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 October 11 – October 20, 2017.
Meaning of “Regular and Established Place of Business”
In CAO Lighting, Inc. v. Light Efficient Design & Electrical Wholesale Supply Co., 4:16-cv-00482 (D. Idaho Oct. 11, 2017), the court determined that the defendant did not have a “regular and established place of business” because its sales representatives (1) were contractors, not direct employees; and (2) they only occasionally visited the district. While the defendant also had distributors that were located in the district, their physical presence was not enough to satisfy Section 1400(b) because the defendant did not “own, rent, lease, or occupy these locations or any other property or equipment in the state.” The court further noted that the defendant’s list of contacts within the district on its website and its revenue from the district were not relevant factors under the test articulated in In re Cray.
In Ascion, LLC v. Tempur Sealy Int’l, Inc., 15-cv-12067 (E.D. Mich. Oct. 13, 2017), the court held that a subsidiary’s license to do business in the state of Michigan could not be imputed to the subsidiary’s parent corporation for the purposes of determining venue under Section 1400(b). For more on the subsidiary/parent analysis under Section 1400(b), please see our article here. The Eastern District of Michigan also joined the majority of courts in holding that TC Heartland was an intervening change in the law that allows defendants to raise venue objections that they otherwise would have waived under Rule 12 of the Federal Rules of Civil Procedure.
Waiver of Objection to Venue
In contrast to the decision in Ascion (see above), Judge Schroeder held in Tinnus Enterprises, LLC v. Telebrands Corp., 6:16-cv-00033 (E.D. Tex. Oct. 17, 2017), that TC Heartland was not an intervening change in the law that qualifies as an exception to waiver doctrine. Tinnus is the most recent case to reaffirm the position of the Eastern District of Texas that TC Heartland did not change the law of venue. Applying this position, Judge Schroeder held that the defendants waived the venue defense by admitting in pleadings that venue was proper and by not objecting to venue when the court “conducted lengthy injunction proceedings, resolved several discovery disputes, and completed claim construction.”
No Waiver of Objection to Venue
In Eyetalk365, LLC v. Zmodo Technology Corporation, 3:16-cv-00789 (W.D.N.C. Oct. 18, 2017), the court determined that TC Heartland was an intervening change in the law of venue qualifying as an exception to waiver. The court further noted that the motion to transfer was filed two months after TC Heartland had minimally prejudiced the plaintiff where the parties had engaged in some discovery and prepared claim construction briefs, but had not yet held a hearing on those constructions or set a trial date.
Scope of the TC Heartland Decision
In Snyders Heart Valve LLC v. St. Jude Medical S.C., Inc., 4:16-cv-812 (E.D. Tex. Oct. 12, 2017), the court dismissed the plaintiff’s “interesting statutory interpretation argument” that the Supreme Court’s TC Heartland decision is not applicable to multi-district states, such as the Eastern District of Texas, which are governed by the general venue provision 28 U.S.C. § 1391(d). Plaintiff maintained that TC Heartland arose in the District of Delaware under 28 U.S.C. § 1391(c), the general venue provision for single-district states, and therefore its holding only applies to single-district states. The court rejected plaintiff’s position, finding that the TC Heartland opinion applies to the “entire” general venue statute under the Section 1391.
In Red.com, Inc. v. Jinni Tech Ltd., 8-17-cv-00382 (C.D. Ca. Oct. 11, 2017), the court rejected defendant’s argument that the TC Heartland decision also applied to patent infringement actions against foreign corporations, rather than just domestic ones. The court noted that the Supreme Court expressly stated that its holding did not apply to foreign corporations.
TC Heartland Transfer Issues
In Blazer v. Chrisman Mill Farms LLC, 1:17-cv-320 (N.D. Ala. Oct. 16, 2017), the Northern District of Alabama transferred a patent infringement action to the Eastern District of Kentucky, where a justdismissed declaratory judgment action involving the same parties was originally filed. Crisman Mill Farms (“CMF”), the accused patent infringer, initially sought a declaratory judgment of non-infringement in the Eastern District of Kentucky. Blazer then filed his own patent infringement action against CMF in the Northern District of Alabama. The declaratory judgment action was subsequently transferred to Alabama, after the Eastern District of Kentucky found that it lacked personal jurisdiction over Blazer. One week after the TC Heartland decision, CMF moved to transfer the patent infringement action to the Eastern District of Kentucky. The Northern District of Alabama granted the motion to transfer and explained in a footnote: “[t]he fact that this transfer is to a court that lacked personal jurisdiction over Mr. Blazer as a defendant in the DJ action but that undoubtedly will have personal jurisdiction over him as a plaintiff in this patent infringement action is ironic, but has no impact on this Court’s analysis.”
Standard for Pleading Venue
In Shoes by Firebug LLC v. Stride Rite Children’s Group, LLC, 4:16-cv-00899 (E.D. Tex. Oct. 18), the Eastern District of Texas granted the plaintiff leave to amend its patent infringement complaint to add the defendant’s parent company as a new defendant over an objection that it would be futile due to improper venue. The court determined that “futility [was] not dependent upon venue considerations” and that it only existed “when the amended complaint ‘fail[ed] to state a claim upon which relief could be granted.’”