NexLearn, LLC v. Allen Interactions, Inc.


Docket No. 2016-2170, -2221

MOORE, SCHALL, HUGHES
June 19, 2017

Brief Summary: DC dismissal of NexLearn’s infringement and breach of contract due to breach of confidentiality relating to an NDA affirmed (e.g., “[w]hile a Kansas resident could purchase ZebraZappsfrom Allen’s website, what is missing is any evidence that such a sale has taken place.”)

Summary: NexLearn appealed DC dismissal of its patent infringement and breach of a nondisclosure agreement (NDA) between the parties (misusing confidential information) for lack of personal jurisdiction. Under the NDA, NexLearn shared its “social simulation software SimWriter®”. The NDA included a “choice of law provision stating Kanses law governs the agreement.” The DC agreed with Allen that NexLearn did not show the required “personal jurisdiction in order to bring its contract claim” since “NexLearn failed to allege that Allen had sufficient contacts with Kansas”. The FC panel explained the DC “can exercise personal jurisdiction over an out-of-state defendant pursuant to either general or specific jurisdiction”, general jurisdiction being found when a party’s “affiliations within a State are so ‘continuous and systematic’ as to render them essentially at home in the forum State” (Daimler AG, US 2014). “Specific jurisdiction…‘focuses on the relationship among the defendant, the forum, and the litigation” (Walden, US 2014) (three-part test: whether the defendant purposefully directed its activities at the forum State, whether the claims arise out of or relate to those activities, and whether the assertion of jurisdiction is reasonable and fair (Avocent, FC 2008). And the “out-of-state defendant must have ‘minimum contacts’ with the forum state ‘such that maintenance of the suit does not offend traditional notions of fair play and substantial justice’” (Int. Shoe, US 1945). “[S]upplemental jurisdiction” may be exercised “once a court has original jurisdiction over some claims” as long as the additional claims “are part of the same case or controversy”. The FC panel agreed with the DC (considered de novo), finding, e.g., “many of the contacts NexLearn assertes confer specific jurisdiction over Allen occurred prior to the…patent’s issuance”, Allen’s activities related to the “later development of ZebraZapps…are too attenuated to form a sufficient contact”, and the choice of law provision does “not render Allen subject to specific jurisdication in Kansas” (Burger King, US 1985). Its post-patent issuance interactive website including a dropdown menu allowing Kansas residents to buy the app was also found to be insufficient (“While a Kansas resident could purchase ZebraZappsfrom Allen’s website, what is missing is any evidence that such a sale has taken place.”) (Nuance Comm., FC 2010; Campbell Pet, FC 2008; Trintec, FC 2005; Helicopteros, US 1984 (“unilateral activity of another party or third person is not an appropriate consideration”)). Thus, the DC’s dismissal for lack of personal jurisdiction was affirmed. It also found that since there was no personal jurisdiction, the DC could not have supplemental jurisdiction over the breach of contract claim.

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