Companies are starting to rethink their expansion plans following the Supreme Court’s decision in TC Heartland, according to acting USPTO head Joseph Matal. Speaking at last week’s Intellectual Property Owners Association’s annual meeting, Matal highlighted the deep impact that the changes in the law around venue are having in the US.
“One thing that has struck me over this year is how many people have told me, “well, now that TC Heartland has come down and there’s some sort of test we’re not moving anything to East Texas anymore”,” he told IPO delegates. Matal didn’t name any names, although he did refer to one company that at the last minute had opted against building a data centre in East Texas because of the prospect of owning a physical presence in what has been until recently most patent owners’ litigation venue of choice.
In his comments, Matal maintained that, with the courts still filling in some of the blanks from the Supreme Court’s ruling, venue would remain a hot topic. “I don’t think the issue has been put to bed,” he said. “I think the district court judges out there aren’t going to walk away from this easily - they’ll continue to try to interpret the venue statute that keeps a broad jurisdiction for them.”
Matal was speaking before the Court of Appeals for the Federal Circuit judgment in In re: Cray, which was issued last Thursday, although he did reference it in his comments. In its decision, the CAFC ruled that the Eastern District of Texas had wrongly blocked a petition by supercomputer manufacturer Cray to have an infringement suit, brought against it by Raytheon, transferred out of the district.
In making its original ruling the East Texas court had proposed a four-factor test to help determine what constitutes a “regular and established place of business” — the part of the US statute which has become the focus for establishing venue since TC Heartland.
Raytheon’s argument that Cray could be sued in East Texas was largely based on the fact that the defendant had a coupe of employees working remotely in the district when the suit was filed. However, it did not rent or own any property in the area and so the Federal Circuit ruled that the company’s presence did not constitute a “regular and established place of business”.
If the Cray ruling had been allowed to stand then it seems certain that judges in America’s most popular patent venue would have been able to hold onto a lot more cases. But even while the local judges have been doing their best to hold onto their caseload, Eastern Texas has lost its place as the busiest patent district to Delaware and has seen numerous lawsuits transferred to other parts of the US.
A little over four months since the Supreme Court handed down its decision in TC Heartland the Fed Circuit decision provides some much-needed, additional guidelines on just where patent owners can bring infringement suits in the US. What that ruling and Matal’s IPO comments show is that as the US litigation landscape is going through some profound changes, corporate America is taking note.