Yesterday, a Federal Circuit panel denied Hughes Network Systems, LLC's petition for a writ of mandamus to transfer a patent infringement case out of the Eastern District of Texas because Hughes waived its venue defense. (In re Hughes Network Sys., LLC, 17-130 (Fed.Cir. July 24, 2017) (Per Curiam Order, J. Prost, Bryson, and Taranto)). Although nonprecedential, the decision may provide insight on how the Federal Circuit will handle venue defense waiver issues going forward.
In January 2015, Elbit Systems of America sued Hughes for patent infringement in the Eastern District of Texas. Roughly two months before the case was to set to go to trial, on May 24 and June 3, 2017, Hughes moved to transfer venue. Hughes argued inter alia that it did not “reside” in the Eastern District of Texas, as required by 28 U.S.C. § 1400(b) in light of the recent Supreme Court TC Heartland decision. The district court denied the motions because Hughes had failed to seek transfer until 16 months after the case commenced thereby waiving its venue defense. Hughes petitioned the Federal Circuit for a writ of mandamus.
The Federal Circuit panel found “no clear abuse of discretion” by the district court. Indeed, the Federal Circuit held that Hughes waived its right to transfer for improper venue because it waited to file a motion only after the Supreme Court decided TC Heartland on the eve of trial. The three-page Federal Circuit Order suggests that defendants will have a hard time challenging patent venue unless they raised the challenge before the TC Heartland decision issued and/or the case is in its infancy.
Notably, the decision did not resolve whether TC Heartland was a change of law. The panel noted that it did not “necessarily agree with the district court’s conclusion that the Supreme Court’s decision in TC Heartland did not effect a change in the law.” This seemingly leaves open whether TC Heartland represents intervening law, an exception to waiver.
It has only been two months, but as more and more orders issue interpreting and applying the TC Heartland decision, the Federal Circuit must start to weigh in and provide guidance to the district courts. The court has seemingly recognized this fact and, on July 18, 2017, the court asked for a response to another petition for writ of mandamus seeking review of a denial of motion to transfer venue in the Eastern District of Texas where it will have to consider what constitutes a “regular and established place of business” under the second prong of 28 U.S.C. § 1400(b). In re Cray Inc., 17-129 (Fed.Cir.). We expect the Federal Circuit to receive more writ of mandamus petitions regarding venue-related issues going forward.