Coinbase, Inc. v. Modern Font Applications LLC

Background

Coinbase filed a declaratory-judgment action seeking a ruling that it did not infringe three Modern Font patents: U.S. Patent Nos. 8,522,127, 9,886,421, and 9,892,093. Modern Font had sent Coinbase a June 18, 2021 letter identifying alleged infringement by Coinbase’s website and mobile applications and offering an opportunity to license the patents.

Coinbase is a Delaware corporation with physical offices in the Northern District of California. Modern Font is a Utah corporation with its principal place of business in Utah. Modern Font sent the letter from Utah to Coinbase’s legal department through CT Corporation System at an address in Texas. The court found that public records listed Coinbase’s address in San Francisco, California.

The opinion also describes Modern Font’s other connections to California related to the patents. Its in-house lawyer, Andrew Oliver, lived and worked in the district and directed Modern Font’s patent licensing and enforcement activities. Modern Font also used California counsel and had filed or been involved in patent-related cases in California involving the asserted patents.

Motions

Modern Font moved to dismiss under Federal Rule of Civil Procedure 12(b)(2) for lack of personal jurisdiction, under 28 U.S.C. § 1391 for improper venue, and under Rule 12(b)(6) for failure to state a claim. Coinbase opposed the motion and alternatively moved for jurisdictional discovery, meaning discovery aimed at developing facts about the court’s power to hear the case.

Personal Jurisdiction

The court applied Federal Circuit law because the personal-jurisdiction issue in this patent-related declaratory action was closely connected to patent law. The court considered whether Modern Font purposefully directed activities at California, whether Coinbase’s claims arose from or related to those activities, and whether exercising jurisdiction would be reasonable and fair.

The court held that Coinbase established specific personal jurisdiction. It concluded that Modern Font’s cease-and-desist letter was directed to Coinbase in California even though Modern Font sent it to CT Corporation’s Texas address. The court reasoned that Modern Font could not avoid jurisdiction by sending the letter to an out-of-state service agent when records identified Coinbase’s address in San Francisco.

The court also found additional relevant contacts. Oliver pursued Modern Font’s patent-enforcement and licensing activities in the district, and Modern Font pursued California patent-enforcement activities with California counsel involving the same patents. These contacts, combined with the letter, were sufficient to establish minimum contacts with the Northern District. Modern Font did not present a compelling showing that exercising jurisdiction would be unreasonable.

Because specific jurisdiction was sufficient, the court did not reach Coinbase’s separate argument for general jurisdiction. The court also denied Coinbase’s request for jurisdictional discovery as moot.

Venue

Modern Font argued that venue was improper because it was not subject to personal jurisdiction in the district and suggested that venue might instead lie in the Central District of California. The court denied that argument. At minimum, it held, venue was proper under 28 U.S.C. § 1391(b)(2) because a substantial part of the events or omissions giving rise to Coinbase’s claims occurred in the Northern District.

Failure to State a Claim

The court denied Modern Font’s Rule 12(b)(6) motion. Coinbase identified the website, iPhone application, and Android application that Modern Font had accused of infringement. The court held that Coinbase’s allegations were sufficient at the pleading stage because they identified the accused products and gave Modern Font enough notice of Coinbase’s non-infringement contentions.

Disposition

The court denied Modern Font’s motion to dismiss the case and denied Coinbase’s motion for jurisdictional discovery as moot. The order did not dismiss Coinbase’s action.