United States Court of Appeals for the Federal Circuit
05-1221, -1428
BRECKENRIDGE PHARMACEUTICAL, INC.,
Plaintiff-Appellant,
v.
METABOLITE LABORATORIES, INC.,
and PAMLAB, L.L.C.,
Defendants-Appellees.
Robert E. Pershes, Buckingham, Doolittle & Burroughs, L.L.P., of Boca Raton, Florida,
argued for plaintiff-appellant. With him on the brief were L.A. Perkins and H. Michael Muñiz.
Glenn K. Beaton, Gibson, Dunn & Crutcher, LLP, of Denver, Colorado, argued for
defendants-appellees. With him on the brief was Amanda Tessar.
Appealed from: United States District Court for the Southern District of Florida
Judge James I. Cohn
United States Court of Appeals for the Federal Circuit
05-1221, -1428
BRECKENRIDGE PHARMACEUTICAL, INC.,
Plaintiff-Appellant,
v.
METABOLITE LABORATORIES, INC. and PAMLAB, L.L.C.,
Defendants-Appellees.
_________________________
DECIDED: April 7, 2006
_________________________
Before MICHEL, Chief Judge, FRIEDMAN, Senior Judge, and LINN, Circuit Judge.
MICHEL, Chief Judge.
Breckenridge Pharmaceutical, Inc. (“Breckenridge”) appeals the decision of the
United States District Court for the Southern District of Florida dismissing for lack of
personal jurisdiction its claims of tortious interference, unfair competition, and
declaratory judgment of non-infringement against patent holder, Metabolite
Laboratories, Inc. (“Metabolite”). Breckenridge Pharm., Inc. v. Metabolite Labs., Inc.,
348 F. Supp. 2d 1335 (S.D. Fla. 2004) (Breckenridge). Breckenridge also appeals the
district court’s subsequent grant of summary judgment on all claims to PamLab, L.L.C.
(“PamLab”), the exclusive licensee of the patents at issue. Breckenridge Pharm., Inc. v.
Metabolite Labs., Inc., No. 04-80090-CIV-COHN (S.D. Fla. May 17, 2005) (PamLab).
The district court held that the patent-related claims could not proceed without
Metabolite, an indispensable party, and that the state law claims were preempted under
Federal Circuit law. Id. Because the district court erroneously concluded that it lacked
personal jurisdiction over Metabolite, and because there are genuine disputes of
material fact with respect to the state law claims, the district court incorrectly dismissed
Metabolite and granted summary judgment to PamLab. Therefore, we reverse the
dismissal of Metabolite, vacate the grant of summary judgment to PamLab, and
remand.
I
Metabolite, a Colorado corporation, is the holder of patents for a method of
controlling hyperhomocysteinemia, a condition involving elevated serum metabolite
levels, which is an emerging risk factor for heart and vascular disease, and its principal
business involves licensing its patents to pharmaceutical manufacturing companies.
Through an exclusive license of the Metabolite patents, co-defendant PamLab, a
Louisiana corporation, manufactures and distributes a prescription-only vitamin product
containing a specific formulation of B12, folic acid and B6 marketed as FOLTX, which it
promotes to doctors and clinicians throughout the country. Breckenridge, a generic
drug company headquartered in Florida, manufactures a similar product, marketed as
“Folbee”, which it sells to large pharmacies and retailers—including Walgreens, Eckerd,
and Rite Aid—as a substitute for FOLTX.
On December 18, 2003, Metabolite and PamLab filed suit in the United States
District Court for the District of Colorado alleging that Breckenridge had infringed the
Metabolite patents by offering to sell Folbee to drug wholesalers and retailers as a
generic equivalent to FOLTX. Following the district court’s denial of the plaintiffs’
05-1221, -1428 2
motion for a temporary restraining order (“TRO”) on December 23, 2003, the plaintiffs
voluntarily dismissed the suit.
Several weeks later, Metabolite, in cooperation with PamLab,1 sent between ten
and twenty letters to vitamin distributors and retailers informing them of the Metabolite
patents and PamLab’s exclusive license. Three letters were sent to customers of
Breckenridge in Florida: Publix Super Markets, Eckerd, and Winn-Dixie. The letters did
not name Breckenridge or threaten a lawsuit for infringement. The letters stated in
relevant part:
[O]ne or more small generic drug companies are offering generic
equivalents to FOLTX. As the patent owner, Metabolite wanted to
alert you to the patent coverage on FOLTX. We would urge you to
consult with your patent attorney before entering into any
arrangements for the distribution, dispensing or substitution of
these generic equivalents in place of a legitimate prescription or
order for FOLTX.
Metabolite enclosed a PamLab brochure that contained PamLab’s contact information
but did not contain pricing or order forms.
On January 29, 2004, about eight days after learning of the letters, Breckenridge
filed suit against Metabolite and PamLab in the United States District Court for the
Southern District of Florida, seeking declaratory judgment of non-infringement and
alleging state law claims of tortious interference and unfair competition. Metabolite
moved to dismiss the complaint for lack of personal jurisdiction and, on December 3,
1
PamLab argues that the letters to Breckenridge’s customers were sent by
Metabolite alone. This argument is unavailing. Although it is true that the letters were
“sent by” Metabolite in that Metabolite’s counsel was the only signatory, Metabolite co-
owner Dr. Robert H. Allen conceded in his deposition that PamLab Vice President Barry
LeBlanc supplied the names and addresses of Breckenridge’s customers in Florida for
the purpose of sending the letters. “But for” PamLab’s cooperation, the letters might not
have been sent.
05-1221, -1428 3
2004, following jurisdictional discovery, the district court granted the motion. On May
17, 2005, the district court granted summary judgment in favor of PamLab on all claims.
Breckenridge challenges both rulings in separate appeals, which we have consolidated.
We have jurisdiction pursuant to 28 U.S.C. § 1295(a)(1).
II
Where a defendant is not subject to general jurisdiction in the forum state, a
district court may nonetheless exercise specific jurisdiction over the defendant if the
cause of action “arises out of” or “relates to” the defendant’s in-state activity. Burger
King Corp. v. Rudzewicz, 471 U.S. 462, 472-73 (1985). In determining whether specific
jurisdiction may be exercised over a non-consenting out-of-state defendant, a district
court must undertake a two-part inquiry. First, the state long-arm statute must permit
service of process on the defendant. See Fed. R. Civ. P. 4(e), 4(k)(1)(A). Second, the
exercise of personal jurisdiction must satisfy due process requirements. Burger King,
471 U.S. at 474-76. The Due Process Clause requires that there exist sufficient
“minimum contacts” such that maintenance of the suit does not offend “traditional
notions of fair play and substantial justice”. Id. at 476-78.
A
On appeal, Breckenridge asserts that two subsections of the Florida long-arm
statute permit the exercise of personal jurisdiction over Metabolite.2 Subsection 1(b)
authorizes jurisdiction over a party that “[c]ommit[s] a tortious act within this state”, and
subsection 1(f) authorizes jurisdiction over a party that “[c]aus[es] injury to persons or
2
PamLab states that it “sells products throughout the country, including into
Florida” and “does not contest personal jurisdiction” in Florida. Thus, the question of
personal jurisdiction is relevant only with respect to Metabolite.
05-1221, -1428 4
property within this state arising out of an act or omission by the defendant outside this
state, if, at or about the time of the injury [ ]: 1. The defendant was engaged in
solicitation or service activities within this state.” Fla. Stat. § 48.193(1)(b), (f).
The district court held that Metabolite’s contacts with Florida satisfied subsection
(1)(f) of the Florida long-arm statute. We agree. The district court correctly concluded
that there was no jurisdiction under (1)(b) because Metabolite’s letters into Florida may
qualify as protected communications under federal patent law and thus may not be
tortious. See Globetrotter Software, Inc. v. Elan Computer Group, Inc., 362 F.3d 1367,
1377 (Fed. Cir. 2004) (“The federal patent laws preempt state laws that impose tort
liability for a patentholder’s good faith conduct in communications asserting infringement
of its patent and warning about potential litigation.”). With respect to subsection (1)(f),
the court correctly concluded that the letters could be construed as solicitations,
because they described the FOLTX product and PamLab’s exclusive license, and
enclosed PamLab’s promotional materials. Because Breckenridge alleges that the
letters caused injury in Florida, the requirements of subsection (1)(f) are met.
Accordingly, the district court correctly determined that Metabolite would be subject to
personal jurisdiction if consistent with due process.
B
The issue of personal jurisdiction in a declaratory action for non-infringement is
“intimately related to patent law” and thus governed by Federal Circuit law regarding
due process. Silent Drive, Inc. v. Strong Indus., Inc., 326 F.3d 1194, 1201 (Fed. Cir.
2003). Where a suit involves both patent and non-patent claims, Federal Circuit law
regarding due process also applies to the question of personal jurisdiction on non-
05-1221, -1428 5
patent claims if “the resolution of the patent infringement issue will be a significant
factor” in determining liability under the non-patent claims. 3D Sys., Inc. v. Aarotech
Labs., Inc., 160 F.3d 1373, 1377 (Fed. Cir. 1998). A court must inquire whether the
defendant has “purposefully directed his activities” at the forum state and, if so, whether
“the litigation results from alleged injuries that arise out of or relate to those activities.”
Burger King, 471 U.S. at 472. Then, to defeat jurisdiction, the burden of proof shifts to
the defendant, which must “present a compelling case that the presence of some other
considerations would render jurisdiction unreasonable.” Id. at 476-77.
1
Breckenridge argues that the district court erred by applying Federal Circuit law
rather than Eleventh Circuit law to the question of personal jurisdiction with respect to
the state law tort claims, and argues that this choice of law question is important.
Whereas the Federal Circuit provides that a patent owner may, without more, send
cease and desist letters to a suspected infringer, or its customers, without being
subjected to personal jurisdiction in the suspected infringer’s home state, see, e.g., Akro
Corp. v. Luker, 45 F.3d 1541, 1548-49 (Fed. Cir. 1995) (citing various district court
cases), the Eleventh Circuit does not appear to have a similar carve-out.3
3
The district court determined that it was unclear whether personal
jurisdiction would attach under the Eleventh Circuit Cronin factors, which govern the
“traditional notions of fair play and substantial justice” inquiry, but concluded that
because Federal Circuit precedent “clearly precludes personal jurisdiction”, it would be
“unfair” to exercise personal jurisdiction over Metabolite. Breckenridge, 348 F. Supp. 2d
at 1341 n.5 (citing Cronin v. Wash. Nat’l Ins. Co., 980 F.2d 663, 670 (11th Cir. 1993)).
Breckenridge argues that, given the inconclusive result under Cronin, the
“reasonableness” standard under Int’l Shoe Co. v. Washington, 326 U.S. 310, 317
(1945), requires the district court to exercise jurisdiction over Metabolite.
05-1221, -1428 6
Here, the district court correctly applied Federal Circuit law governing personal
jurisdiction to all claims because the question of infringement is a critical factor in
determining liability under the non-patent claims. 3D Sys., 160 F.3d at 1377. See also
Silent Drive, 326 F.3d at 1201 (applying regional circuit law to non-patent claims where
analysis “with respect to non-patent counts is not intimately linked to patent law”); Elecs.
for Imaging, Inc. v. Coyle, 340 F.3d 1344, 1348 (Fed. Cir. 2003) (applying regional
circuit law where facts underlying non-patent claims were not “intimately involved with”
facts relating to declaratory action of non-infringement).
To establish a claim of tortious interference under Florida law, Breckenridge must
prove: (1) the existence of business relationships between Breckenridge and the letter
recipients; (2) defendants’ knowledge of those business relationships; (3) defendants’
intentional and unjustified interference with those business relationships; and (4)
damages because of defendants’ interference. Gossard v. Adia Servs., Inc., 723 So. 2d
182, 184 (Fla. 1998). A claim of unfair competition in Florida arises under the common
law and, while elusive of precise definition, requires a plaintiff to prove, at minimum,
competition and unfairness. Practice Mgmt. Assoc., Inc. v. Old Dominion Ins. Co., 601
So. 2d 587, 587-88 (Fla. App. Ct. 1992). As the district court correctly noted,
Metabolite’s letters would neither be unjustifiable nor unfair if the implication of
infringement contained therein is true. Accordingly, because the non-patent issues in
this case are “intimately linked to patent law”, Federal Circuit law regarding due process
must be applied to the question of personal jurisdiction over Metabolite with respect to
all claims.
05-1221, -1428 7
2
The next question, then, is whether, under Federal Circuit law, the exercise of
personal jurisdiction over Metabolite satisfies the requirements of due process. This
court employs a three-prong test, in which we determine whether: (1) the defendant
purposefully directed its activities at residents of the forum, (2) the claim arises out of or
relates to those activities, and (3) assertion of personal jurisdiction is reasonable and
fair. Akro, 45 F.3d at 1545-46. With respect to the last prong, the burden of proof is on
the defendant, which must “present a compelling case that the presence of some other
considerations would render jurisdiction unreasonable” under the five-factor test
articulated by the Supreme Court in Burger King. Id. (quoting Burger King, 471 U.S. at
476-77).
The district court held that “quite clear” Federal Circuit precedent established
that, where a letter makes only a cursory attempt at soliciting business, “principles of fair
play and substantial justice defeat the reasonableness of jurisdiction” in a declaratory
action for non-infringement.4 Breckenridge, 348 F. Supp. 2d at 1341 (citing Silent Drive,
326 F.3d at 1202; Hildebrand v. Steck Mfg. Co., 279 F.3d 1351, 1356 (Fed. Cir. 2002);
Red Wing Shoe Co. v. Hockerson-Halberstadt, Inc., 148 F.3d 1355, 1360 (Fed. Cir.
1998)). The district court found that because “[i]n this case, Metabolite has no other
contacts with Florida, other than its three Attorney Letters”, the court could not exercise
personal jurisdiction over Metabolite. Id.
4
The district court failed to discuss two Federal Circuit decisions which
involve fact patterns highly relevant to the present case, likely because counsel did not
cite those cases to the district court, just as they did not to us.
05-1221, -1428 8
The district court correctly stated this court’s law that personal jurisdiction may
not be exercised constitutionally when the defendant’s contact with the forum state is
limited to cease and desist letters, “without more.” Red Wing Shoe, 148 F.3d at 1360.
However, the district court erred in concluding that Metabolite’s attorney letters
represented the extent of its contacts with Florida. In several prior decisions, we have
attempted to clarify what “other activities” permit a district court to exercise personal
jurisdiction over a out-of-state defendant in compliance with due process, but cases like
the present indicate that there is a need in the district courts for clearer guidance on this
issue.
In Silent Drive, plaintiff Silent Drive, an Iowa corporation, sought jurisdiction over
the defendant, a Texas corporation with its principal place of business in Texas, in Iowa
federal district court in a declaratory action for non-infringement. 326 F.3d at 1197. The
defendant sent two letters to Silent Drive informing it of an injunction obtained in Texas
and enclosed a copy of its patent for “academic purposes only”. Id. at 1198-99. There
was no license agreement at issue in Silent Drive. In addition to the cease and desist
letters, the defendant’s only contact with Iowa was that it had issued a news release
describing the injunction and patent and sent a copy of the news release to a potential
customer of Silent Drive in Iowa. Id. at 1199. We concluded that due process
requirements were not satisfied because the letters primarily were related to the
injunction, which was obtained for misappropriation of trade secrets and was unrelated
to the patent at issue.5 Id. at 1202.
5
We ultimately found personal jurisdiction proper in Silent Drive on other
grounds. See 326 F.3d at 1204-05.
05-1221, -1428 9
In Hildebrand, the plaintiff, a Colorado resident, filed a patent infringement suit
against the defendants, all Ohio corporations, in Colorado federal district court. 279
F.3d at 1353. Because one week earlier, one of the defendants had filed an action for
declaratory judgment of non-infringement, invalidity, and tortious interference in Ohio
federal district court, the Colorado district court granted that defendant’s motion to
dismiss in Colorado and transfer the case to Ohio. Id. The Ohio district court
determined that it had personal jurisdiction over Hildebrand, and we reversed. Id. at
1354. There was no license agreement at issue in Hildebrand. Hildebrand’s contacts
with Ohio, in addition to the cease and desist letters, were that he had attempted to
negotiate license agreements with two of the Ohio-based defendants.6 Id. at 1353-54.
We held that the exercise of personal jurisdiction over Hildebrand would be
unconstitutional because “[a]ll of the contacts were for the purpose of warning against
infringement or negotiating license agreements, and he lacked a binding obligation in
the forum.”7 Id. at 1356.
In Red Wing Shoe, the plaintiff, a Minnesota corporation, sought jurisdiction over
defendant Louisiana corporation in Minnesota federal district court in an action for
declaratory judgment of non-infringement, invalidity, and unenforceability. 148 F.3d at
1357. The defendant sent Red Wing Shoe a series of letters alleging infringement and
6
One of the letters was accompanied by a set of tools, but we did not
consider that fact relevant to our personal jurisdiction inquiry because the defendant
had indicated clearly in the letter that the tools were a sample set, not for sale. 279
F.3d at 1353-54.
7
In addition, the portion of the opinion discussing the constitutionality of the
exercise of personal jurisdiction over Hildebrand may be dicta, as we had already
determined that Hildebrand could not be reached by the Ohio long-arm statute, which
does not grant jurisdiction to the limits of due process. See id. at 1354-56.
05-1221, -1428 10
offering a non-exclusive license. Id. In addition, the defendant had thirty-four non-
exclusive licensees, all of which sold products in Minnesota and six of which maintained
retail stores in Minnesota or possessed a Minnesota business registration. Id. at 1357-
58. The defendant received royalty income from its licensees for sales made in
Minnesota, but “exercise[d] no control over the sales activities of its licensees” and,
indeed “had no dealings with its licensees in [Minnesota]”. Id. at 1358, 1361-62. We
held that the mere receipt of royalty income from sales in the forum state was
insufficient to ground personal jurisdiction. Id. at 1358; World-Wide Volkswagen v.
Woodson, 444 U.S. 286, 299 (1980) (“[F]inancial benefits accruing to the defendant
from a collateral relation to the forum State will not support jurisdiction if they do not
stem from a constitutionally cognizable contact with that State.”). We explained that,
because the defendant had no relationship with its licensees beyond the receipt of
royalty income, the Minnesota activities of the defendant’s licensees were essentially
“unilateral” and could not be attributed to the defendant. Id. at 1360. We concluded
that the exercise of personal jurisdiction over the defendant in Red Wing Shoe “would
not comport with principles of fairness.” Id. at 1361.
In contrast, we found due process requirements to be satisfied in Akro. Over a
course of three years, the defendant, a California resident, sent cease and desist letters
to Akro in Ohio, the forum state, which indicated that the defendant had entered into an
exclusive license agreement with one of Akro’s competitors, also an Ohio corporation.
45 F.3d at 1542-43. The license agreement, in addition to specifying royalty payment
terms, granted the licensee the power to litigate infringement suits on the defendant’s
behalf and also required the defendant to “defend and pursue any infringements against
05-1221, -1428 11
his patent”. Id. at 1543. In explaining why personal jurisdiction was proper, we first
reasoned that, in determining the scope of the defendant’s contacts with the forum
state, “the plaintiff need not be the forum resident toward whom any, much less all, of
the defendant’s relevant activities were purposefully directed.” Id. at 1547 (citing Calder
v. Jones, 465 U.S. 783 (1984); Keeton v. Hustler Magazine, Inc., 465 U.S. 770 (1984)).
Thus, we looked to the defendant’s relationship with its exclusive licensee to determine
the extent of the defendant’s forum state contacts. We found that, by virtue of the
license agreement terms regarding infringement litigation, the defendant in Akro had—
by the license agreement itself—created “continuing obligations” in the forum state. Id.
at 1546. Because the license agreement in Akro obligated the defendant beyond the
mere receipt of royalty income, we found Akro distinguishable from Red Wing Shoe.
Indeed, given those facts, we held that “it could scarcely be more clear that [the
defendant] purposefully directed activities at residents of Ohio within the meaning of the
due process inquiry.” Id.
In Genetic Implant Systems v. Core-Vent Corp., 123 F.3d 1455 (Fed. Cir. 1997),
we clarified the holding in Akro and explained that a defendant’s obligations under an
exclusive license agreement may subject it to personal jurisdiction in the forum state
even if the licensee is not incorporated or headquartered in the forum state, so long as
the exclusive licensee conducts business there. The defendant in Genetic Implant had
sold the patented product directly in the state of Washington until the issuance of its
patent, at which time it entered into an exclusive distribution and marketing agreement
with a Delaware corporation that continued to sell the patented product in Washington.
Id. at 1457. The defendant sent three letters to an accused infringer in Washington, and
05-1221, -1428 12
the accused infringer sought a declaratory judgment of non-infringement in Washington
federal district court. Id.
As in Akro, we concluded that personal jurisdiction over the defendant was
proper. Id. First, we stated that, although the defendant’s relationship was with an
exclusive distributor rather than an exclusive licensee, “[t]he appointment of a distributor
to sell a product covered by a patent is analogous to a grant of a patent license” in that
the agreement “surrender[s] the patentee’s right to exclude the distributor under the
patent.” Id. at 1458. Then, in analyzing the defendant’s contacts with Washington, we
emphasized as “most significant” the defendant’s arrangement with its distributor and
the distributor’s product sales in the state. Id. at 1457. We noted that, as in Akro, the
agreement between the patentee and distributor in Genetic Implant created a
relationship beyond the payment of royalties. Although the defendant retained the sole
right to pursue patent infringement claims, the defendant agreed to indemnify the
distributor for liability arising from any third party patent infringement action related to
the distributor’s sale, use, or making of the covered products, and authorized the
distributor to use its trademarks in marketing and distribution. Id. at 1459. In addition,
we noted that the defendant had itself conducted business in the forum state prior to
entering into the exclusive distributorship agreement, and had developed a valuable
customer base and generated goodwill through advertising and educational initiatives
that potentially enhanced the future sales of its exclusive distributor. Id. at 1458.
Finally, we acknowledged that the case differed from Akro in that the distributor
in Genetic Implant was not headquartered in the forum state. Id. at 1459. However, we
explained that the “distinction between in-state and out-of-state distributors is not
05-1221, -1428 13
tenable . . . [The distributor] is present in Washington in the sense that it promotes and
sells [the] patented products in the state; thus, it is transacting business ‘in-state’.” Id.
As such, we concluded that the exercise of personal jurisdiction over the defendant
comported with due process requirements.
In sum, our case law has held as follows: where a defendant has sent cease and
desist letters into a forum state that primarily involve a legal dispute unrelated to the
patent at issue, such as an injunction obtained for misappropriation of trade secrets, the
exercise of personal jurisdiction is improper. Silent Drive, 326 F.3d at 1202. Likewise,
a defendant may not be subjected to personal jurisdiction if its only additional activities
in the forum state involve unsuccessful attempts to license the patent there.
Hildebrand, 279 F.3d at 1356. The same is true where the defendant has successfully
licensed the patent in the forum state, even to multiple non-exclusive licensees, but
does not, for example, exercise control over the licensees’ sales activities and, instead,
has no dealings with those licensees beyond the receipt of royalty income. Red Wing
Shoe, 148 F.3d at 1357-58.
In contrast, the defendant is subject to personal jurisdiction in the forum state by
virtue of its relationship with its exclusive forum state licensee if the license agreement,
for example, requires the defendant-licensor, and grants the licensee the right, to litigate
infringement claims. Akro, 45 F.3d at 1546. Finally, the defendant will also be subject
to personal jurisdiction in the forum state if the exclusive licensee (or licensee
equivalent) with which it has established a relationship is not headquartered in the
forum state, but nonetheless conducts business there. Genetic Implant, 123 F.3d at
1457-59.
05-1221, -1428 14
Thus, the crux of the due process inquiry should focus first on whether the
defendant has had contact with parties in the forum state beyond the sending of cease
and desist letters or mere attempts to license the patent at issue there. Where a
defendant-licensor has a relationship with an exclusive licensee headquartered or doing
business in the forum state, the inquiry requires close examination of the license
agreement. In particular, our case law requires that the license agreement contemplate
a relationship beyond royalty or cross-licensing payment, such as granting both parties
the right to litigate infringement cases or granting the licensor the right to exercise
control over the licensee’s sales or marketing activities.
Here, in addition to sending letters into the forum state, which we presume
qualify as “cease and desist” letters,8 Metabolite has entered into an exclusive license
with PamLab, a company that, while not headquartered or incorporated in Florida,
conducts business in Florida. As part of the license agreement, Metabolite granted
PamLab the right to sue for patent infringement with Metabolite’s written consent, and
the parties agreed to “discuss in good faith the appropriate action, if any, with respect to
third party infringers of the Licensed Patents, and to cooperate reasonably in any
enforcement actions”. Metabolite granted PamLab “full control of the prosecution or
maintenance” of any patent or application that Metabolite abandons or permits to lapse
8
The district court referred to the letters as “cease and desist letters” and
categorized the letters as containing an “implication of infringement” despite the fact that
the letters did not expressly accuse Breckenridge or the recipient drug store chains of
patent infringement. As a practical matter, patentees and patent counsel today often
write such accusatory letters artfully, and the type of implicit accusation of infringement
contained in the Metabolite attorney letters has become the norm for what we
traditionally refer to as “cease and desist” letters. In any event, Metabolite concedes
that, if its attorney letters qualify as tortious, it is because they are “effectively ‘cease
and desist’ letters.”
05-1221, -1428 15
and agreed to provide PamLab with an executed power of attorney for that purpose.
Metabolite further agreed to “provide consultation to PamLab in the science, medicine
and marketing of vitamins and related products, from time to time”.
That this exclusive license agreement not only contemplated an ongoing
relationship between PamLab and Metabolite beyond royalty payments but has actually
resulted in such a relationship is obvious from the facts of this case. Metabolite
coordinates with PamLab in sending cease and desist letters and in litigating
infringement claims in Florida and elsewhere and, as is the case here, licensor and
licensee are often represented jointly by counsel. As such, we hold that, through its
relationship with PamLab, which sells products in Florida, Metabolite has purposefully
availed itself to the privilege of conducting activities within Florida.
3
Finally, we turn to the third prong of the Akro test: whether Metabolite has
provided a “compelling case” that the exercise of jurisdiction over it would offend
principles of fair play and substantial justice. See Akro, 45 F.3d at 1545-46. The
Supreme Court has provided a list of five factors to consider in determining the fairness
of asserting personal jurisdiction over a defendant, consisting of: “the burden on the
defendant,” “the forum State's interest in adjudicating the dispute,” “the plaintiff's interest
in obtaining convenient and effective relief,” “the interstate judicial system's interest in
obtaining the most efficient resolution of controversies,” and the “shared interest of the
several States in furthering fundamental substantive social policies.” Burger King, 471
U.S. at 477.
05-1221, -1428 16
The only argument made by Metabolite regarding the first factor, raised below
and reargued here, is its assertion that as a “small company” that “does not have a
sales force”, defending this suit in Florida would place it under a “significant” burden. It
states that litigation in Florida would disrupt the “active research laboratory and other
personal and professional commitments” of Dr. Allen in Colorado. This argument is
unconvincing, as litigation in Florida will not prevent Dr. Allen himself from remaining in
Colorado, at least for the vast majority of the time. We also view Metabolite’s general
assertion of hardship, without supporting evidence, as unpersuasive.
Second, Florida has an interest in adjudicating this dispute greater than the
“partial[ ]” interest recognized by the district court. Although, as the district court noted,
“the principal dispute between the parties is one of federal patent law”, that does not
diminish Florida’s interest in protecting its companies and residents. Here, resolution of
the dispute will affect not only Florida-based Breckenridge and the Florida branches of
the retailers that received the letters, which Florida has an interest in protecting from
unfair competition and tortious interference, but also Florida residents, who have an
interest in legally obtaining a generic equivalent to FOLTX.
Third, the district court correctly recognized that plaintiff Breckenridge, a
company incorporated in Florida with its principal operations in Florida, has an interest
in obtaining “convenient and effective” relief from a nearby federal court. Id. The district
court minimized this factor, however, by stating that “Plaintiff could have brought this
suit in federal court in Colorado, and thus a dismissal on personal jurisdiction grounds
does not prejudice the ability of the Plaintiff to obtain full and effective relief.” Id. We do
not agree that the option to sue in Colorado supports the district court’s conclusion.
05-1221, -1428 17
This inquiry requires the court to focus on the convenience and effectiveness of relief
from the plaintiff’s perspective, as generally the first party to file suit chooses the forum,9
and it is clearly more convenient for a Florida corporation with its base of operations in
Florida to obtain relief in Florida.
The district court found that the fourth factor, “the interstate judicial system's
interest in obtaining the most efficient resolution of controversies,” “tips slightly” toward
Metabolite, as it surmised that the District of Colorado has “presumably a much smaller
case load” than does the Southern District of Florida. Metabolite argues on appeal that,
in fact, the fourth factors tips heavily in favor of Metabolite because “the main witnesses
and evidence will be in Colorado”, and “the Colorado courts are familiar with
Metabolite’s patents”. As the Supreme Court stated in Burger King, however,
considerations regarding witnesses and evidence “most frequently can be
accommodated through a change of venue” and are unlikely to “become so substantial
as to achieve constitutional magnitude.” 471 U.S. at 483 (emphasis in original).
The district court concluded that the fifth factor, the “shared interest of the several
States in furthering fundamental substantive social policies”, plays “little role in this
patent dispute”, and Metabolite does not argue otherwise on appeal.
In sum, the first three factors favor Breckenridge, and the final factor is minimally
relevant. Even assuming that the fourth factor favors Metabolite, Metabolite has not
met its burden of showing a “compelling case” that the exercise of personal jurisdiction
would be unfair under Burger King. As such, we hold that the Southern District of
9
Here, Metabolite and PamLab were technically the first to file suit in this
matter, and did so in Colorado, but dismissed voluntarily after the district court denied
their request for a TRO.
05-1221, -1428 18
Florida may exercise personal jurisdiction over defendant Metabolite in accordance with
due process.10
III
Finally, we turn to the district court’s grant of summary judgment to PamLab.
The district court based its grant of summary judgment as to the declaratory action of
non-infringement on the absence of patent owner Metabolite, which it concluded was a
necessary party under Federal Rule of Civil Procedure 19. PamLab, slip. op. at 7-10.
Because we hold that the district court has personal jurisdiction over Metabolite, we
vacate the court’s grant of summary judgment as to the declaratory action.
With respect to the state law claims, the district court held that summary
judgment was proper because Breckenridge failed to raise a genuine issue of material
fact as to whether the content of the letters was “objectively baseless”, as is required to
avoid preemption by the federal patent laws. Id., slip. op. at 10 (quoting Globetrotter,
362 F.3d at 1377). The trial court explained that the letters were not sent on behalf of
PamLab, do not allege infringement, and do not mention Breckenridge by name. Id.
The court characterized the letters as “exactly the type of innocuous patent publication
communications that the Federal Circuit has decided are immune from state tort law.”
Id.
10
Metabolite argued in its Motion to Dismiss before the district court that
dismissal was warranted because under “[t]he fact pattern present here”, the United
States District Court for the District of Minnesota dismissed Metabolite for lack of
personal jurisdiction. See Upsher-Smith Labs., Inc. v. Pan Am. Labs., Inc., No. 01-352
ADM/AJB (D. Minn. Sept. 4, 2002). That matter is not before us. Thus, we do not
express an opinion as to the propriety of that dismissal. We hold only that, on the facts
before the Florida district court, the exercise of personal jurisdiction over Metabolite is
proper.
05-1221, -1428 19
Breckenridge asserts that the district court erred in reaching this conclusion. In
particular, Breckenridge argues that a material fact dispute exists as to whether
Metabolite’s statement in the letters that it has exclusively licensed “certain
formulations” of the vitamin to PamLab misrepresents the patents at issue, which
contain only method claims involving oral administration of the vitamin formulations. We
agree. Because the question of whether any statements in the letters were “objectively
baseless” is genuinely disputed and integrally related to the question of infringement,
we vacate the grant of summary judgment to PamLab as to the state law claims as well.
IV
As the district court correctly concluded, the Florida long-arm statute permits the
exercise of jurisdiction over Metabolite. In its due process analysis, the district court
correctly applied Federal Circuit law governing personal jurisdiction to non-patent claims
that we agree are intimately linked to the patent law. Because Metabolite has
established a relationship with PamLab, its exclusive licensee, which promotes,
advertises and sells FOLTX in Florida, and with which Metabolite coordinates cease
and desist letters and infringement litigation, Metabolite has purposefully availed itself of
the benefits and protections of Florida law. Because Metabolite has not presented a
compelling case that the exercise of personal jurisdiction would be unreasonable or
unfair, the Florida federal district court may exercise personal jurisdiction over
Metabolite in accordance with due process. As such, the district court’s dismissal of
Metabolite for lack of personal jurisdiction was erroneous and is reversed.
Because the district court granted summary judgment to PamLab on the
declaratory judgment action based on its erroneous determination that it lacked
05-1221, -1428 20
personal jurisdiction over Metabolite, and because a material fact dispute exists in the
state law claims regarding whether any statements in the Metabolite letters were
“objectively baseless”, the grant of summary judgment in favor of PamLab is vacated.
The case is remanded for further proceedings.
REVERSED, VACATED and REMANDED
05-1221, -1428 21