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Developments in Proper Patent Venue

By David Ward 

Proper venue for patent cases in the United States has seen a drastic shift in the last several years, beginning with the United States Supreme Court’s TC Heartland LLC v. Kraft Food Grp. Brands, LLC holding in 2017.[1] In TC Heartland, the Court made a landmark distinction between the general venue statute, 28 U.S.C. § 1391(c), and the patent venue statute, § 1400(b).[2] This distinction unequivocally separated patent venues as only being proper “where the defendant resides, or where the defendant has committed acts of infringement and has regular and established place of business;” the key wording of “resides” now means only where the defendant is incorporated after TC Heartland.[3]

After TC Heartland: In re Cray

Courts have further narrowed the meaning of § 1400(b) since then. While TC Heartland cleared up the question of “where the defendant resides” in the first prong of the patent venue statute, In Re Cray Inc. defined a “regular and established place of business” as (1) the defendant’s physical place within the judicial district; (2) “regular and established”; and (3) “the place of the defendant.[4] The physical place must be a building or part of a building set apart for any purpose used for conducting business, and it must be used in a steady, uniform, orderly, and methodical manner.[5] The determination of a “regular and established place of business” is a highly factual one, considering whether the place is owned or leased, whether defendant conditioned employment on an employee’s continued residence in the district, marketing, and other relevant factors.[6] “The place of the defendant,” usually (but not always) means a place owned or leased by the defendant, not just where employees work.[7] Under the patent venue statute, the patent infringement must have also allegedly taken place there as well.[8]

In re Google, LLC

Texas has been one of the most recent battleground for patent infringement venue disputes regarding a “regular place of business.” In 2019, Google was sued for patent infringement in the Eastern District of Texas because the alleged patent infringement took place on “Google Global Cache” servers housed in the District.[9] The District Court denied a motion to dismiss for lack of venue because the servers were regarded as a “regular and established place of business.”[10]

The Federal Circuit disagreed in February of 2020, stating that no Google employee performed installation of, performed maintenance on, or physically accessed the datacenters. [11] While the Federal Circuit rejected an argument that Google had to own or lease the premises (which they did not), the court reasoned that a “place a business” required defendant’s employees or agents to conduct business there.[12] While the parties contracting with Google could be seen as their agents, the court reasoned that the relationship did not rise to that level. The contracting party did not have authority to act on Google’s behalf and was given only specific step-by-step instructions, and therefore did not qualify as an “agent.”[13] Lastly, purely background maintenance work was not sufficient because that work standing alone was not “conducting [the defendant’s] business” in the meaning of a “regular and established place of business” in the statute.[14]

Uniloc 2017 LLC v. Apple Inc.

Despite this even further narrowing of the patent venue statute in the Federal Circuit, the Western District of Texas (WDTX) refused a motion to transfer a case with Apple as a defendant to the Northern District of California (NDCA) in June of 2020.[15] The case was easily distinguishable from recent cases. First, Apple has a significant presence in WDTX with a large campus, manufacturing activities, and numerous stores in the forum.[16] Apple employs over 7,000 employees at its campus in the WDTX.[17] Second, Apple contracts with its manufacturer Flextronics, which manufactures the accused infringing product in the District.[18] And third, Apple receives many of its components from suppliers within the WDTX.[19]

Given these facts, Apple’s operations in the WDTX rose to the level of “where the defendant has committed acts of infringement and has regular and established place of business” under both § 1400(b) as well as In re Cray. Apple, however, still argued that it would be more convenient for them as the defendant in NDCA. Judge Albright of the WDTX did not agree with that either, as Apple’s recent growth, significant contacts, and presence within the District showed that it was not “clearly more convenient” for Apple to transfer the case under 5th Circuit precedent.[20]

Moving Forward

While the recent Uniloc v. Apple case provided what seems to be a rare defeat for large corporate patent defendants seeking a venue transfer to their home forum, it was a highly factual distinction. Courts have continually narrowed the patent venue statute since TC Heartland in 2017, with both In re Cray and In re Google restricting what constitutes a “regular place of business” of the defendant. However, even though the bar is high, the Uniloc v. Apple case proves that it is indeed possible for patent plaintiffs litigating against large corporate entities to secure a venue other than the defendant’s home venue.

[1] 137 S. Ct. 1514 (2017)

[2] Id. at 1520.

[3] Id. at 1519; see 28 U.S.C. § 1400(b).

[4] In re Cray Inc., 871 F.3d 1355, 1360-63 (Fed. Cir. 2017)

[5] Id.

[6] Id.

[7] Id.

[8] 28 U.S.C § 1400(b).

[9] Super Interconnect Techs. LLC v. Google LLC, No. 2:18-CV-00462-JRG, 2019 WL 3717683, at *1 (E.D. Tex. Aug. 7, 2019).

[10] Id.

[11] In re Google LLC, 949 F.3d 1338, 1340 (Fed. Cir. 2020).

[12] Id. at 1345.

[13] Id.

[14] Id. at 1346; see 28 U.S.C. § 1400(b).

[15] Uniloc 2017 LLC v. Apple Inc., No. 6-19-CV-00532-ADA, 2020 WL 3415880 (W.D. Tex. June 22, 2020).

[16] Id. at *4.

[17] Id.

[18] Id. at *5.

[19] Id.

[20] Id. at *16; see In re Volkswagen of Am., Inc., 545 F.3d 304, 314 (5th Cir. 2008)