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Wednesday, January 24, 2018

Venue in Patent Cases

Last term, the Supreme Court decided in TC Heartland v. Kraft Foods that the term “resides” in the patent venue statute (28 U.S.C. § 1400) should be interpreted more narrowly than in the general venue statute (28 U.S.C. § 1391).  Specifically, the Court held that corporations only “reside” where they are incorporated for purposes of the patent venue statute, whereas corporations “reside” wherever they are subject to personal jurisdiction for purposes of the general venue statute.  I firmly believe the Supreme Court got it wrong in TC Heartland, as I argued in this article, amicus brief, and blog post.  That said, there are still a number of questions about forum choice in patent cases left to be resolved post-TC Heartland.         

In addition to the “resides” provision, the patent venue statute also permits infringement suits to be filed where the defendant has infringed and has a “regular and established place of business.”  So now the question is: when does a defendant have a “regular and established place of business” in a particular judicial district?  Initially, it looked like this might be interpreted broadly when a judge in the Eastern District of Texas (ED Texas) held in Ratheon Co. v. Cray, Inc. that physical presence was not required.  Instead, the district judge reasoned, courts should consider various factors, such as the extent to which the defendant derives benefits from presence in the district, including sales revenue.  The lower court then concluded that venue was proper in ED Texas, and Cray petitioned for a writ of mandamus.  The Federal Circuit granted the writ and reversed the lower court.  The Federal Circuit held that, for venue to be proper, there must be a “physical place in the district,” meaning a “physical, geographical location in the district from which the business of the defendant is carried out.”

Of course, a defendant with a formal office or store will have a “regular and established place of business” under the Federal Circuit’s decision in Cray.  This means that companies like Apple that have stores all over the country can still be sued in most districts.  But what else will count as a “physical place”?  Will maintaining a server in the district be enough?  One court said no, but the server in that case was not being used, so it was not “regular and established.”  Different facts might very well lead to a different result.  These venue questions are particularly difficult in pharmaceutical cases where parties sue under the Hatch-Waxman Act, a specialized statutory scheme that allows branded companies to sue before the generic has actually started distributing the allegedly infringing product.  Currently, district courts are struggling to decide what constitutes a “regular and established place of business” in Hatch-Waxman cases.  Thus, the only thing that is clear at this point is that it is going to take time--and in some cases discovery--to resolve the many questions that remain in the wake of TC Heartland.  

Posted by Megan La Belle on January 24, 2018 at 12:28 PM | Permalink

Comments

Thanks for that interesting post , the point is not only narrow interpretation or broad one , but , it must follow or match first , the wording , the language itself , so , one can read clearly ( patent venue statute ) :

(a) Civil actions, suits, or proceedings arising under any Act of Congress relating to copyrights or exclusive rights in mask works or designs may be instituted in the district in which the defendant or his agent resides or may be found.

End of quotation :

So , it seems that not only the defendant location is at issue , but also his agent. Agent , that is to say , that we don't have necessarily the same similarity in terms of identity ( like sales man for example ) or the core of centrality ( headquarter ) . Moreover : the wording also , stands on : " may be found " , that is to say , that formal fixed and strict location , as central in terms of management , is not obliging the person filing suit . Yet , when dealing with patent infringement , it seems that we have a different attitude of the lawmaker , here :


(b) Any civil action for 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.

End of quotation :

So , here we don't deal with agent as possibility , but rather , whatsoever where he does reside ( in central terms ) or , where the infringement act has been committed , all along with or in addition should have : " regular and established place of business " . That is to say , that the lawmaker , emphasizes in patent , the centrality , the headquarter or alike extension of it . This is because , whatsoever , he should : reside there , or have established place according to the language .

Thanks


Posted by: El roam | Jan 24, 2018 1:37:23 PM

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