Google Wins Mandamus at Federal Circuit in EDTX Venue Dispute

For venue to be proper based on a “regular and established placed of business” analysis, a regular, physical presence of an employee or other agent of the business must be present in the “place of business” and must be conducting the defendant’s business.

Google logo on the wall of the server room. Editorial 3D. The Federal Circuit recently granted a petition for a writ of mandamus to Google LLC (“Google”) finding that venue was improper for a case filed by Super Interconnected Technologies LLC (“SIT”) against Google in the Eastern District of Texas. See In re Google LLC, No. 2019-126, 2020 U.S. App. LEXIS 4588 (Fed. Cir. Feb. 13, 2020) (Before Dyk, Wallach, and Taranto, Circuit Judges) (Order for the Court, Dyk, Circuit Judge) (Concurring opinion, Wallach, Circuit Judge).

SIT brought suit against Google in the Eastern District of Texas arguing that venue was proper under the patent venue statute (28 U.S.C. § 1400(b)). SIT filed its suit after the Supreme Court’s decision in TC Heartland LLC v. Kraft Foods Group  Brands LLC, 137 S. Ct. 1514, 1517 (2017), which held that “a domestic corporation ‘resides’ only in its State of incorporation for purposes of the patent venue statute,” and after the Federal Circuit’s decision in In re Cray, Inc., 871 F.3d 1355, 1360 (Fed. Cir. 2017), which held that a “regular and established place of business” under the patent venue statute must be: (1) ‘a physical place in the district’; (2) ‘regular and established’; and (3) ‘the place of the defendant.’” SIT alleged venue was proper under the patent venue statute because Google allegedly committed acts of infringement in the Eastern District of Texas and has a regular and established place of business there.

SIT’s allegation of venue was based on Google’s use of several Google Global Cache (“GGC”) servers which were located in the Eastern District of Texas at the time of SIT first brought suit. The GGC servers were installed, maintained, and hosted by third party Internet Service Providers (“ISPs”). The ISPs would route Google’s traffic through the GGC servers within the District prior to sending the traffic to Google’s central data storage servers located outside of the District.

The petition for writ of mandamus arrived at the Federal Circuit after Google’s motion to dismiss was denied by the United States District Court for the Eastern District of Texas. The District Court concluded that the GGC servers qualified as Google’s “regular and established business” under Cray’s venue test. Google subsequently petitioned the Federal Circuit for a writ of mandamus asking that the Federal Circuit direct the District Court to dismiss the case for lack of venue under the patent venue statute.

The Federal Circuit acknowledged that it had previously denied a writ of mandamus filed by Google for a case having similar facts stating at the time that “it would be appropriate to allow the issue to percolate in the district courts so as to more clearly define the importance, scope, and nature of the issue for us to review.” See In re Google LLC, No. 2018-152, 2018 U.S. App. LEXIS 31000, at 6 (Fed. Cir. Oct. 29, 2018). The Court believed the time was now appropriate to address this issue through a writ of mandamus noting that several similar cases had now been heard in various district courts with conflicting results. The Court identified two issues that should be addressed: (1) whether a server rack, a shelf, or analogous space can be a “place of business,” and (2) whether a “regular and established place of business” requires the regular presence of an employee or agent of the defendant conducting business.

Google first argued that the GGC servers did not constitute a place of business because the “place of business” requirement should require a real property or leasehold interest and Google had neither a real property nor a leasehold interest in the GGC servers. The Court quickly dismissed this argument concluding that Cray itself recognized that a “place of business” is not restricted to real property that the defendant must own or lease. The Court viewed Google’s use of the GGC servers to constitute a “place of business” in the same way that a merchant at a flea market would be considered to have a place of business at a table even though the merchant had neither a real property nor a leasehold interest.

Google next argued that a “regular and established place of business” under the second prong of Cray requires a place where an employee or agent of the defendant is conducting the defendant’s business. The Federal Circuit found this argument persuasive because it was supported by 28 U.S.C. § 1694, which was the second sentence of the original patent venue statute, and the related legislative history. §1694 assumes that the defendant will have a “regular and established place of business” within the meaning of the venue statute only if the defendant also has an “agent… engaged in conducting such business.” The Court concluded that a “regular and established place of business” requires the regular, physical presence of an employee or other agent of the defendant conducting the defendant’s business at the alleged “place of business.”

Finding that a defendant must have regular, physical presence of an employee or other agent of the defendant conducting the defendant’s business at the alleged “place of business,” the Court concluded that the Eastern District of Texas was not a proper venue for this case because Google does not have an employee or agent regularly conducting its business within the District. The Court limited this holding by stating that it does not hold that a “regular and established place of business” will always require the regular presence of a human agent. That is, the Court did not address whether a machine could be an agent of a business. Nor did the Court decide what might be inferred from Congress’ amendment to the venue statute in the America Invents Act concerning automated teller machines. See AIA § 18(c).

In a concurring opinion, Circuit Judge Wallach agreed with the conclusion but encouraged district courts to further consider Google’s business model. Circuit Judge Wallach expressed frustration that Google’s business model was not clear and that it’s possible the end user could be considered an agent of Google “by entering searches and selecting results… providing data which Google monetizes as the core aspect of its business model.”

EDITORIAL NOTE: If you are looking for discussion of a different In re Googlecase regarding venue where the Federal Circuit en banc denied deciding whether servers create a regular and established place of business please see this recent article, also by the same authors dealing with a case between Google and SEVEN Networks.

Photography Courtesy of Deposit Photos
ID: 195563908
Copyright: alexeynovikov
Upload Date: May 12, 2018
Editorial Use Only.

The Author

Robert Schaffer

Robert Schaffer is an intellectual property partner at Troutman Sanders. Bob applies more than 30 years of experience to IP counseling and litigation. His work includes patent procurement, strategic planning and transactional advice, due diligence investigations, district court patent cases, and Federal Circuit appeals. He regularly handles complex and high-profile domestic and international patent portfolios, intellectual property agreements and licensing, IP evaluations for collaborations, mergers, and acquisitions. In disputed court cases Bob’s work includes representing and counseling client in ANDA litigations, complex patent infringement cases and appeals, and multidistrict and international cases. In disputed Patent Office matters his work includes representing and counseling clients in interferences, reexaminations, reissues, post-grant proceedings, and in European Oppositions. For more information and to contact Bob please visit his profile page at the Troutman Sanders website.

Robert Schaffer

Joseph Robinson has over 20 years of experience in all aspects of intellectual property law. He focuses his practice in the pharmaceutical, life sciences, biotechnology, and medical device fields. His practice encompasses litigation, including Hatch-Waxman litigation; licensing; counseling; due diligence; and patent and trademark prosecution. He has served as litigation counsel in a variety of patent and trademark disputes in many different jurisdictions, and has also served as appellate counsel before the Court of Appeals for the Federal Circuit. Joe also focuses on complex inter partes matters before the U.S Patent and Trademark Office, inventorship disputes, reexaminations and reissues. His experience includes numerous interferences, a particular advantage in new U.S. Patent and Trademark Office post-grant proceedings. He also counsels on patent–related U.S. Food and Drug Administration issues, including citizen petitions, Orange Book listing, and trademark issues. For more information and to contact Joe please visit his profile page at the Troutman Sanders website.

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Discuss this

There are currently 7 Comments comments.

  1. Anon March 1, 2020 8:23 am

    This appears to be the lynchpin:

    The Court limited this holding by stating that it does not hold that a “regular and established place of business” will always require the regular presence of a human agent.

    So (mind you, I have not as of yet attempted to derive the answer myself from reading the case), what is the distinction here that appears to depend on a reading that a real person MUST be involved in order to meet the (admittedly conflicted and percolated issue of) “or agent” aspect of the regular and established place of business test?

    I will be rather disappointed if this decision is solely a “we have reached a desired Ends, but do not indicate the Means” type of decision.

  2. Anon March 1, 2020 8:35 am

    … “encouraged district courts to further consider Google’s business model. Circuit Judge Wallach expressed frustration that Google’s business model was not clear and that it’s possible the end user could be considered an agent of Google

    How was this consideration not a part of a remand to decide this issue?

    This very much appears to be a case of Google seemingly willing to play both sides of an issue and escape liability even though liability MUST incur based on the choices of Google.

    This appears to be manifestly unjust.

    And separately from venue, and turning to patent infringement liability (particularly joint liability), would not the choice by Google to have its business mode fold in the actions of its customers (in theory then making those customers the agent of Google in addition to being ‘just customers’), impact the analysis of just who must be joined in an infringement suit? Does this rise to the level that customers need not be included (even though they appear to be needed to be included for consideration as they are necessary to have any completed act that would serve as a basis for any patent infringement claim against Google?

    I ‘get’ that there may well easily be some set of patents to which this last thrust does not apply, so the last thrust is only directed at the subset that does apply — which appears to include the patents of the immediate case.

  3. Anon March 1, 2020 2:57 pm

    There is a fair amount of substance in this decision, but what caught my eye in the transition from section III to section IV of the decision (I was looking for the ‘agent not necessarily a human’ discussion) Was this:

    If there is dissatisfaction with the resolution we reach, “[t]he remedy for any dissatisfaction with the results in particular cases lies with Congress and not with [the courts]. Congress may amend the statute; we may not.” Griffin v. Oceanic Contractors, Inc., 458 U.S. 564, 576 (1982); see also BigCommerce, Inc., 890 F.3d at 985 (“We cannot ignore the requirements of the statute merely because different requirements may be more suitable for a more modern business environment. Such policy-based arguments are best directed to Congress.”).

    We conclude that the Eastern District of Texas was not a proper venue because Google lacked a “regular and established place of business” within the district since it has no employee or agent regularly conducting its business at its alleged “place of business” within the district.

    IV

    To be clear, we do not hold today that a “regular and established place of business” will always require the regular presence of a human agent, that is, whether a machine could be an “agent.” Such a theory would require recognition that service could be made on a machine pursuant to 28 U.S.C. § 1694. Nor do we decide what might be inferred in this respect from Congress’ amendment to the venue statute in the AIA concerning automated teller machines. See AIA § 18(c).

    In particular, The beginning of my quote appears to be particularly used in a selective measure — vis a vis patent eligibility.

    It’s use (and reasoning here) seems to be ‘conveniently forgotten’ when the “policy change’ is one indicated as desired by the Supreme Court.

    Last I checked, the Supreme Court and Congress occupied expressly different branches per the Constitution.

  4. angry dude March 1, 2020 6:34 pm

    @Anon

    Dude,

    Nobody here wants to read mush less understand your over-complicated and mostly meaningless English sentences

    Who is paying you to post this crap ?

    You (and your twin brother/sister/domestic partner TCFM wtf his real name is) are just distracting reader’s attention from the real pressing issue – uncontrolled and unpunished corruption in wash dc

  5. Anon March 2, 2020 12:13 am

    Lol – because who wants to talk about anything other than what angry dude wants to rant about…?

    Like I said, angry, this is a patent LAW blog, and not ‘the angry dude’s emotional rant blog.’

    Get over yourself already.

  6. Pro Say March 2, 2020 11:00 am

    “Nobody here wants to read mush less understand your over-complicated and mostly meaningless English sentences.”

    My friend and comrade in the good and honorable fight, angry dude . . . while I, like you (and our 1,000’s of fellow beleaguered inventor brethren) are angry, that Anon (who rest assured is also plenty angry) is willing (and able) to take the time to “dig deep” on so many IP issues of importance brings great value to IP Watchdog.

  7. Jam March 2, 2020 12:55 pm

    “Before Dyk, Wallach, and Taranto, Circuit judges”
    One could argue that two of the three biggest shills for the anti-patent pro SV movement sat for this case. I.e., this case was decided the moment the panel was identified, before the ink was dry on the naming papers, and before the bits flipped in the database. If their opinions were properly founded on logic, fact, and law, then such certainty could be comforting. To the contrary, it is easy to argue that such proper foundation cannot be found and is, instead, replaced by simple judicial hand waving that ignores logic and fact, if not also the law (see especially American Axle).

    See
    Am. Axle & Mfg., Inc. v. Neapco Holdings LLC, 939 F.3d 1355, 1356 (Fed. Cir. 2019) (“Before Dyk, Moore, and Taranto, Circuit Judges”, holding claims ineligible under 101).
    Cont’l Circuits LLC v. Intel Corp., 915 F.3d 788, 791 (Fed. Cir. 2019) (“Before Lourie, Linn, and Taranto, Circuit Judges” vacating judgment of noninfringement).
    In re: Google LLC, 914 F.3d 1377 (Fed. Cir. 2019) (Before Prost, Chief Judge, Newman, Lourie, Dyk, Moore, O’Malley, Reyna, Wallach, Taranto, Chen, Hughes, and Stoll, Circuit Judges) (Dissent by Reyna, Circuit Judge, joined by Newman and Lourie, Circuit Judges) (“The court elects not to decide en banc the question of whether servers or similar equipment in third-party facilities are a regular and established place of business, such that venue is proper under 35 U.S.C § 1400(b).”).
    Duncan Parking Techs., Inc. v. IPS Group, Inc., 914 F.3d 1347, 1350 (Fed. Cir. 2019) (“Before Lourie, Dyk, and Taranto, Circuit Judges”) (summary judgment of noninfringement remanded).