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.
Meaning of Regular and Established Place of Business
The debate over venue in Hatch-Waxman cases continued in Bristol-Myers Squibb Co. v. Mylan Pharmaceuticals Inc., 17-379-LPS (D. Del. Nov. 28, 2017) (“Bristol-Myers II”), where Judge Stark ordered venue-related discovery over defendant’s argument that venue was improper under the Federal Circuit’s decision in In re Cray, No. 2017-129 (Fed. Cir. Sept. 21, 2017).
In September, Judge Stark held that Mylan Pharmaceuticals Inc. (“MPI”) may be subject to venue in Delaware even though MPI is not incorporated in the state and does not have a place of business there. See Bristol-Myers Squibb Co. v. Mylan Pharmaceuticals Inc., 17-379-LPS(D. Del. Sept. 11, 2017) (“Bristol-Myers I”). At the time, Judge Stark reasoned that venue could be proper because (i) MPI is frequently involved in ANDA litigation in Delaware; and (ii) MPI has corporate affiliates that do business in Delaware. Our analysis of Bristol-Myers I can be found here.
A few days after Bristol-Myers I, the Federal Circuit issued its opinion in Cray, emphasizing that a “regular and established place of business” for the purposes of venue requires a physical place in the district that is “of the defendant.” Under Cray, sending lawyers to court in Delaware is not a basis for venue. Nor, arguably, can venue be based on locations belonging to corporate entities other than the defendant (since those locations would, presumably, not be “of the defendant”). MPI thus objected to engaging in venue-related discovery following Cray.
In Bristol-Myers II, Judge Stark rejected MPI’s reading of Cray and ordered discovery to proceed. Judge Stark noted that the immediate issue in Cray was whether an employee’s house can be a place of business of his or her employer. The court explained that Cray therefore did “not address whether a physical place of a corporate affiliate or subsidiary or alter ego or agent can, for venue purposes, be attributed to the named defendant.” As such, the court found discovery concerning MPI’s corporate affiliates to be relevant to venue with respect to MPI. Notably, the District of Delaware’s position on this issue appears to be at odds with decisions in several other districts holding that an affiliate’s operations ordinarily do not create a place of business attributable to an affiliated entity (see our post here). Also, as we previously noted here, the court’s permissive approach to venue in the Bristol-Myers I case appears to be animated by a wider practical concern that limiting venue over out-of-state generic drug makers will prevent ANDA plaintiffs from consolidating their Hatch-Waxman litigation in Delaware.
Waiver of Objection to Venue
In Rillito River Solar LLC v. Wencon Development Inc., No. 16-cv-03245 (D. Ariz. Nov. 20, 2017), the court granted the defendant’s motion to transfer venue to the Northern District of California despite the plaintiff’s argument that the defendant had waived its venue objections. The court acknowledged that the defendant did not object to venue in response to the original complaint. The court noted, however, that the defendant asserted its venue objection in the answer to the amended complaint. Moreover, the court reasoned that even if defendant had not properly preserved its objection, there was still no waiver because TC Heartland was an intervening change in the law that excuses waiver. The court also held that “[i]improper venue may be challenged in a post-answer motion to dismiss as long as the objection was preserved in the answer.” Furthermore, the court held that asserting a counterclaim does not waive a venue defense that is otherwise preserved. Finally, the court held that the venue motion was timely because the litigation was still at a relatively early stage.
In Presby Patent Trust v. Infiltrator Water Technologies, LLC, 17-cv-00068 (D. Me. Nov. 29, 2017), the court granted defendant’s motion to transfer venue to the District of Delaware. The defendant, Infiltrator, filed its motion to transfer prior to the TC Heartland decision, relying primarily on the Supreme Court’s decision in Fourco Glass Co. v. Transmirra Products Corp., 353 U.S. 222 (1957). In response, the plaintiff, Presby, argued that Fourco was a dead letter. After the TC Heartland decision issued and reaffirmed Fourco, Presby switched to a novel argument: that venue must be determined at the time of filing and, as such, the district court should ignore the subsequently issued TC Heartland decision. The court rejected Presby’s argument, noting that venue must be based on the facts existing at the time of the complaint, but courts must also still apply changes in the law. Applying TC Heartland, the court noted that Infiltrator is incorporated in Delaware and has no place of business in Maine. As such, venue was improper in Maine.