TRIMBLE INC. v. PERDIEMCO LLC — Oral Argument — Supreme Court Petition Tracker

0:00 Judge Newman cases number 19-2164, Trimble Incorporated against Pergium Company, LLC. Mr. Bagatelle.

0:10 Appellant Attorney (Dan L Bagatell) May it please the court, Dan Bagatelle, on behalf of the declaratory judgment plaintiffs

0:15 and appellants, Trimble and ISE. This appeal raises a personal jurisdiction issue that boils

0:21 down to a due process clause issue, and that's because Pergium Co. undisputedly had the minimum

0:27 Judge Dyk contact necessary. Mr. Bagatelle, I understand your argument about overruling Red Wing,

0:35 but I'd like to start out by asking you if you think Red Wing is distinguishable from this case

0:42 on the reasonableness prong. And if I read your brief correctly, your distinction appears to be

0:48 that here there was a threat of suit, whereas that threat of suit did not

0:56 exist in the case. And I'd like to start out by asking you if you think Red Wing is distinguishable

0:57 in Red Wing. Am I correct in understanding your position?

1:02 Appellant Attorney (Dan L Bagatell) In part. I think there are a couple of distinctions. First of all, we know for sure that

1:08 the contacts here were more extensive than in Red Wing Shoe. There were 22 over three and a half

1:13 months. And we know that we have expressed threats to suit here. It's not clear to me exactly what

1:21 the facts were in Red Wing Shoe. The court described them in several different ways.

1:26 But we know that here we have more than simply a patent owner that's saying,

1:30 here I am, and wouldn't you like to license my patent? They deliberately threatened two different

1:37 related companies, and they specifically accused them infringement and said they were going to take

1:42 them to court. We think the facts here are actually more similar, or at least as similar to Jack

1:47 Henry, because there were broad infringement allegations against multiple targets and

1:51 repeated specific threats to suit.

1:55 Judge Dyk Why in the Red Wing should the number of communications or the threat to suit make a

2:02 difference?

2:04 Appellant Attorney (Dan L Bagatell) Well, first of all, I mean, it's true that the Red Wing held that there were minimum contacts

2:10 there. But if you look at Burger King, Burger King calls for a balancing of the minimum contacts.

2:17 Judge Dyk I don't understand what you're saying. We're not talking about minimum contacts, which

2:21 I understand was conceded here, but about the reasonable.

2:25 Correct. But the reasonable is wrong. Should those facts, in other words, the multiple contacts

2:33 and the threat of suit make a difference?

2:36 Appellant Attorney (Dan L Bagatell) Yes. And I think my point is not that there's a dispute over minimum contacts, but that the

2:41 minimum contacts under Burger King are weighed against the reasonableness factors. And so you

2:47 look at all of that together and determine whether it would be reasonable and fair to subject the

2:53 declaratory judgment defendant in this case.

2:56 To suit. And we think in this case, it is. And this is not a simple case, quite like Red Wing

3:05 shoe. It's more complicated. There are multiple defendants. As I said, I think this is really more

3:10 similar to Jack Henry. And Jack Henry and Genetic Veterinary Services have both held that there is

3:18 no bright line rule, which is consistent with the Burger King case itself. There's no talismanic

3:25 considerations.

3:27 As Booker, as Red Wing shoe might be read to suggest.

3:30 Judge Newman Well, I think Red Wing shoe did what related to the facts. And I thought Jack Henry fairly clearly

3:43 said that the facts need to be considered. What's your argument?

3:50 I'm not with that, Your Honor. And in fact, Per Diemco agrees that there's no bright line rule.

4:08 Appellant Attorney (Dan L Bagatell) They're trying to say that Jack Henry was a good faith case and or a bad faith case,

4:14 as they say. But I don't read Jack Henry to turn on the bad faith of the declaratory judgment

4:21 defendant. Certainly, a bad faith would undermine any claim of unfairness or unreasonableness. But

4:27 good faith doesn't confer immunity. And again, Per Diemco's behavior here wasn't significantly

4:32 different than the patent owner's behavior was in Jack Henry. Per Diemco tries to argue that

4:43 there's some sort of a Hobson's choice that they must either forego relief, be hailed into a far

4:48 flung forum or sue immediately. We're not suggesting that. If all you do is tell somebody

4:56 that you own patent rights and you're offering those patent rights, you're not going to have

5:00 either subject matter or personal jurisdiction. Because first of all, there's no case in

5:04 controversy. And second of all, there wouldn't be purposeful direction towards the forum,

5:10 which you need for minimum contacts and personal jurisdiction. And second of all,

5:14 they're not being forced into an inconvenient forum because they're entitled.

5:18 To and did here move to transfer under Section 1404. The problem was that they moved to transfer

5:24 to the Eastern District of Texas, with which they had no real connection. They're arguing

5:29 essentially that they can only be sued in the Eastern District of Texas, which is untenable.

5:34 They're they operate out of D.C. and they have no constitutional right to be sued in their own

5:39 favorite forum. They are, but nobody ever goes there. It's a one man company. He's never been

5:49 in there. The office is locked and unused. All his activities towards the defendants or the

5:56 plaintiffs in this case were by telephone from Washington, D.C. and by letter from Washington,

6:01 D.C. So this is a company that basically chooses to litigate away. They don't want to litigate in

6:08 D.C. In fact, when after this case was dismissed, we filed a declaratory judgment action in the

6:14 district of the District of Columbia, and they said there's no personal jurisdiction in D.C.

6:19 Which is just incredible to me. But more important for present purposes, we know that

6:24 Prodeumco prefers to litigate away from home. They threatened to sue in both Iowa and Texas,

6:31 and there's not much difference between Texas or Iowa and the Northern District of California. At

6:37 most, it's an issue of degree, which could be dealt with by a motion to transfer, which again,

6:44 they filed. And the motion was denied because their presence there was in the district court's

6:49 word.

6:49 Judge Newman I thought they threatened to sue in Texas.

6:53 Appellant Attorney (Dan L Bagatell) Your Honor?

6:54 Judge Newman Did they say that they were going to sue in Texas?

6:58 Appellant Attorney (Dan L Bagatell) Yes. Originally, they were dealing with ISE, the subsidiary, and they threatened to sue ISE in

7:07 the Northern District of Iowa. They attached a draft complaint. Then in discussions with

7:12 Trimble's counsel, they threatened to sue Trimble, the parent company, a larger company,

7:17 in the Eastern District of Texas. So they wanted to be away from home.

7:22 This is a little bit unusual, I think, that you're not dealing with a patent owner that basically says,

7:29 it's inconvenient for me to go away from home. They're saying it's inconvenient for me to be

7:35 away from the Eastern District of Texas, with which they have no real connection. At the end

7:48 of the day, the district court erred by dismissing the case basically under a single consideration,

7:52 this supposed privilege to threaten an infringement suit without subjecting yourself to jurisdiction

7:56 where your target resides. And we just think that's contrary to the law. So I think that's a little bit

8:00 to Burger King. Once you have minimum contacts that are established, you weigh those factors

8:05 against the minimum contacts. You don't look at one particular mechanical test or talismanic

8:12 consideration. The other side has argued that, well, you can look at, for example, whether you

8:17 have a contract, and if a contract is not enough to establish minimum contacts, that may be. But

8:24 we're not dealing with the minimum contacts prong, as Judge Steig pointed out. We're dealing with

8:29 reasonableness. And in fact, we're dealing with reasonableness. And in fact, we're dealing with

8:30 reasonableness, you can't just look at one factor. You have to look at all of them. The only

8:35 factor where they have a significant argument is burden, and that argument is weak and was taken

8:40 care of by their motion to transfer. So we would ask the court to reverse and remand for further

8:45 Judge Newman proceedings in the Northern District of California. Any questions for Mr. Bagatelle or Mr. Sandell?

8:59 Appellee Attorney (Laurence M. Sandell) Good morning. May it please the court. Redeemed contacts with the Northern District of California

9:05 were indirect, limited, and closely

9:08 to those of Red Wings Shoe. And despite our express challenge to do so, the appellants have been

9:14 unable to find any case where personal jurisdiction was found based on a similar level of forum

9:20 Judge Dyk contacts. Wait, Mr. Sandell, I'm confused. I thought you were not disputing that there were

9:26 minimum contacts here, but that the argument was that the reasonableness prong wasn't satisfied.

9:32 Appellee Attorney (Laurence M. Sandell) I'm sorry, ma'am. They're a similar level of forum contacts. Excuse me. You agree that the minimum

9:38 Judge Dyk contacts part of the test is satisfied here, correct?

9:44 Appellee Attorney (Laurence M. Sandell) Well, it's our position that Trimble has not established them, but assuming that they are

9:53 established, redeem is clearly met its burden to show that personal jurisdiction is constitutionally

9:58 Judge Dyk unreasonable. Well, let's put it this way. On appeal, you're not disputing the existence of

10:04 Appellee Attorney (Laurence M. Sandell) minimum contacts. It's a very minor portion of our appeal. We don't concede them, but it's

10:12 Judge Dyk not disputing it at all.

10:14 Appellee Attorney (Laurence M. Sandell) I've alluded to a number of cases where that found in other courthouse courts that found demand

10:21 letters insufficient to satisfy minimum contacts, and we think those are relevant.

10:26 Judge Dyk Where do you argue in your brief that minimum contacts are lacking here?

10:31 Appellee Attorney (Laurence M. Sandell) Nowhere specifically, Your Honor.

10:32 Judge Dyk Pardon me?

10:34 Appellee Attorney (Laurence M. Sandell) Nowhere specifically, Your Honor.

10:35 Judge Dyk Okay. So on appeal, you're not disputing minimum contacts.

10:39 Appellee Attorney (Laurence M. Sandell) Okay. Yeah, we don't dispute them.

10:41 Judge Dyk Okay. So let me ask.

10:45 Why should we not, as an in-bank court, overrule Red Wing? How is Red Wing consistent

10:53 with the Supreme Court law on the reasonableness problem?

10:58 Appellee Attorney (Laurence M. Sandell) Well, the Supreme Court mandates a flexible inquiry into whether personal jurisdiction

11:03 would offend traditional notions of fair play and substantial justice, and the precedent and

11:08 policy of Red Wing's shoe can guide this court in its assessment of constitutional reasonableness.

11:17 You know, Red Wing's shoe points out that traditional notions of fair play and substantial

11:23 justice afford sufficient latitude for a patentee to inform an accuser of his alleged injury,

11:31 infringement, and to attempt to compromise the claim without risking being held into a far-flung

11:37 jurisdiction.

11:38 And so based on that policy, actually, Red Wing's shoe held specifically that that policy squarely

11:46 invokes the fourth fairness.

11:47 It goes right in to the Supreme Court's four factors.

11:51 And the other thing that really should be talked about is, what is this sufficient latitude?

11:57 What sufficient latitude is, that in and of itself is a flexible inquiry.

12:04 So what this court is doing, is really determining whether or not Trimble's actions are within

12:17 the scope of that sufficient latitude.

12:20 And in effect, what Red Wing's shoe does is it takes that flexible analysis, and it looks at some of the factors that are already there.

12:30 And it says, hey, we're in this very unique situation of a declaratory judgment action.

12:36 Some of these factors counsel against constitutional reasonableness.

12:43 Judge Newman Well, why doesn't it depend, just as in the Hardy case, after Red Wing said that you look at the factors,

12:51 and certainly, one has to agree there's a difference between a letter or a phone call, and four months of negotiations for a license.

13:07 Entire thrust of precedent that bright lines, you look at the facts.

13:14 Appellee Attorney (Laurence M. Sandell) We have a straw man argument that I believe has been painted on us.

13:29 We believe we do have to look at the facts.

13:32 And when you look at the physically challenged of the D.J. action in California, that the parties' negotiations were continuing,

14:27 1328 of the appendix, the Supreme Court's be distinguished here, or is Red Wing, in your view, in point?

15:29 Now, let's try to say, oh, well, there are more targets here, only to indemnify the flexible analysis.

18:19 Potential thousands of people, applications and negotiations.

18:56 The charge of bad faith in its reply brief at page 13 and also page 15, but only on the ground that, quote,

19:05 threatened litigation, threats are evidence of bad faith.

19:16 Subject matter, contacts with that forum were efforts to get proper notice of the contacts with the proper,

20:29 notice of its patent rights, interpretation of Red Wing's shoe, and these squarely and both factor.

21:07 The burden on the defendant here is greater to litigate in the Northern District of California rather than in Iowa.

21:28 The general burden, which I've already mentioned, that it's a further away.

21:42 On that note, looking as to the specifics of it, and the other thing, I guess,

21:54 Judge Dyk It depends solely on distance?

22:03 Appellee Attorney (Laurence M. Sandell) Factors there, I believe, are

22:14 I don't think you really answered my question.

22:27 Judge Dyk Why is there more burden?

22:29 And for your client to litigate in Iowa, in the Northern District of California, as opposed to Iowa or Texas, it would be the distance would be, would be one reason for it.

22:47 Appellee Attorney (Laurence M. Sandell) And the distance would probably be the main, the main reason they're actually you're on.

22:54 So we're talking about our burden there.

22:56 It's, it's further away, longer trips.

22:58 Of course, all of this came down before the COVID-19 crisis happened.

23:03 But, you know,

23:04 That may kind of add to the burden for us as well there.

23:08 But, but it's mostly distance distance, I would say, and in Texas, you know, that is our home district and there really is no burden argument to be made.

23:20 I'd also want to point out on this point.

23:22 I hope I answered your question, your honor, that Trimble's reply, Trimble's reply incorrectly implies that per diem argued to the DC district court that litigating a related declaratory judgment action.

23:34 would be inconvenient and burdensome to per diem.

23:37 And we didn't make that argument.

23:38 We chiefly argued that the DC suit was duplicate to this one, and that it was anticipatory, given how Trimble filed suit in the middle of continuing negotiations.

23:48 But I mean, I admit that we did make a perfunctory argument that DC lacked personal jurisdiction, but that was just based on its corporate home being in Texas with respect to general jurisdiction.

23:59 And because with respect to personal, with respect to specific jurisdiction.

24:03 Because per diem, was not an appropriate jurisdiction to deal with, so you don't have to file a suit.

24:04 did not direct patent enforcement efforts at the D.C. forum.

24:08 But the relevant point about the jurisdiction argument was not what it omitted.

24:14 Was that from the district court's dismissal of appellant's territory judgment action?

24:53 Appellant Attorney (Dan L Bagatell) Judge Newman, I'll just make a few quick points in rebuttal.

24:58 The first point is that Mr. Sandell repeatedly discussed flexibility,

25:04 but the reality is the district court didn't exercise any flexibility.

25:09 It simply addressed one factor, not all factors.

25:13 And the reality is this court has referred to the Red Wing shoe as an inflexible patent-specific rule.

25:19 Basically, it's turning all on one factor and everything else gets trumped.

25:22 That is inconsistent with the Supreme Court's jurisprudence,

25:26 as the district court, in fact, recognized in a footnote in his opinion.

25:30 Second of all, Mr. Sandell says we didn't identify any cases,

25:35 and we've specifically discussed Jack Henry,

25:38 and I think we've explained that.

25:39 And I think we've explained why this case is very similar to Jack Henry.

25:42 Jack Henry was not a bad faith.

25:44 The court did not find that there was any lying going on.

25:47 The only thing it said was that only your bank is being sued, not Jack Henry, which was true.

25:54 It's also true that Jack Henry didn't have much of a burden argument, but that's also true here.

25:59 They don't have a significant burden argument because they themselves want to litigate away from home.

26:07 As I said, that can easily be dealt with via a 14-04 motion,

26:11 there's only a marginal difference between California and Iowa and Texas when you're flying from Washington, D.C.

26:16 At the end of the day, the burden was on per diem code to make a compelling case

26:21 that it was unreasonable or unfair to adjudicate Northern California, and they just didn't do it.

26:25 And the reality is they do say that they can only be sued in the Eastern District of Texas.

26:30 They moved to dismiss in D.C. for lack of personal jurisdiction.

26:34 Their position is they can only be sued where they want to be sued.

26:37 There's no constitutional right to be sued only in your favorite form.

26:41 So we ask the court to reverse. Thank you.

26:43 Judge Newman Okay, any more questions?

26:46 Mr. Bagatello, both counsels, the case is taken under submission.