(CN) – The Federal Circuit reinstated a lawsuit accusing two video gaming machine makers of violating patents by displaying or selling their gaming machines at trade shows in Nevada.
The appellate panel in Washington, D.C., vacated a federal judge’s decision to dismiss, for lack of jurisdiction, Patent Rights Protection Group’s lawsuits against Video Gaming Technologies and SPEC International.
Tennessee-based VGT and Michigan-based SPEC argued that they lacked the “minimal contacts” in Nevada to support a lawsuit there.
U.S. District Judge James Mahan agreed and ruled that exercising personal jurisdiction would be unreasonable under 9th Circuit precedent.
But the Federal Circuit said the judge should have applied its precedent, not 9th Circuit law, to decide the proper venue.
SPEC and VGT acknowledged the error but argued that it was harmless, because Federal Circuit precedent would lead to the same conclusion. They claimed that defending the suit in Nevada would be “overly burdensome,” because their witnesses and key documents are in Michigan and Tennessee.
The Federal Circuit was unconvinced, saying Nevada “is not prohibitively burdensome for either SPEC or VGT.”
“Indeed, their admitted presence at numerous trade shows in Nevada indicates that, despite their arguments to the contrary, neither company faces a particularly onerous burden in defending itself in Nevada,” Judge Richard Linn wrote for the three-judge panel.
The court also vacated Judge Mahan’s refusal to allow jurisdictional discovery.
“Patent Rights’ request for jurisdictional discovery is not based on a mere hunch,” Linn wrote. He said the manufacturers’ claim that they attended the trade shows without intending to sell machines “strains credulity.”
“It is simply unrealistic to contend that either SPEC or VGT … would exhibit its products at a gaming trade show in Las Vegas, Nevada, one of the world’s larger gaming markets, without some prospect of commercial benefit,” Linn wrote.
“Under these circumstances, it is apparent that additional discovery may unearth facts sufficient to support the exercise of personal jurisdiction over one or both of the companies.
The panel vacated Mahan’s rulings and remanded for further consideration.