Pet-Chat Patent Suit Dismissed in California

     SAN FRANCISCO (CN) – A federal judge dismissed a patent dispute between two developers of competing products that allow pet owners to remotely interact with their pets.
     Both plaintiff Petzilla, Inc. and defendant Anser Innovation LLC are vying to corner essentially the same niche of the lucrative pet care and pet product market – enabling so-called “pet parents” to see, talk with and engage with their pets even when they are away from home for extended periods.
     The stakes are considerable. According to the American Pet Products Association, $55.72 billion was spent on pets in the U..S. in 2013, and it projects those expenditures will rise to $58.51 billion this year.
     While a large chuck of that spending is devoted to food, visits to veterinarians and the like, a sizable amount – somewhere between $13 billion and $17 billion, is spent on pet supplies, pet boarding, and other services.
     Anser Innovation, a Burnsville, Minn.-based technology company, owns the patent for the “Domestic Animal Telephone,” a product that uses a “‘greet & treat'” device – called PetChatz – which “allows pet owners to video-chat their pets and release an edible treat.”
     Petzilla, headquartered in San Jose, Calif., manufactures and sells a similar product, “PetziConnect,” and claims a de facto license for distribution in California through its business relationships with PayPal and a California distributor of the product.
     In 2013, Anser Innovation sent a cease and desist letter to Petzilla, claiming the company was wrongly infringing on its patent for the PetChatz device. Petzilla sued, seeking a judgment affirming that this was not the case, but then voluntarily dropped the lawsuit, only to file another complaint less that a week later.
     The latest lawsuit claimed that Anser Innovations patent on its device “failed to satisfy one or more provisions for patentability” and that it “surrendered its right” to enforce its patent claims when it appointed a distributor and retailer – nonparty Tuffy’s Pet Foods Inc. – to sell PetChatz in California.
     But before U.S. District Judge Edward M. Chen could get to those issues, he had to first determine whether he has jurisdiction over the dispute. In the end, he decided he did not.
     “Anser retains primary responsibility for sales of the PetChatz device through distributors, brokers and retailers that are either selected by Anser or identified as ‘sales leads’ by Tuffy’s,” Chen wrote. “Tuffy’s does not receive any revenues from sales of the PetChatz device. Instead, Tuffy’s is responsible for producing co-branded Treat Packs, including the treats for those Treat Packs for use with the PetChatz device or ‘on-the-go.'”
     “While the patent contemplates a food dispenser, the ‘Treat Pack’ is not a food dispenser. Indeed, the Tuffy’s agreement distinguishes between the two” and “does not confer upon Tuffy’s any rights to the Treat Pack dispenser,” Chen said. “Instead, Tuffy’s merely receives rights with respect to selling and manufacturing a co-branded pack of treats.”
     “The analogy to an exclusive license of the patent is inapplicable” because ” the Tuffy’s agreement confers no exclusive rights over the PetChatz product; it only covers a form of treats usable by PetChatz.”
     “In short, the treats and Treat Pack are not ‘covered’ by the patent, the limited non-patent licenses contemplated by the Tuffy’s agreement are nonexclusive, Anser retains its intellectual property rights under the Tuffy’s Agreement, and the Tuffy’s agreement does not confer upon or oblige Tuffy’s or Anser to enforce or defend enforcement of the patent.”
     Because Tuffy’s only sells the treats for PetChatz in California, Chen ruled “general jurisdiction does not apply,” Chen wrote.
     “As to specific jurisdiction, the cease-and-desist correspondence and the Tuffy’s agreement do not create specific jurisdiction,” he said.

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