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 July 10 – July 18, 2017.
Mandamus Petition Filed
On July 17th, Cray Inc. filed a mandamus petition seeking review of Judge Gilstrap’s June 29, 2017 ruling in Raytheon Company v. Cray, Inc., 2-15-cv-01554 (E.D. Tex. June 29, 2017) (Order, Dkt. 289). As we previously explained [see WHAT IS A "REGULAR AND ESTABLISHED PLACE OF BUSINESS”?], Judge Gilstrap’s order indicated that venue under the second prong of § 1400(b) should be considered based upon the “totality of the circumstances” utilizing four-factors: presence in the district, representations about presence in the district, benefits defendant received from the district, and defendant’s targeted interactions with the district. If the Federal Circuit grants this petition, it will certainly clarify the issues concerning “regular and established place of business.”
Meaning of Regular and Established Place of Business
In Realtime Data LLC v. Acronis, Inc., 6-17-cv-00118 (E.D. Tex. July 14, 2017) (Report and Recommendations, Magistrate Judge John D. Love, Dkt. 29), the defendant argued venue was not proper in its answer, asserting that it “does not own, lease, or rent any office space in Texas. . . or employ any personnel in Texas.” After TC Heartland issued, Defendant filed a June 6, 2017 motion to dismiss for improper venue, asserting the same argument, but with a supporting declaration from a corporate representative. Plaintiff failed to respond to the motion. Based on the defendant’s uncontroverted statements, the Magistrate Judge recommended granting the motion to dismiss, noting that the defendant did not reside in Texas or have a permanent and continuous presence to qualify as a regular and established place of business.
Waiver of Objection to Venue
In Navico, Inc. et al v. Garmin International, Inc. et al., 2:16-cv-00190 (E.D. Tex. July 11, 2017) (Order, Judge Rodney Gilstrap, Dkt 163), the court denied Defendants' motion to dismiss or transfer for improper venue. The court found that defendants waived the venue defense because they litigated the case through claim construction and engaged in substantial motion practice without objecting to venue. The defendants argued that TC Heartland decision was an intervening change of law, thus triggering an exception to the waiver doctrine. The court disagreed.
In Realtime Data LLC v. CARBONITE, INC. et al., 6:17-cv-00121 (E.D. Tex. July 11, 2017) (Report and Recommendations, Magistrate Judge John D. Love, Dkt 56), the court held that the defendant waived its venue objection even though the defendant denied that venue was proper in its answer and even expressly stated that, “to the extent the U.S. Supreme Court decides [TC Heartland] ... [it] reserves the right to amend its answer and/or seek to dismiss this case based on improper venue.” The court nonetheless found there was a waiver because the defendant failed to raise the venue defense in its initial motion to dismiss. The Court also held that TC Heartland does not qualify as an intervening change in the law.
In Realtime Data LLC v. Barracuda Networks, Inc., 6-17-cv-00120 (E.D. Tex. July 14, 2017) (Report and Recommendations, Magistrate Judge John D. Love, Dkt. 30), the defendant admitted venue was proper in its answer. After TC Heartland issued, the defendant filed a motion for leave to file an amended answer challenging venue along with a motion to dismiss for improper venue. The court denied the motion to amend because the defendant failed to file before the deadline to amend its pleadings. The court also recommended denying the motion to dismiss because TC Heartland does not represent a change in the law and therefore the defendant waived its objection to venue.
In Reebok International Ltd. v. TRB Acquisitions LLC et al., 3-16-cv-01618 (D. Or. July 14, 2017) (Order, Judge Michael H Simon, Dkt. 53) the court denied defendants’ motion to dismiss for lack of venue, finding that defendants waived their objection to venue by failing to raise the defense in their answer. The court reasoned that the defendants should have known before they answered on March 3, 2017 that venue would be addressed by the then-pending TC Heartland case. While defendants preserved their right to challenge venue in papers filed before the answer, they nonetheless failed to address the issue in the answer itself. The court also found that the defense of improper venue was not “unavailable” to defendants before TC Heartland issued and TC Heartland is not an intervening change in the law that triggers an exception to waiver doctrine.
In Fox Factory, Inc. v. SRAM, LLC, 3:16-cv-00506 (N.D. Cal. July 18, 2017) (Order, Judge William H. Orrick, Dkt. 72), the court denied the defendant’s motion to dismiss or transfer for improper venue. The court found that defendant waived the defense by not objecting to venue in its answers to plaintiff’s complaints and amended complaints. The court also held that the defense of improper venue was not “unavailable” to defendants before TC Heartland issued and TC Heartland is not an intervening change in the law that triggers an exception to waiver doctrine. Even though the case was in its infancy, the court noted that a “lack of litigation history is not dispositive” to excuse defendant’s waiver of the venue defense.
No Waiver of Objection to Venue
In Hand Held Products et al. v. Code Corporation, 2:17-cv-00820 (D.S.C., July 18, 2017) (Order, Judge Mark Gergel, Dkt. 63), the court granted a motion to transfer to the District of Utah due to improper venue. The defendant admitted that venue was proper in its first answer, but denied venue was proper in its April 27, 2017 amended answer. Ordinarily, failing to raise venue in the first answer would result in a waiver of the defense. The court, however, stressed that waiver is an equitable doctrine and that defendant reasonably believed that the decision in VE Holding controlled venue. Given that there was no prejudice to plaintiff, since the case had just begun, the court held that defendant had not waived its venue defense. The court also found that the defendant lacked a regular and established place of business in South Carolina since it had only one local employee who did not make sales, interact with customers, or maintain any inventory.