Coinbase, Inc. v. Modern Font Applications LLC

District Court, N.D. California·Decided January 6, 2022·No. 3:21-cv-05305·Unknown

Opinion

San Francisco Division COINBASE, INC., Case No. 21-cv-05305-LB Plaintiff, ORDER DENYING MOTION TO DISMISS AND DENYING AS MOOT v. MOTION TO FOR JURISDICTIONAL DISCOVERY Re: ECF Nos. 22, 29 Defendant.

Coinbase, a company that offers a cryptocurrency platform, sued Modern Font Applications, a non-practicing entity, for a declaratory judgment of non-infringement after Modern Font sent a letter accusing Coinbase’s website and mobile applications of infringing Modern Font’s patents. Modern Font is a Utah company. It sent the letter from Utah to the attention of Coinbase’s legal department “c/o CT Corporation System” at CT Corporation’s address in Texas, alleging infringement in Texas “and likely other states.” CT Corporation is a corporate agent for service of process. Coinbase’s actual address in Texas public records is in San Francisco, California. Modern Font moved to dismiss the complaint for lack of personal jurisdiction and venue and for failure to state a claim. Coinbase opposed the motions and moved in the alternative for jurisdictional discovery. The court denies the motion to dismiss because Modern Font has minimum related to its enforcement of the patents in suit. These facts also establish venue. Coinbase otherwise pleaded its claims sufficiently. Coinbase’s motion for jurisdictional discovery thus is moot. In a June 18, 2021 letter to Coinbase, Modern Font accused Coinbase of infringing claims of three Modern Font patents — U.S. Patent Nos. 8,522,127, 9,886,421, and 9,892,093 — and offered it an opportunity to license the patents.1 On July 9, 2021, Coinbase sued Modern Font for a declaratory judgment of non-infringement.2 Coinbase is a Delaware corporation with “physical offices” in this district. Modern Font is a Utah corporation with its principal place of business in Utah.3 1. Facts Relevant to Jurisdiction and Venue The main issue in the motion to dismiss is whether personal jurisdiction and venue are proper in this district. Coinbase groups the jurisdictional facts into three categories: Modern Font’s targeting Coinbase in the district, Modern Font’s connections to the district, and Modern Font’s other patent- enforcement activities in California. Modern Font also asserts additional jurisdictional facts. 1.1 Modern Font’s Targeting Coinbase in the Northern District of California Listing a return address in Utah, Modern Font’s in-house lawyer Andrew Oliver sent the June 18, 2021 letter to Coinbase’s “Legal Department, c/o CT Corporation System,” at CT Corporation’s address in Dallas, Texas.4 CT Corporation is an agent for service of process. The Texas Office of the Comptroller’s website shows Coinbase’s mailing address in San Francisco, California.5 1 Compl. – ECF No. 1 at 4 (¶¶ 21–22, 24); Letter, Ex. 4 to id. – ECF No. 1-4. 2 Compl. – ECF No. 1 at 2 (¶ 1). 3 Id. (¶¶ 4–5). 4 Letter, Ex. 4 to id. – ECF No. 1-4. 5 Coinbase Status, Ex. B to Bloch Decl. – ECF No. 24-1 at 31. The court judicially notices the agency’s website (and later in this order judicially notices similar facts). Fed. R. Evid. 201(b)(2) (can judicially notice a fact that “can be accurately and readily determined from sources whose accuracy cannot reasonably be questioned”); Lee v. Cnty. of Los Angeles, 250 F.3d 668, 689–90 (9th Cir. 2001) (judicial notice of public records and undisputed facts in them); White v. Soc. Sec. Admin., No. 14-cv- 05604-JST, 2015 WL 3902789, at *2 (N.D. Cal. June 24, 2015) (five Social Security Administration In the letter, Mr. Oliver asserted that Coinbase was infringing the patents in suit, identified aspects of Coinbase’s website and mobile app that allegedly were infringing the patents, and offered a license to resolve the dispute.6 1.2 Modern Font’s and the Asserted Patents’ Connection to the Northern District Mr. Oliver is a partner in a San Jose law firm and lives in the district, where he “directs [Modern Font’s] patent licensing and enforcement activities with respect to the Asserted Patents,”7 including through lawsuits in the Central District of California against Dine Brands Global, BJ’s Restaurants, El Pollo Loco, and The Habit Restaurants.8 In May 2020, in a declaration in a Modern Font lawsuit in the District of Utah (where he opposed a protective order seeking to block his access to highly confidential source code), he summarized his patent litigation experience, his background as a software engineer, and his evaluation of source code.9 (Coinbase cites the last point as evidence of Mr. Oliver’s evaluation in the district of potential targets for Modern Font’s licensing and enforcement efforts.10) Modern Font also hired California attorneys in aid of its patent application and assertion efforts. John Lord (in the Central District) is its local counsel in four California cases (two in the Central District and two in the Northern District) involving the asserted patents.11 Modern Font also hired California law firms to prosecute “many of the [a]sserted [p]atents.” For example, Fenwick & West assisted with the prosecution of the ’127 patent, including through Brian Bannon, located in the (N.D. Cal. June 10, 2014) (Food and Drug Administration letters and press releases). The court can consider evidence outside the pleadings to determine whether it has personal jurisdiction. Deprenyl Animal Health, Inc. v. Univ. of Toronto Innovations Found., 297 F.3d 1343, 1347 (Fed. Cir. 2002). 6 Letter, Ex. 4 to Compl. – ECF No. 1-4. 7 Compl. – ECF No. 1 at 3 (¶ 12); Opp’n – ECF No. 24 at 7; Oliver Decl., Ex. D to Bloch Decl. – ECF No. 24-1 at 37 (¶ 3). 8 Opp’n – ECF No. 24 at 10 (citing lawsuits by case name and number). The court takes judicial notice of the other lawsuits. 9 Oliver Decl., Ex. D to Bloch Decl. – ECF No. 24-1 at 36–39. 10 Opp’n – ECF No. 24 at 10. 11 Id. at 11 (citing two Central District cases, where Mr. Lord entered appearances, and two Northern District cases, where he “presumably” would appear). The dockets for the two Northern District cases Northern District. Fenwick & West’s Mountain View office was listed as the correspondence address during prosecution with the USPTO.12 Lincoln Essig at the Knobbe Martens law firm in Irvine, California, assisted with the prosecution of the ’421 patent.13 1.3 Modern Font’s Patent-Enforcement Activities in California Modern Font has filed eighteen district-court lawsuits in the last three years. All involved the asserted ’421 patent. Four are in California (as discussed in the last section): two in the Central District and two (filed against Modern Font) in the Northern District. Two lawsuits in Utah were served on the target’s California agent for service of process.14 1.4 Modern Font’s Additional Jurisdictional Facts Modern Font propounded additional jurisdictional facts (beyond its status as a Utah corporation with a principal place of business in Utah). First, Coinbase is a remote-first company, as its website shows, and will remain so after the pandemic is over. According to its CEO (in a post on February 23, 2021), it is now a decentralized company with no headquarters: 52% of its employees joined after the pandemic started, and once in-office work is safe, 95% can work remotely still. Many employees who originally worked in San Francisco now work elsewhere. Also, designating one location as headquarters is counter to Coinbase’s crypto culture.15 Its SEC Form S-1 lists its address as “Address Not Applicable” because in May 2020, Coinbase became a remote-first company and thus does not maintain a headquarters.16 According to LinkedIn, its head of intellectual property is Ariana Woods, located in the

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Coinbase, Inc. v. Modern Font Applications LLC, (N.D. Cal. 2022).

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