Judge Burke Declines to Assert Personal Jurisdiction over Texas LLC

May 12, 2016

Publication| Intellectual Property

In Fidelity National Information Services, Inc. v. Plano Encryption Technologies, LLC, C.A. No. 15-777-LPS-CJB (D. Del. Apr. 25, 2016), a declaratory judgment action, Magistrate Judge Burke concluded in a report and recommendation that the Court did not have personal jurisdiction over the defendant, Plano Encryption Technologies, LLC, a Texas limited liability company (“Plano”).

The plaintiff argued that Plano was the alter ego of its managing member, a Delaware company, and thus subject to suit in Delaware. Judge Burke stated that the complaint merely recited the factors for consideration under the alter ego theory without pleading supporting facts; thus, the plaintiff was “leaps and bounds away from making [the required] prima facie showing” of personal jurisdiction. Because Judge Burke concluded that the plaintiff made “a very weak submission as to the applicability of the alter ego theory,” the Court refused to allow jurisdictional discovery on what Judge Burke characterized as “a ‘fishing expedition’ in order to allow [the plaintiff] to ‘construct a basis for jurisdiction.’”

A finding of no personal jurisdiction by itself would leave Plano’s Delaware managing member in the suit. But because this Delaware entity was neither the patentee nor a licensee attempting to license and enforce the patents-in-suit, Judge Burke concluded that the Court would not have subject matter jurisdiction over the Delaware entity. According to Judge Burke, the Court could not hear a declaratory judgment claim of no infringement against a defendant that did not have standing to defend the patents.

Analysis: This case highlights the importance of pre-suit investigation into personal jurisdiction. Although the District of Delaware often orders jurisdictional discovery under the appropriate circumstances, if the complaint lacks sufficient factual support for the theory of personal jurisdiction, jurisdictional discovery may be denied.

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