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 November 4, 2017 – November 10, 2017.
Meaning of “Regular and Established Place of Business”
In BillingNetwork Patent, Inc. v. Modernizing Medicine, Inc., No. 17-cv-05636 (N.D. Ill. Nov. 6, 2017), the Northern District of Illinois determined that venue was improper under 28 U.S.C. § 1400(b) because defendant Modernizing Medicine did not have a “regular and established place of business” in the district. Plaintiff BillingNetwork argued that Modernizing Medicine created a “regular and established place of business” by registering to do business in Illinois as a foreign corporation, having a registered agent in Chicago for service of process, and having several work-at-home employees in the district. However, the court found that these facts did not satisfy the Federal Circuit’s In re Cray three-part test for establishing a “regular and established place of business,” which requires (1) a physical place in the district; (2) that is a regular and established place of business; and (3) that is the place of the defendant.
In American GNC Corporation v. ZTE Corporation et al., No. 17-cv-00620 (E.D. Tex. Nov. 7, 2017), the Eastern District of Texas court adopted the findings in the magistrate judge’s report and denied defendant ZTE’s motion to dismiss for improper venue. ZTE objected to the report’s finding that a third party’s “dedicated call center in Plano, Texas” created a “regular and established place of business” for ZTE in the district. The court noted that ZTE “has chosen to delegate its call center operations to a third party,” but nonetheless held that the call center is a “physical place” from which ZTE “actually engage[s] in business” under the Federal Circuit’s In re Cray test.
In Niazi v. St. Jude Medical S.C., Inc. et al., No. 17-cv-00183 (W.D. Wisc. Nov. 7, 2017), the court granted defendants’ motions to dismiss for improper venue. Plaintiff argued that the defendants had a “regular and established place of business” in the district because they each employ sales representatives who live or work in the in the district. The court disagreed, concluding that even though defendants “do business in this district,” this fact is not sufficient to show that “they have a place of business” in the district under the In re Cray test.
No Waiver of Objection to Venue
In Ford Global Technologies, LLC v. New World International Inc. et al., No. 15-cv-10394 (E.D. Mich. Nov. 7, 2017), the court granted defendant New World International’s motion to transfer for improper venue. Plaintiff Ford Global acknowledged that venue was no longer proper under the Supreme Court’s TC Heartland decision, but argued that New World waived the improper venue defense by failing to contest venue in its initial motion to dismiss. The court disagreed, finding that the TC Heartland decision was an intervening change of law in the law of patent venue. Accordingly, New World did not waive its improper venue defense because it was not available at the time of the initial motion to dismiss.
In Precision Fabrics Group, Inc. v. Tietex International, Ltd., No. 14-cv-00650 (M.D.N.C. Nov. 7, 2017), the court found that the Supreme Court’s TC Heartland decision constitutes an intervening change in law that excuses waiver of the improper venue defense. Notably, the court granted defendants’ motion to transfer for improper venue even at a late stage of litigation – the parties had already filed dispositive motions and participated in pre-trial briefings. The court held that transfer was appropriate because the defendants never owned or rented property in the district to create a “regular and established place of business.”