Posts Tagged: "venue"

On April 15, U.S. District Judge William Conley of the Western District of Wisconsin issued an opinion and order in Raytheon Company v. Cray, Inc. granting summary judgment of non-infringement to defendant Cray on two supercomputer patents that had been asserted by Raytheon. The order is the likely conclusion to a case that became an important part of the debate on proper venue in patent cases after the U.S. Supreme Court’s decision in TC Heartland, and aspects of how this case played out after venue was transferred point to the importance of that particular decision on U.S. patent litigation.

In May of 2017, the United States Supreme Court delivered a unanimous decision in TC Heartland LLC v. Kraft Food Group Brands LLC that reversed the Federal Circuit and said that 28 U.S.C. 1400(b) remains the only applicable patent venue statute, that 28 U.S.C. 1391(c) did not modify or amend 1400(b) or the Court’s 1957 ruling in Fourco Glass Co. v. Transmirra Products Corp., and that the term “residence” in 28 U.S.C. 1400(b) means only the state in which a company is incorporated. Since TC Heartland, courts and plaintiffs have struggled to understand the real world application of this decision; most recently, the Federal Circuit in In re Google allowed a case to remain in the Eastern District of Texas because Google had servers there. Thus, while the decision has undoubtedly resulted in a shift away from the heyday of the Eastern District of Texas, the precise parameters of a “physical presence” sufficient to satisfy venue remain murky. To examine the effect TC Heartland has had so far, I recently sat down with Mike Oropallo of Barclay Damon, who has been out there litigating patent cases around the country. Among other observations, Oropallo says that—as usual—it all comes down to the Federal Circuit. Read on for more.

The Federal Circuit recently elected not to decide en banc “whether servers are a regular and established place of business, such that venue is proper under 35 U.S.C. § 1400(b). In re: Google LLC, No. 2018-152 (Fed. Cir. Feb. 5, 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). SEVEN Networks, LLC’s (SEVEN) patent infringement suit against Google arose in the Eastern District of Texas. SEVEN alleged Google’s servers, stored in a third-party ISP’s facility, where the allegedly infringing activities occurred, were a regular and established place of business, such that venue is proper under 35 U.S.C. § 1400(b). The district court denied Google’s motion to dismiss for improper venue. As a result, Google petitioned the Federal Circuit for a writ of mandamus directing the district court to dismiss or transfer the case for improper venue. On appeal, the panel majority found mandamus relief inappropriate because “it is not known if the district court’s ruling involves the kind of broad and fundamental legal questions relevant to § 1400(b),” and “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.”

The United States Court of Appeals for the Federal Circuit recently reversed a district court’s grant of motion to dismiss a declaratory judge action against Plano Encryption Technologies LLC (PET). The district court, which is situated in the Northern District of Texas, held that PET’s contacts with the Northern district did not subject it to personal jurisdiction and venue was thus improper. On appeal, the Federal Circuit reversed and remanded for further proceedings… While personal jurisdiction and venue are fact-dependent inquiries, sending patent enforcement letters to a recipient located and doing business in a forum can be enough to establish personal jurisdiction over the sending party in the forum such that venue is proper in the forum. Such a finding may be particularly true when the sending party’s “sole business is to enforce its intellectual property.”

The Federal Circuit’s recent venue decisions represent important developments in the interpretation of the patent venue statute. The application of these decisions will have immediate effects on defendants in patent infringement cases, and particularly those who are often subject to suit in popular districts like the Eastern District of Texas and the District of Delaware. While many open questions remain—perhaps most notably the treatment of domestic unincorporated associations—the Federal Circuit continues to delineate the scope of the patent venue statute.

The recent Tinnus opinion further defines the meaning of “regular and established place of business.” See Tinnus Enters. v. Telebrands Corp., Case No. 6:17-CV-00170-RWS (E.D. Tex. May 1, 2018). The opinion provides additional guidance to practitioners defining “residence” under TC Heartland, Micron, and Cray: teleworking employees are not enough, but leased retail space in brick-and-mortar stores might be.

Of the many lingering issues left in TC Heartland’s wake for domestic corporations, a Federal Circuit panel resolved several of them recently. In In re ZTE (USA), No. 2018-113, the court addressed two of the most common issues dogging appeals over the application of § 1400(b): whose law governs burden, and where does that burden lie. In In re Bigcommerce, No. 2018-120, the court addressed the territorial bounds mapped by the phrase “judicial district” in § 1400(b). Judge Linn authored both. 

In patent infringement suits brought against a corporate defendant in a state with multiple judicial districts, venue is only proper in the single district where the defendant maintains a principal place of business. If the principal place of business is not in the state of incorporation, venue is proper in the single judicial district where the office registered in its corporate filings is located.

The Federal Circuit denied HTC Corp.’s petition for a writ of mandamus seeking dismissal for improper venue… The patent venue statute does not apply to foreign corporations sued for patent infringement. These foreign defendants may be sued in any judicial district where they are subject to personal jurisdiction.

Q4 2017 saw a total of 981 patent infringement cases filed in district courts, the second-lowest total for any quarter in 2017 and the third-lowest total for any quarter dating to the third quarter of 2011. The 4,057 patent suits filed in district court through 2017 was the lowest total for an entire year since 2011… A week-by-week graph of patent filings shows that, while Eastern Texas saw a much greater share of patent filings than Delaware in the months leading up to the TC Heartland decision, Delaware filings have topped Eastern Texas filings in almost every week since the SCOTUS decision.

It is that time once again when we look back on the previous year in preparation to close the final chapter of 2017 in order move fresh into the year ahead. 2017 was a busy year in the patent world, although change was not as cataclysmic as it had been in past years, such as 2012 when the PTAB and post grant challenges began, in 2013 when AIA first to file rules went into effect, or in 2014 when the Supreme Court decided Alice v. CLS Bank. It was, nevertheless, still an interesting year… To come up with the list below I’ve reviewed all of our patent articles, and have come up with these top 10 patent stories for 2017. They appear in chronological order as they happened throughout the year.

With venue for patent infringement actions under § 1400(b) narrowed after TC Heartland and In re Cray, patent owners could use declaratory judgment (DJ) actions to secure their desired venue because venue in DJ actions is governed by § 1391. The Declaratory Judgment Act provides federal courts with the authority to “declare the rights and other legal relations of any interested party” where an “actual controversy” exists. 28 U.S.C. §§ 2201–02… The ITC offers patent owners yet another venue option outside of § 1400(b).

The U.S. Court of Appeals for the Federal Circuit recently issued its decision in In re Micron Tech., Inc., Case No. 2017-138 (Fed. Cir. Nov. 15, 2017), and resolved a question that had divided district courts and commentators throughout the United States following the U.S. Supreme Court’s ruling in TC Heartland LLC v. Kraft Foods Group Brands LLC, 137 S. Ct. 1514 (2017):  Did TC Heartland change the law of venue in patent cases such that a party’s failure to raise a venue defense in its initial responsive pleading could be excused?  The Federal Circuit held: “We conclude that TC Heartland changed the controlling law in the relevant sense: at the time of the initial motion to dismiss, before the Court decided TC Heartland, the venue defense now raised by Micron (and others) based on TC Heartland’s interpretation of the venue statute was not “available,” thus making the waiver rule . . . inapplicable.”

Arguing against Micron’s motion to dismiss, Harvard contended that TC Heartland only affirmed a previous precedent set by SCOTUS and that the improper venue challenge was available to Micron back when it filed its first motion in August 2016… The Federal Circuit concluded that the TC Heartland decision “changed controlling law in the relevant sense” and thus the Supreme Court’s interpretation of the patent venue statute was not available to Micron at the time of its August 2016 motion to dismiss.concluded that the TC Heartland decision “changed controlling law in the relevant sense” and thus the Supreme Court’s interpretation of the patent venue statute was not available to Micron at the time of its August 2016 motion to dismiss.

The TC Heartland decision follows the trend of eroding patent holder rights due to the potential for infringers to more easily move the lawsuit to a more favorable forum and in some cases have the issues of infringement and discovery for same stayed for a year or more.  As patents and mechanisms to enforce patents become weaker, the high-tech economy of Northern California will begin to diminish as foreign companies encounter fewer obstacles in their way to compete against companies with weaker IP rights… Because so much hinges on a stay motion in modern patent litigation cases, this predominant statistic influences where plaintiffs should consider filing their patent complaint.