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 30 – September 5, 2017.
Meaning of “Regular and Established Place of Business”
In American GNC Corp. v. ZTE Corp., ZTE (USA) Inc., ZTE (TX) Inc., Civ. No. 2:17-cv-107-RWS-RSP (E.D. Tex. Sept. 5, 2017), the Eastern District of Texas granted the defendant’s motion to transfer to the Northern District of Texas. The court held that the defendant, ZTE, met its burden of establishing that the Dallas area is “clearly more convenient.” Although the court ultimately transferred the case, it also noted that the defendant had failed to show that venue was improper in the Eastern District of Texas. In particular, the court held that venue was adequately alleged in the Eastern District because the plaintiff supplied a document from ZTE stating that it had a call center in Plano, Texas (within the Eastern District) with “60+ dedicated ZTE representatives.” The court noted that such a call center would amount to a regular and established place of business.
In Herbert E. Townsend, v. Brooks Sports, Inc., Civ. No. 2:17-cv-62-FtM-38MRM (M.D. Fl. Aug. 31, 2017), the Middle District of Florida held that employing a full-time information technology specialist in the judicial district was insufficient to create a “regular and established place of business” under the second prong of the patent venue statute, 28 U.S.C. § 1400(b). In reaching this decision, Judge Chappel declined to adopt the four-part test for determining a “regular and established place of business” that the Eastern District of Texas articulated in Raytheon Co. v. Cray, Inc., Civ. No. 2-15-cv-01554, 2017 U.S. Dist. LEXIS 100887, 2017 WL 2813896 (E.D. Tex. Jun. 29, 2017). For a full summary of the case, please see our article entitled “District Court in Florida Rejects Raytheon Test for Determining a Regular and Established Place of Business.”
No Waiver of Objection to Venue
In Smart Wearable Techs., Inc. v. TomTom, Inc., Civ. No. 3:16-cv-49 (W.D. Va. Aug. 31, 2017), the Western District of Virginia granted TomTom’s motion to transfer venue. The plaintiff did not dispute that venue was improper following TC Heartland, but argued that TomTom had waived its right to challenge venue when TomTom failed to raise venue in its initial Rule 12 response. The court observed that courts are split on whether TC Heartland constitutes an intervening change in the law, which is an exception to the waiver doctrine. Ultimately, the court agreed with the line of cases finding that TC Heartland changed in the law, noting “[t]his precise argument was previously foreclosed by controlling precedent… Thus, as a practical matter, the legal basis for TomTom’s motion was unavailable until the Supreme Court decided TC Heartland.” Additionally, the court noted that even if the defense of improper venue had technically been available to TomTom before TC Heartland, the court still would not have found waiver given (i) the early stage of the case, (ii) there was no intentional delay by TomTom, and (iii) TomTom expressly denied the venue allegation in its answer.
In Columbia Sportswear North America, Inc. v. Seirus Innovative Accessories, Inc., Civ. No. 3:15- cv-64-HZ (D. Or. Sept. 5, 2017), the District of Oregon granted the defendant’s motion to transfer to the Southern District of California two weeks before the trial was scheduled to commence. The court first found that the defendant had waived its venue objection because it failed to raise venue in its first Rule 12 motion. The court also found that the defendant waived the venue defense because the defendant had “vigorous[ly] litigat[ed]” the case by engaging in claim construction and filing motions in limine. The court, however, found that the waiver was excused because TC Heartland was an intervening change of law. The court acknowledged that a majority of opinions have held TC Heartland did not change the law, but the court was nonetheless persuaded by the growing minority line of cases reaching the opposite result. Because the plaintiff did not argue that venue was proper post-TC Heartland, the court transferred the case. The court also noted that while transfer would be prejudicial to the plaintiff, dismissing the case would be more prejudicial and that “the law of venue exists for the convenience of defendants, not plaintiffs, and under 28 U.S.C. § 1406(a), prejudice to the plaintiff is not a relevant consideration.”