Sometimes it seems that the courts go out of their way to find that they have personal jurisdiction over an accused tortfeasor. (Protostorm, LLC et al. v. Antonelli Terry Stout & Kraus, LLP et al.)
Antonelli Terry is a Virginia law firm. Protostorm is a limited liability company whose sole offices are in New York. Protostorm retained Antonelli Terry to secure patent and trademark protection for an online computer game and associated software. In performing these services, Antonelli Terry transmitted faxes, placed telephone calls and sent email messages to Protostorm’s general counsel in New York.
In 2001, Antonelli Terry advised Protostorm that the final date for filing a nonprovisional patent application was approaching. In response, Protostorm requested that Attorney Hogue undertake this task, although he was no longer with the Antonelli Terry firm. Hogue agreed to this, although he specified that he be paid directly, by Protostorm, and that the patent application “may be physically filed by the [Antonelli Terry] firm in Arlington, VA” which would provide a separate bill for its services.
Sometime later, Attorney Hogue sent a final draft of the application to Protostorm, enclosing a bill for his services and stating that he would “add nothing further and any changes will be made by you to eliminate confusion.” Thereafter, Antonelli Terry advised that the application had been filed, and billed for its services.
Although the foregoing seems routine, the sequel clearly was not. Protostorm claimed that, contrary to its instructions, Antonelli Terry had not filed a nonprovisional patent application in the U.S. Patent Office. Instead, the firm had filed an international PCT (Patent Cooperation Treaty) application, designating 86 (yup, 86) countries, but omitting the U.S. According to Protostorm, Antonelli Terry concealed this fact in subsequent status reports. Sometime later, Antonelli Terry allegedly abandoned this application, without notice to Protostorm.
When Protostorm subsequently discovered what it believed to be an infringement of its expected patent rights, it reported this information to Antonelli Terry, only to learn the true state of affairs. Protostorm, which apparently has no sense of humor, professed that a patent on its invention would have been worth “many millions of dollars.” It took the course of unhappy clients everywhere – it sued its attorneys. Specifically, it sued them in New York. Therein lies the point of this blog. Antonelli Terry moved to dismiss the lawsuit on the grounds that it had not “transacted business” in New York and, hence, it was not subject to the jurisdiction of the courts of New York. Attorney Hogue had been the only one to have visited with Protostorm, in New York, and he was not an employee of the firm.
Not good enough, said the New York court. “In the context of personal jurisdiction, New York courts focus on ‘the realities of the relationship in question rather than the formalities of agency law.’ [The] facts are sufficient to show that Hogue acted with [Antonelli Terry’s] knowledge, for its benefit, and in a manner resembling a joint venture.” Thus, his visits could be attributed to Antonelli Terry.
It’s nice to see that a court is making decisions on realities, rather than formalities. This could establish a precedent for courts everywhere – even for Congress.
THE LESSON TO BE LEARNED: Never assume that a court doesn’t or won’t have personal jurisdiction over you – act accordingly.