Broadway National Bank v. Plano Encryption Technologies, LLC
173 F. Supp. 3d 469
W.D. Tex.2016Background
- Plano Encryption Technologies, LLC (PET) is a patent-assertion entity owning patents relating to secure data transmission; it does not manufacture products.
- PET sent cease-and-desist / licensing letters (including the “Liddle Letter”) to Broadway Bank alleging infringement of three patents; Broadway Bank sued for a declaratory judgment of noninfringement.
- PET moved to dismiss for improper venue (Rule 12(b)(3)) or, alternatively, asked the court to decline jurisdiction on equitable grounds; Broadway sought jurisdictional discovery.
- PET’s contacts with the Western District of Texas consisted mainly of the Liddle Letter, similar letters to other Western District banks, and PET’s appearance and settlement in a related Western District declaratory action (National Bank), which it dismissed without contesting jurisdiction.
- The court evaluated venue under 28 U.S.C. § 1391(b) and (d), applying Federal Circuit personal-jurisdiction precedent governing declaratory judgment suits against patentees.
- Court found venue improper in the Western District and transferred the case to the Eastern District of Texas for efficiency (consolidated related cases there).
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether PET "resides" in the Western District under § 1391(b)(1)/(d) (i.e., whether its contacts would support personal jurisdiction if the district were a separate state) | Liddle Letter and other cease-and-desist letters, plus PET’s appearance in National Bank case, suffice to subject PET to jurisdiction and therefore make venue proper | Cease-and-desist letters alone do not create personal jurisdiction; PET’s other contacts are insufficient to establish the required "other activities" tied to enforcement in the forum | Held: PET does not "reside" in the Western District; cease-and-desist letters and the settlement appearance were insufficient to establish personal jurisdiction for venue purposes |
| Whether a substantial part of events giving rise to the claim occurred in the Western District under § 1391(b)(2) | Receipt of the Liddle Letter in San Antonio (Western District) is the event giving rise to Broadway’s declaratory-judgment claim | The real source of the claim is the existence/ownership and enforcement of the patents (located and enforced mainly in the Eastern District), not mere receipt of a letter | Held: § 1391(b)(2) not satisfied; substantial events occurred in the Eastern District, not the Western District |
| Whether Broadway Bank’s suggestion that PET waived venue challenge by not moving under Rule 12(b)(2) (personal jurisdiction) is valid | PET’s failure to move under 12(b)(2) concedes personal jurisdiction, making venue proper | § 1391(d) requires that a defendant have sufficient contacts with the particular district; waiving a statewide personal-jurisdiction defense does not waive a venue challenge to a specific district | Held: PET did not waive the venue defense by not filing a 12(b)(2) motion; waiver argument rejected |
| Whether jurisdictional discovery should be permitted | Broadway seeks limited discovery (depose Liddle, obtain settlement terms) to uncover additional contacts supporting venue | PET’s asserted contacts are undisputed and insufficient; proposed discovery is speculative, overly broad, and irrelevant | Held: Jurisdictional discovery denied as unnecessary and speculative |
Key Cases Cited
- Avocent Huntsville Corp. v. Aten Int'l Co., 552 F.3d 1324 (Fed. Cir. 2008) (cease‑and‑desist letters alone typically insufficient for personal jurisdiction in patent declaratory suits; need "other activities" related to enforcement)
- Red Wing Shoe Co. v. Hockerson‑Halberstadt, Inc., 148 F.3d 1355 (Fed. Cir. 1998) (patentee should be able to inform potential infringers of rights without submitting to jurisdiction in every forum)
- Burger King Corp. v. Rudzewicz, 471 U.S. 462 (U.S. 1985) (minimum contacts and due process framework for personal jurisdiction)
- Int'l Shoe Co. v. Washington, 326 U.S. 310 (U.S. 1945) (foundation for "minimum contacts" test)
- Autogenomics, Inc. v. Oxford Gene Tech. Ltd., 566 F.3d 1012 (Fed. Cir. 2009) (Federal Circuit law governs personal jurisdiction issues in patent cases)
- Silent Drive, Inc. v. Strong Indus., Inc., 326 F.3d 1194 (Fed. Cir. 2003) (letters may satisfy purposeful-direction element but still require related "other activities" to comport with fair play and substantial justice)