Patent Law Practice Center

CAFC strikes down EDTX venue test

The United States Court of Appeals for the Federal Circuit has struck down a much-criticized venue test created by Judge Rodney Gilstrap of the United States Federal District Court for the Eastern District of Texas. See In re: Cray Inc.

In a unanimous panel decision authored by Judge Alan Lourie (joined by Judges Reyna and Stoll), the Federal Circuit found that Judge Gilstrap misinterpreted the scope and effect of Federal Circuit precedent in determining that Cray maintained “a regular and established place of business” in the Eastern District of Texas within the meaning of 28 U.S.C. § 1400(b). Accordingly, Judge Gilstrap’s denial of Cray’s transfer motion was an abuse of discretion. The Federal Circuit panel ordered the case transferred, but did not decide to which court the case should be transferred. While Cray would prefer transfer to the Western District of Wisconsin, Raytheon would prefer transfer to the Western District of Texas. The Federal Circuit left the decision of which district to transfer the case to for remand.

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Supreme Court reverses 25 years of Federal Circuit patent venue law

On May 22, 2017, the United States Supreme Court issued its much-anticipated decision in TC Heartland LLC v. Kraft Food Group Brands LLC. In a unanimous decision of the Court delivered by Justice Thomas (minus Justice Gorsuch who did not participate in consideration of the case), the Supreme Court reversed the Federal Circuit and ruled that 28 U.S.C. 1400(b) is the only applicable venue statute in patent infringement cases, and that 28 U.S.C. 1391(c) did not modify or amend 1400(b) or the Court’s 1957 ruling in Fourco Glass Co. v. Transmirra Products Corp.

Pursuant to § 1400(b), a “patent infringement may be brought in the judicial district where the defendant resides, or where the defendant has committed acts of infringement and has a regular and established place of business.” Under § 1391(c), a corporation is deemed to be a resident of “any judicial district in which such defendant is subject to the court’s personal jurisdiction….”

In Fourco Glass Co. v. Transmirra Products Corp., 353 U.S. 222 (1957), the Supreme Court held that § 1400(b) is not to be supplemented by § 1391(c) and that “§ 1400(b) is the sole and exclusive provision controlling venue in patent infringement actions….” While that might seem to have ended the inquiry on its face, the Federal Circuit in 1990 decided VE Holding Corp. v. Johnson Gas Appliance Co., 917 F. 2d 1574 (1990), which announced its view that the Judicial Improvements and Access to Justice Act of 1988 made 1391(c) applicable to patent infringement actions.

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CAFC transfers case from Eastern Texas to Northern California

On Thursday, February 23, 2017, the United States Court of Appeals for the Federal Circuit granted a mandamus petition filed by Google, and ordered a Texas federal court to transfer a patent infringement case to a federal court that covers Silicon Valley, as requested by Google. See In re: Google Inc. This extraordinary remedy was delivered in the form of a non-precedential opinion authored by Chief Judge Prost and joined by Judge Lourie. Despite the Federal Circuit’s designation of the decision as non-precedential, the Court should be prepared for the onslaught of mandamus petitions that will now be filed given that they have shown a willingness to step in and re-weigh transfer factors de novo.

This petition for writ of mandamus arose out of a patent infringement suit brought by Eolas Technologies, Inc. against Google and various other defendants involving U.S. Patent No. 9,195,507. On the day this lawsuit was filed against Google, Eolas also filed two related suits in the same district, accusing various Walmart and Amazon entities of infringement. The Walmart and Amazon entities, like Google, sought transfer to the Northern District of California under 28 U.S.C. § 1404(a) for convenience. Weighing the relevant transfer factors, the district court concluded that the Northern District of California was not clearly a more convenient forum than the Eastern District of Texas.

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SCOTUS take patent venue case

Several weeks ago, the United States Supreme Court granted certiorari in TC Heartland LLC v. Kraft Food Brands Group LLC. This case will force the Supreme Court to decide whether 28 U.S.C. § 1400(b) is the exclusive provision governing venue in patent infringement actions. This resolution of this question could have important ramifications, both for the future of patent litigation and for the future of patent reform.

Ultimately, the question that the petitioner really wants the Supreme Court to decide is if the Eastern District of Texas, home up to one-quarter of all patent infringement litigations, is a proper venue for patent owners to be choosing. The Eastern District of Texas is a popular choice among patent owners because of the perception that the district court has developed a articular specialty in handling patent matters, and because the judges have a reputation of giving patent owners a fair chance…maybe more than a fair chance, depending upon who you listen to.

If the Supreme Court issues a ruling that strikes down current patent venue rules, there would be no need for patent venue reform efforts to continue in Congress. On the other hand, if the Supreme Court were to affirm the Federal Circuit, calls for legislative venue reform would likely become deafening. On yet a third hand, patent reform might look very different than most people expect, even if the Supreme Court were to overrule the Federal Circuit, because a venue ruling that would make it difficult or impossible to bring cases in the Eastern District of Texas would also make it much more difficult for all patent owners to bring infringement cases in courts other than the home court of the defendant. That could be a bridge too far for many, if not most, patent owners, who otherwise might be in favor of at least some venue reform. Thus, there is a chance that whatever the outcome of this case, it will lead to patent reform. See The Politics of Patent Venue Reform.

The statutes in question will be 28 U.S.C. § 1400(b) and 28 U.S.C. § 1391(c). Pursuant to § 1400(b), a “patent infringement may be brought in the judicial district where the defendant resides, or where the defendant has committed acts of infringement and has a regular and established place of business.” Pursuant to § 1391(c), a corporation is deemed to be a resident of “any judicial district in which such defendant is subject to the court’s personal jurisdiction…”

In Fourco Glass Co. v. Transmirra Products Corp., 353 U.S. 222 (1957), the Supreme Court held that § 1400(b) is not to be supplemented by § 1391(c) and that “§ 1400(b) is the sole and exclusive provision controlling venue in patent infringement actions….” While that might seem to end the inquiry on its face, the Federal Circuit has for 25 years ignored the Supreme Court ruling in Fourco Glass, based on the belief that 1988 amendments by Congress “rendered the statutory definition of corporate residence found in § 1391 applicable to patent cases.” Thus, it is the belief of the Federal Circuit that Congress overruled the Supreme Court’s ruling in Fourco Glass, which Congress obviously has the authority to do. See Supreme Court agrees to hear patent venue case with patent reform implications.

The irony is that everyone knows this case is about the Eastern District of Texas, yet the case between TC Heartland and Kraft Food Brands Group was litigated in the District of Delaware. Thus, Kraft is unfortunately caught up in this proxy patent battle to which it really ought not be a party. It is truly unfortunate that the Supreme Court would use a case from Delaware and party that is most certainly not a patent troll to opine about patent trolls running to the Eastern District of Texas. But that is the bizarro world of patent litigation in which we live, some might say.

CAFC OKs Transfer Despite Forum Selection Clause

In a non-precedential opinion issued October 18, 2013, the Federal Circuit issued a decision that calls into question the overall utility of forum selection clauses in contractual relationships. In fact, Eli Lilly lost its bid to have its dispute with Genentech and City of Hope heard in the Northern District of California despite a forum selection clause in the governing contract that stated the parties would litigate any dispute in the Northern District of California. See In re Eli Lilly and Co.