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”
Two decisions this past week concern whether the place of business of a defendant’s affiliate or subsidiary can satisfy the “regular and established” prong for patent venue. In Javelin Pharmaceuticals, Inc. et al. v. Mylan Laboratories Ltd., Civ. No. 16-cv-00224 (D. Del. Dec. 1, 2017), the court reasoned that “the ‘place’ of a corporate affiliate or subsidiary of a named defendant may, in at least some circumstances, and similar to the place of a defendant's employee, he treated as a ‘place of the defendant.’” The court specifically observed that “[a]mong the pertinent circumstances to be considered is whether the formalities of corporate separateness are preserved.” Based on the plaintiff’s allegation that such formalities were not observed, the court permitted venue-related discovery and denied, without prejudice, the defendant’s motion to dismiss for improper venue. In Galderma Laboratories, LP v. Teva Pharmaceuticals USA, Inc., Civ. No. 17-cv-01076 (N.D. Tex. Nov. 17, 2017), the court held that “[a] subsidiary’s presence in the district cannot be imputed to the parent for venue purposes so long as the two entities maintain formal corporate separateness.” The plaintiff in Galderma did not plead an alter ego or agency theory and the court refused to consider such arguments made for the first time in responding to the motion to dismiss.
In Personal Audio, LLC v. Google, Inc., Civ. No. 15-cv-350 (E.D. Tex. Dec. 1, 2017), the court held that an office that Google had leased to another company was not a regular and established place of business of Google. The fact that Google had previously occupied the office was immaterial, as § 1400(b) requires proof of a regular and established place of business at the time of filing. The court also held that Google cache servers, which were hosted in the district by local ISPs, did not create a regular and established place of business.
In Uniloc USA, Inc. et al. v. Nutanix, Inc., Civ. No. 17-cv-00174 (E.D. Tex. Dec. 6, 2017), the court held that the defendant did not have a regular and established place of business in the district despite employing nineteen sales employees there. The defendant’s employees worked from home, and the defendant submitted that the territory to which its sales teams are assigned often bears little relation to their place of residence. The defendant also did not store any inventory in the district.
Acts of Infringement
The Galderma Laboratories case (see above) also addressed the issue of where a defendant in an ANDA “has committed acts of infringement” so as to allow venue under 28 U.S.C. § 1400(b). The defendant, Teva Pharmaceuticals USA, Inc., argued that the “act of infringement” in an ANDA case is the filing of the ANDA itself. Teva thus argued that venue was improper because Teva did not file its ANDA in the district. The court agreed, finding that Teva did not commit acts of infringement in Texas. The fact that Teva filed a paragraph IV challenge against a Texas company did not affect the venue analysis.
Waiver of Objection to Venue
Cobalt Boats, LLC v. Brunswick Corp., Civ. No. 15-cv-0021 (E.D. Va. Dec. 4, 2017) was the first case to find waiver following TC Heartland, holding that the Supreme Court’s decision did not meet the intervening change in the law exception to waiver. The case proceeded to trial, and defendant Brunswick lost a jury verdict. Thereafter, the Federal Circuit held in In re Micron Techology, Inc., 2017-138, 2017 WL 5474215 (Fed. Cir. Nov. 15, 2017), that TC Heartland was an intervening change in the law (i.e., the court’s decision in Cobalt Boats was incorrect). Brunswick moved for judgment as a matter of law and a new trial, arguing in part that the court erred in denying its venue motion under Micron. The court denied the defendant’s motion, finding that Brunswick still forfeited its venue defense because it was first raised on the eve of trial and was part of a pattern of delay tactics by Brunswick.
In Javelin Pharmaceuticals (see above), the court held that the defendant did not waive its objection to venue due to defendant’s litigation conduct. The defendant objected to venue in its answer and waited less than three months after the Supreme Court’s TC Heartland decision to file its motion to dismiss for improper venue. Under these circumstances, the court held that the venue defense was not forfeited.