Juniper Networks Inc. v. Swarm Technology LLC

Filing 59

ORDER RE MOTION TO DISMISS. Signed by Judge James Donato on 12/21/2021. (jdlc3, COURT STAFF) (Filed on 12/21/2021)

Case 3:20-cv-03137-JD Document 59 Filed 12/21/21 Page 1 of 6

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UNITED STATES DISTRICT COURT

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NORTHERN DISTRICT OF CALIFORNIA

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JUNIPER NETWORKS INC., et al.,
Plaintiffs,

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United States District Court
Northern District of California

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Case No. 3:20-cv-03137-JD
ORDER RE MOTION TO DISMISS

v.

Re: Dkt. No. 39
SWARM TECHNOLOGY LLC,
Defendant.
Juniper Networks, Inc. and Apstra, Inc., seek a declaration of noninfringement of patents

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owned by Swarm Technology LLC. Dkt. No. 38. Swarm is an Arizona limited liability company

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with a principal place of business in Arizona. Id. at ¶ 9. Juniper and Apstra are Delaware

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corporations with principal places of business in California. Id. at ¶¶ 7-8. Apstra is a wholly

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owned subsidiary of Juniper. Id. at ¶ 8.

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Swarm has asked to dismiss the first amended complaint, Dkt. No. 38, under Federal Rules

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of Civil Procedure 12(b)(2) (lack of personal jurisdiction) and 12(b)(3) (improper venue). Dkt.

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No. 39. In the alternative, Swarm asks for a transfer to the District of Arizona. Dkt. No. 39 at 13.

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The parties have engaged in venue and jurisdictional discovery in connection with Swarm’s

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motion. Dkt. No. 42. Dismissal and transfer are denied.

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BACKGROUND

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The salient facts are straightforward. In July 2019, Swarm sent a letter to Juniper in

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California to “highlight a licensing opportunity” for U.S. Patent Nos. 9,852,004 (the ’004 patent)

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and 9,146,777 (the ’777 patent), with the disclaimer that this was “not and should not be construed

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as an accusation of infringement.” Dkt. No. 18-4 at ECF 3. Even so, the letter presented a claim

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chart to “demonstrate the correlation between claim 1 of the ’004 patent and [Juniper’s] Zero

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Case 3:20-cv-03137-JD Document 59 Filed 12/21/21 Page 2 of 6

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Touch Provisioning.” Id. Juniper and Swarm exchanged several emails discussing their stances

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on the claim chart. Id. at ECF 6-18.
In September 2019, Swarm sent a draft licensing agreement to Jupiter in California. Id. at

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ECF 18-23. Juniper told Swarm that it did not believe a license was necessary. Swarm disagreed,

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and Juniper and Swarm had a call in December 2019 to discuss the situation. Id. at ECF 25-27;

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Dkt. No. 26-1 at ¶ 5. Nothing appears to have happened after that until April 2020, when Swarm

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advised Juniper about Swarm’s newly issued U.S. Patent No. 10,592,275 (the ’275 patent). Dkt.

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No. 18-4 at ECF 29. Swarm reiterated its belief that Juniper needed a license for the ’004 patent

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and attached a new claim chart comparing the ’275 patent to Juniper’s products. Id. Swarm also

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sent Juniper a revised claim chart that presented additional claim elements. Id. at ECF 31. This

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United States District Court
Northern District of California

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declaratory relief action ensued.
Swarm had similar communications with Apstra in California. See Dkt. No. 36-3. Apstra

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was joined as a party to this action following Juniper’s acquisition of Apstra. See Dkt. Nos. 36

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and 38.
DISCUSSION

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I.

PERSONAL JURISDICTION
The Federal Circuit has concluded that the question of personal jurisdiction is “intimately

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involved with the substance of the patent laws,” and so Federal Circuit case law applies rather than

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the case law of the regional circuits. See Trimble Inc. v. PerDiemCo LLC, 997 F.3d 1147, 1152

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(Fed. Cir. 2021) (quoting Autogenomics, Inc. v. Oxford Gene Tech. Ltd., 566 F.3d 1012, 1016

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(Fed. Cir. 2009). When a claim of personal jurisdiction “is based on affidavits and other written

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materials in the absence of an evidentiary hearing, a plaintiff need only make a prima facie

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showing that defendants are subject to personal jurisdiction.” Elecs. for Imaging, Inc. v. Coyle,

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340 F.3d 1344, 1349 (Fed. Cir. 2003). For a motion to dismiss, “a district court must accept the

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uncontroverted allegations in the plaintiff’s complaint as true and resolve any factual conflicts in

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the affidavits in the plaintiff’s favor.” Id.

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“Determining whether jurisdiction exists over an out-of-state defendant involves two
inquiries: whether a forum state’s long arm statute permits service of process and whether
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Case 3:20-cv-03137-JD Document 59 Filed 12/21/21 Page 3 of 6

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assertion of personal jurisdiction violates due process.” Autogenomics, 566 F.3d at 1017. The

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Federal Circuit has concluded that California’s long-arm statute is coextensive with the limits of

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due process. See Cal. Gov. Code § 410.10; see also Trimble, 997 F.3d at 1152; Inamed Corp. v.

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Kuzmak, 249 F.3d 1356, 1360 (Fed. Cir. 2001). Consequently, the “two inquiries collapse into a

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single inquiry: whether jurisdiction comports with due process.” Inamed, 249 F.3d at 1360.

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The Federal Circuit has adopted a three-factor test to determine if jurisdiction over an out-

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of-state defendant comports with due process: “(1) whether the defendant ‘purposefully directed’

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its activities at residents of the forum; (2) whether the claim ‘arises out of or relates to’ the

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defendant’s activities with the forum; and (3) whether assertion of personal jurisdiction is
‘reasonable and fair.’” Xilinx, Inc. v. Papst Licensing GmbH & Co. KG, 848 F.3d 1346, 1352

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United States District Court
Northern District of California

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(Fed. Cir. 2017) (citing Inamed, 249 F.3d at 1360). “The first two factors correspond with the

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minimum contacts prong of the International Shoe Co. v. Washington, 326 U.S. 310 (1945)

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analysis, and the third factor corresponds with the fair play and substantial justice prong of the

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analysis.” Xilinx, 848 F.3d at 1352 (quoting Inamed, 249 F.3d at 1360).

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In the declaratory judgment context, warning letters satisfy the requirement of minimum

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contacts, but “such letters cannot satisfy the fairness prong of the Due Process inquiry.” Id. at

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1357 (quoting Red Wing Shoe Co., Inc. v. Hockerson-Halberstadt, Inc., 148 F.3d 1355, 1361 (Fed.

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Cir. 1998)). Even so, the Federal Circuit has cautioned that its decisions should not be read to

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create a “general rule that demand letters can never create specific personal jurisdiction.” Trimble,

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997 F.3d at 1156.

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Swarm’s main objection to minimum contacts is that the full scope of its licensing conduct

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in California should be ignored because only actions enforcing or defending a patent can give rise

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to specific jurisdiction. Dkt. No. 47 at 4-5 (citing Adobe Sys. Inc. v. Tejas Research, LLC, No. 14-

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cv-868-EMC, 2014 WL 4651654, at *3 (N.D. Cal. Sep. 17, 2014)). This goes too far. The

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Supreme Court and the Federal Circuit have been clear that a party’s broader contacts with a

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forum are relevant to personal jurisdiction inquiries, without limitation to patent enforcement

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conduct. See Ford Motor Co. v. Montana Eight Judicial Dist. Court, 141 S. Ct. 1017, 1026 (2021)

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(“[O]ur most common formulation of the rule demands that the suit ‘arise out of or relate to the
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defendant’s contacts with the forum.’”) (emphasis in original); Trimble, 997 F.3d at 1156 (“[T]he

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Supreme Court’s recent decision in Ford has established that a broad set of a defendant’s contacts

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with a forum are relevant to the minimum contacts analysis.”). A party’s overall contacts with a

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forum can demonstrate that “there is a strong relationship among the defendant, the forum, and the

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litigation -- the essential foundation of specific jurisdiction.” Trimble, 997 F.3d at 1156

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(quotations omitted). In some circumstances, nonexclusive patent licensing activity in a forum

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can establish personal jurisdiction. Id.

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The record demonstrates that Swarm had sufficient contacts in California to warrant a
finding of jurisdiction. In keeping with its tunnel vision view of jurisdiction, Swarm says that its
communications with Juniper were licensing discussions that cannot rise to the level of

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United States District Court
Northern District of California

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enforcement actions giving rise to personal jurisdiction in California. Dkt. No. 39 at 11. But “a

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specific threat of infringement litigation by the patentee is not required to establish jurisdiction

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and a declaratory judgment action cannot be defeated simply by the stratagem of a correspondence

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that avoids magic words such as litigation or infringement.” ABB Inc. v. Cooper Indus., LLC, 635

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F.3d 1345, 1348 (Fed. Cir. 2011) (quotations omitted) (quoting Hewlett-Packard Co. v. Acceleron

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LLC, 587 F.3d 1358, 1362 (Fed. Cir. 2009)). Swarm’s July 2019 letter was careful to say that it

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“should not be construed as an accusation of infringement,” and that it was simply

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“demonstrat[ing] the correlation between claim 1 of the ’004 patent and [Juniper’s] Zero-Touch

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Provisioning,” Dkt. No. 18-4 at ECF 3, but the claim chart it included in the letter sent a much

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more contentious message. This message was amplified in Swarm’s subsequent communications

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to the effect that Juniper required a license to continue to operate. Id. at ECF 3, 29. Swarm also

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told Juniper that it “failed to express any position that would prevail in a Markman hearing.” Id.

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at ECF 27. This conduct evidences an intent to fight, not just talk, as Swarm would have it. See,

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e.g., 3M Co. v. Avery Dennison Corp., 673 F.3d 1372, 1380 (Fed. Cir. 2012) (declaratory

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judgment defendant’s indication that it had analyzed the plaintiff’s product and would send claim

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charts “signaled its intent to escalate the dispute”); Hewlett-Packard, 587 F.3d at 1361

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(identification of specific claims and claim charts, or lack thereof, were factors in determining

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whether the district court had jurisdiction over the dispute).
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Case 3:20-cv-03137-JD Document 59 Filed 12/21/21 Page 5 of 6

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In addition to sending these and other communications to Juniper in California, Swarm

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was active in California in other ways. Swarm attended trade shows in 2017 and 2018 in Santa

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Clara, California, where its founder and CEO, Alfonso Iniguez sought to license Swarm’s patents.

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Dkt. No. 39-2 at ¶ 4. Swarm sent to several other California companies letters similar to those it

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sent to Juniper. Dkt. No. 45-12. Swarm exchanged communications with at least three other

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California companies about whether their product was covered by the Swarm patents and whether

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a license was necessary. Dkt. No. 45-13. Swarm also entered a non-disclosure agreement with a

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California company that stipulated to disputes being adjudicated by courts located in California.

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See e.g., Dkt. No. 45-20 at ECF 4.

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Swarm tries to downplay the scope of these contacts by saying that its licensing efforts

United States District Court
Northern District of California

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were not particularly successful in California, see Dkt. No. 47 at 5, but the point is of no moment

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for jurisdictional purposes. What matters are Swarm’s substantial efforts in California to get

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companies to take a license. “An entity that repeatedly sends communications into a forum state

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clearly has fair warning that its activity may subject it to the jurisdiction of a foreign sovereign.”

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Trimble, 997 F.3d at 1155 (cleaned up) (quoting Quill corp. v. North Dakota, 504 U.S. 298, 308

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(1992)). Swarm’s overall contacts with California, in combination with its communications with

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Juniper and Apstra, establish minimum contacts with California sufficient for personal jurisdiction

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in this Court.

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Swarm’s suggestion that its contacts with California do not satisfy the “fair and

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reasonable” prong of due process, Dkt. No. 47 at 5-6, does not lead to a different conclusion. In

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determining the reasonableness of exercising personal jurisdiction, the Federal Circuit applies the

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factors from Burger King Corp. v. Rudzewicz, 471 U.S. 462 (1985) and World-Wide Volkswagen

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Corp. v. Woodson, 444 U.S. 286 (1980), namely: (1) “the burden on the defendant”; (2) “the

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forum state’s interest in adjudicating the dispute”; (3) “the plaintiff’s interest in obtaining

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convenient and effective relief”; (4) “the interstate judicial system’s interest in obtaining the most

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efficient resolution of controversies”; and (5) “the shared interest of several states in furthering

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fundamental substantive social policies.” Trimble, 997 F.3d at 1157-59. Swarm does not address

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these factors, and simply repeats the same myopic argument that Swarm did not initiate
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Case 3:20-cv-03137-JD Document 59 Filed 12/21/21 Page 6 of 6

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enforcement actions in this forum. Dkt. No. 47 at 6-7. The point is no more persuasive here than

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it was earlier.
That Swarm may be a small company based in Arizona also does not weigh against

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personal jurisdiction. In this time of remote access court hearings and electronic discovery, it is

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hardly an undue burden on Swarm to litigate a case in this District. See Breckenridge Pharm., Inc.

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v. Metabolite Labs., Inc., 444 F.3d 1356, 1367 (Fed. Cir. 2006). Moreover, as California

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residents, Juniper and Apstra have a substantial interest in litigating this dispute in California, and

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California has a correspondingly substantial interest in its adjudication. Trimble, 997 F.3d at

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1158-59. There is also no “conflict between the interests of California and any other state,
because the same body of federal patent law would govern the patent noninfringement claim”

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United States District Court
Northern District of California

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regardless of the forum. Id. at 1159 (citing Xilinx, 848 F.3d at 1356). Consequently, Swarm has

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not made “a compelling case that the presence of some other considerations would render

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jurisdiction unreasonable.” Id. (quoting Burger King, 471 U.S. at 477).

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II.

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VENUE
Swarm’s suggestion in the alternative that venue is improper in this District is not well

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taken. Venue is appropriate in “a judicial district where any defendant resides,” and for purposes

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of venue, a defendant is resident in “any judicial district in which such defendant is subject to the

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court’s personal jurisdiction with respect to the civil action in question.” 28 U.S.C. § 1391.

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Because the Court finds that it can exercise personal jurisdiction over Swarm, venue is also proper

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in the Northern District of California.
CONCLUSION

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Swarm’s motion to dismiss for lack of personal jurisdiction and improper venue is denied.

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IT IS SO ORDERED.

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Dated: December 21, 2021

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JAMES DONATO
United States District Judge

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