The IP Litigation Team at Fried Frank is continuously tracking the impact of TC Heartland. Every week, we provide a roundup of the courts' latest orders and opinions concerning venue-related issues in patent infringement cases.
The summaries below are grouped by topic and cover the period August 2 – August 8, 2017.
Meaning of “Regular and Established Place of Business” – Federal Circuit Briefing
Previously we reported on a Petition for Writ of Mandamus filed by Cray disputing the district court’s fourfactor test for a “regular and established place of business,” In re Cray, 2017-129 (Fed. Cir.), Raytheon’s response, and amicus briefs in support of the petition. [For summaries of the briefs, please see JULY 19, 2017 - TC HEARTLAND WEEKLY UPDATE, GILEAD AND ALLIANCE OF TECH COMPANIES PRESS FEDERAL CIRCUIT TO CLARIFY MEANING OF “REGULAR AND ESTABLISHED PLACE OF BUSINESS”, and AUGUST 2, 2017 – TC HEARTLAND WEEKLY UPDATE]. On August 8, Cray filed its reply brief arguing: (1) that the plain language of “regular and established place of business” under 28 U.S.C. § 1400(b) requires a physical presence; and (2) In re Cordis, 769 F.2d 733 (1985), only stands for the narrow proposition that a “fixed” physical presence is not required to establish a “regular and established place of business.”
On the same day, Ericsson and Nokia filed a joint amicus curiae brief arguing that the court should deny Cray’s petition for writ of mandamus supporting Judge Gilstrap’s flexible four-factor test. [For a summary of Judge Gilstrap’s four-factor test, please see WHAT IS A “REGULAR AND ESTABLISHED PLACE OF BUSINESS?”]. The amici endorsed the test as sound policy that will allow “district courts discretion to consider the facts on the ground, rather than corporate formalities” to determine when venue is appropriate. The amici also argued that such a framework will promote administrative simplicity.
Meaning of “Regular and Established Place of Business” – District Court
The district court granted the defendant’s motion to dismiss for improper venue in Prolacta Bioscience, Inc. v. Ni-Q, LLC et al., 2-17-cv-04071 (C.D. Cal. August 7, 2017) (Order, Judge S. James Otero, Dkt. 32). The court held that the mere fact that the defendant CEO’s private residence is located in the district is not enough to establish a “regular and established place of business” for venue purposes. Further, the court found that the plaintiff did not sufficiently plead “acts of infringement” because it did not identify any infringing activity other than inadmissible hearsay that the defendant had been attempting to sell its products in the district.
In Percept Technologies, Inc v. Fove, Inc., 2-15-cv-02387 (D. Nev. August 8, 2017) (Order, Judge Richard F. Boulware, II, Dkt. 52), a District of Nevada court granted the defendant’s motion to transfer for improper venue. The defendant did not have any offices, employees, or land in Nevada. The defendant’s only conduct in Nevada included demonstrating a prototype of its virtual reality product at the Consumer Electronics Trade Show (CES) in Las Vegas and selling one allegedly infringing product to a Nevada resident. The court held that without more, this conduct was not enough to have a “regular and established place of business” in Nevada.
Waiver of Objection to Venue
In an ANDA case, Takeda Pharmaceuticals U.S.A., Inc. v. Mylan Pharmaceuticals Inc., 1:16-cv- 00987-RGA (D. Del. August 3, 2017) (Memorandum Order, Judge Richard G. Andrews, Dkt. 63), the defendant objected to venue in its answer, but did not contest venue when moving to dismiss. Later, after the Supreme Court’s TC Heartland decision issued, the defendant filed another motion to dismiss for improper venue. The court, however, held that the defendant waived its venue defense by not asserting its objection in its original motion to dismiss.
In Crest Audio, Inc. v. QSC Audio Products, LLC, 3:12-cv-00755 (S.D. Miss. August 7, 2017) (Order, Judge Carlton W. Reeves, Dkt 243), the court denied the defendant’s motion to dismiss or transfer for improper venue. After reviewing how other courts have dealt with the venue waiver issue, the court held that the Supreme Court’s TC Heartland decision was not an intervening change in the law that qualifies as an exception to waiver. Here, the defendant failed to raise the improper venue defense at the outset of the case and therefore waived its venue objection.
No Waiver of Objection to Venue
In Ironburg Inventions Ltd. v. Valve Corporation, 1:15-cv-04219 (N.D. Ga. August 3, 2017) (Order, Judge Thomas W. Thrash, Jr., Dkt. 116), the court granted the defendant’s motion to transfer venue. In its answer, the defendant denied venue was proper but later admitted it was proper in its counterclaims. The defendant also moved to dismiss the action at the outset of the case, but did not contest venue. After the Supreme Court issued its TC Heartland decision, however, the defendant moved to transfer for improper venue. The court granted the motion, finding that the defendant had not waived its venue defense because it was not available prior to TC Heartland. The court noted that the plaintiff would not be unduly prejudiced by a transfer because the case is not on the eve of trial (even though there had been a Markman hearing) and that a transfer was warranted because the plaintiff did not present any evidence that the defendant has a “regular and established place of business” in the district.
A Northern District of Illinois court granted the defendant’s motion to transfer venue in Lit v. Zazzle Inc., 1:16-cv-07054 (N.D. Ill. August 3, 2017) (Order, Judge Thomas M. Durkin, Dkt. 45). The defendant filed an original motion to dismiss at the outset of the case, but did not challenge venue until it amended the motion after the Supreme Court issued its TC Heartland decision. Because the original motion to dismiss was still outstanding, the court held that the improper venue challenge was not waived because the defendant was able to supplement its motion to dismiss before the court ruled on the original motion.
In Cutsforth, Inc. v. LEMM Liquidating Company, LLC et al., 0:12-cv-01200 (D. Minn. August 4, 2017) (Order, Judge Susan Richard Nelson, Dkt. 419), after years of litigation, Judge Nelson granted the defendant’s motion to transfer for improper venue. Notably, the defendant never contested venue until the Supreme Court’s TC Heartland decision issued. The defendant argued that the decision represented an intervening change of law and that any waiver of its improper venue defense should therefore be excused. The court agreed, concluding that instead of reaffirming its Fourco holding, the Supreme Court’s TC Heartland decision merely corrected the Federal Circuit’s misinterpretation of a legislative amendment in its VE Holding decision, and thus changed the law. The court therefore transferred the case because the plaintiff could not point to any evidence that defendant had a “regular and established place of business” in the district.
Providing a similar analysis as set forth in Cutsforth, Judge Nelson also granted defendant’s motion to transfer for improper venue in Valspar Corp. v. PPG Industries, Inc., 0:16-cv-01429 (D. Minn. August 4, 2017) (Order, Judge Susan Richard Nelson, Dkt. 110).
In POWERbahn, LLC v. Foundation Fitness, LLC et al., 1:17-cv-02965-AT (N.D. Ga. August 7, 2017) (Order, Judge Miranda M. Du, Dkt. 88), the court granted defendant’s motion to transfer. The court reasoned that the Supreme Court’s TC Heartland decision presented an intervening change to the law, which the Supreme Court itself recognized by observing the changing state of venue law since its Fourco decision. Therefore, the court held that the defendant had not waived its improper venue objection, even though it failed to raise it at the outset of the case.