Defendants may try to avoid being sued for patent infringement in a district by closing their offices in that district so they have no physical presence there and venue is improper. In determining whether such a district is an appropriate venue for patent infringement litigation, courts may consider whether the alleged infringement occurred in the district and whether suit was filed within a reasonable time. Thus, a patent owner who unreasonably delays in filing a patent infringement suit may lose the ability to sue a defendant in a district where the defendant had a physical presence at the time of infringement, but no longer has a physical presence.
ParkerVision sued nine defendants for patent infringement in December of 2015 and amended its complaint two days later. As the case progressed, ParkerVision dismissed its claims against seven of the defendants, and the two remaining defendants (Apple and Qualcomm) challenged venue, Apple through a motion to dismiss for improper venue and Qualcomm through a motion to transfer to the Southern District of California.
When the magistrate judge presiding over the motions recommended the judge deny those motions, Qualcomm objected, contending the magistrate erred in denying the transfer because Qualcomm had no regular and established place of business in the district when the suit was filed, and because the magistrate gave too much weight to ParkerVision’s choice of forum.
After de novo review, the Court adopted the magistrate’s recommendations not to transfer the case.
The ParkerVision Decision
The parties agreed that Qualcomm did not “reside” in Florida under the TC Heartland test because it was a Delaware corporation with its principal place of business in California. Therefore, the Court focused its analysis on a second basis for venue in Florida—a defendant with a “regular and established place of business” that is a physical place in the district.
Closing an Office Prior to the Lawsuit
Prior to the filing the complaint, Qualcomm maintained offices in Florida. But it closed one of the offices in 2014 and the other in November of 2015. So Qualcomm argued Florida was an improper venue for litigation because Qualcomm had no physical place of business in Florida at the time of the complaint.
The Federal Circuit had not recently addressed whether an office that was closed prior to the filing of the complaint constitutes a “regular and established place of business” sufficient to satisfy the venue statute, so the Court looked at precedent from other courts and districts. It concluded that venue is proper if a defendant had a regular and established place of business at the time the cause of action accrued, and a lawsuit was subsequently filed within a reasonable time. While another case found a 21-month delay in filing suit to be unreasonable, in this case, ParkerVision sued Qualcomm within weeks of Qualcomm closing its doors, which the Court found to be reasonable.
Location of Alleged Acts of Infringement
Next the Court analyzed whether ParkerVision alleged acts of infringement in the district sufficient to establish venue in the district under § 1400(b). In its complaint, ParkerVision claimed “Qualcomm directly or through its subsidiaries or intermediaries makes, uses, offers for sale, sells, imports, advertises, makes available, and/or markets products in the United States, the State of Florida, and the Middle District of Florida that infringe one or more claims” of the asserted patents. Qualcomm submitted an affidavit from its senior legal counsel stating that the basis for the alleged infringement occurred either in the Southern District of California or overseas. The Court found that Qualcomm’s affidavit did not override the allegations in the complaint and adopted the magistrate’s finding that ParkerVision’s allegations satisfy the “acts of infringement” requirement of § 1400(b).
Convenience of the Witness
Transfer under § 1404(a) is based on convenience of the witnesses and in the interest of justice. The magistrate denied the motion to transfer the litigation from Florida, noting that it was ParkerVision’s chosen forum because it had previously sued Qualcomm in the Middle District of Florida, ParkerVision resided there, and the inventions claimed in the asserted patents were conceived and reduced to practice in that district. The magistrate also commented on the financial resources of the parties, noting Qualcomm’s ability to compel its employees to travel to the Middle District of Florida if necessary.
Qualcomm argued that the magistrate placed too much weight on such factors. But the Court disagreed and denied the motion to transfer, finding that the parties were in equal footing regarding the convenience of the witnesses and transferring the case would merely shift the burden from ParkerVision to Qualcomm.
Strategy and Conclusion
Defendants may try to avoid being sued for patent infringement in a district by closing their offices in that district so they have no physical presence there and venue is improper. A patent owner who unreasonably delays in filing a patent infringement suit may lose the ability to sue a defendant for patent infringement in a district where a defendant had a physical presence at the time of infringement, but no longer has a physical presence. No hard-and-fast rule has been set by the courts and the question of reasonableness may depend on the specific facts of the case. However, at least one court has found that a delay of 21 months was not reasonable, and another found that a delay of a few weeks was reasonable.
Further Information The ParkerVision opinion can be found here.