In our continuing coverage of the post-TC Heartland landscape, the Federal Circuit recently clarified that venue is proper in only one district per state in In re BigCommerce, Inc., 2018-122 (Fed. Cir. May 15, 2018) (slip op.). Last year, the Supreme Court held in TC Heartland that a company resides where it is incorporated. Among the many unresolved questions flowing from that decision involved the treatment of patent venue in states with multiple districts. Specifically, no appellate court had determined whether a domestic corporation incorporated in a multi-district state “resides” only in the single judicial district where it maintains a principal place of business or registered office, or whether venue could be proper in all judicial districts within that state.
Tony is an Associate in the firm’s Boston office. He has worked with a wide range of technologies including manufacturing, telecommunications, and software development.
Tony’s experience includes assisting in the preparation of patent applications and pre-suit diligence, including patent portfolio analysis; drafting infringement/non-infringement and validity/invalidity analyses; and providing technical and scientific advice to legal practitioners in ITC-337 investigations and US District Court matters. During law school, Tony served as the production editor of the Journal of Health & Biomedical Law.
Further to our ongoing coverage of post-TC Heartland patent litigation, in a recent case in the Western District of Wisconsin, the court granted defendants’ motion to transfer for improper venue. In doing so, it rejected the plaintiff’s contention that venue can be proper where one corporation “works closely” with another corporation resident in the jurisdiction.
In Unity Opto Technology Co. Ltd. v. Lowe’s Home Centers LLC and LG Sourcing, Inc., 18-cv-27-jdp (W.D. Wis.) (May 4, 2018), co-defendant Lowe’s Home Centers has a place of business in the district, namely a physical store located in Plover, Wisconsin. However, co-defendant LG Sourcing does not own, lease, maintain, or operate any facilities in the district, nor does LG Sourcing employ any residents that reside in the district either.
The Federal Circuit recently overturned a decision estopping the plaintiff from pursuing its infringement claims in the United States District Court for the Eastern District of Arkansas, and clarified the effect of reexamination on equitable estoppel and laches. In John Bean Technologies Corporation v. Morris & Associates, Inc., the Federal Circuit held that District Court abused its discretion applying equitable estoppel to bar John Bean Technologies Corp.’s (“John Bean”) infringement action without considering the impact of an intervening ex parte reexamination on the claims of the asserted patent.
On Tuesday, the U.S. Supreme Court issued two important patent law opinions that relate to the inter partes review procedure introduced by the America Invents Act: Oil States Energy Servs., LLC v. Greene’s Energy Grp., LLC, which upholds the constitutionality of inter partes review, and SAS Institute, Inc. v. Iancu, which requires the Patent Trial and Appeal Board to adjudicate the validity all patent claims challenged in a petition for inter partes review if the Board decides to adjudicate the validity of any claim challenged in that petition. Yesterday, the PTO issued a memo describing how pending trials will be conducted and how new petitions will be addressed in light of SAS Institute, but important questions remain.
Further to our ongoing coverage of post-TC Heartland patent litigation, in a recent development from the Northern District of Illinois, the court granted counterclaim defendants’ motion to dismiss for improper venue. In Shure Incorporated v. ClearOne, Inc., 1-17-cv-03078 (ILND March 16, 2018, Order), the court was blunt in dismissing the plaintiff’s argument regarding the applicability of purported “ancillary” venue. Plaintiff argued that the doctrine of ancillary venue, where parties are added in conjunction with a compulsory counterclaim are within the court’s supplemental jurisdiction, does not require an independent basis for venue. The court disagreed, and did not mince words: “[t]his argument is rejected. ClearOne cites no authority for the proposition that the doctrine of ancillary venue (whatever that really is) can override the clear terms of the patent venue statute.”
In properly assessing venue, the court analyzed whether venue was proper under the first part of 28 U.S.C. § 1400(b), which permits a patent infringement action to be brought in the judicial district where the defendant “resides.” Here, the court dismissed counterclaim defendants’ because both defendants lacked a regular and established place of business in the district. One defendant was incorporated in Delaware, and the other was based out of California. The court determined that neither company could be deemed to “reside” in the Northern District of Illinois.
In Drop Stop LLC v. Jian Qing Zhu et al, 2-16-cv-07916 (CACD January 22, 2018), the Central District of California granted Plaintiff’s motion to award attorney fees due to Defendants’ exceptional litigation tactics under 35 U.S.C. § 285. Initially, counsel for Plaintiff sent a cease and desist email to Defendants to stop selling an infringing product, and attached a draft claim chart in support of its infringement position. The claim chart included a disclaimer stating “PLEASE NOTE – this informal opinion cannot be relied upon definitively. A formal opinion is required, and that involves extensive study and other efforts to provide a reliable outcome. Please call me to discuss.” However, four days later, Defendants re-listed the accused products and sent Plaintiff an email attaching Plaintiff’s draft claim chart without the disclaimer. Defendants relied upon Plaintiff’s claim chart to support its non-infringement positions despite not having performed any analysis of their own, and entirely dismissing Plaintiff’s disclaimer, which expressly disclaimed any formal legal opinion.
In a recent development from the Eastern District of Texas, Magistrate Judge Roy S. Payne concluded that defendants Globalfoundries, Qualcomm, and Samsung waited too long prior to moving to dismiss or transfer the case due to improper venue (see report and recommendation here). KAIST IP US LLC filed its complaint back in November 2016, and a significant portion of discovery already occurred. Similar to In re Micron (which we previously covered here), defendants reserved the right to challenge venue pending the decision in TC Heartland, in their respective answers to the complaint. However, it was not until September 2017, about four months after the decision in TC Heartland issued, that defendant Globalfoundries affirmatively challenged venue. Qualcomm and Samsung filed similar motions a month later. The defendants argued that “after lengthy negotiations… it become clear that KAIST did not have a legitimate, good faith interest in an agreed transfer to a proper venue.”
MJ Payne disagreed, largely because the parties were already immersed in claim construction briefing. MJ Payne opined that “[g]ranting such untimely motions at this stage of the proceeding would disrupt the efficiency of the judicial process, both here and in the proposed transferee district.” Further, MJ Payne was perplexed as to why defendants sat on their hands for four to five months after the TC Heartland decision to move. Accordingly, the court denied defendants motions to dismiss or transfer venue citing In re Micron (affirming a district court’s ability to find forfeiture when a party does not raise a timely objection to venue). We will continue to track any developments regarding this matter.
Further to our ongoing coverage of the post-TC Heartland patent litigation landscape, a pair of recent and interesting cases from Texas and Delaware further evolved this important venue-related jurisprudence.
On November 22, 2017, in Intellectual Ventures II LLC v. FedEx Corp. et al., Case Number 2:16-cv-00980 (E.D. TX Nov. 22, 2017), Judge Rodney Gilstrap denied defendants’ motion to dismiss for improper venue due to their conduct in view of the Federal Circuit’s recent decision in In re Micron, which determined that TC Heartland was a change in the law, potentially reviving venue-based transfer motions previously waived. (We previously covered the In re Micron case here.) Defendants sought to dismiss the case for improper venue a few days after the denial of their IPR petitions. After they participated actively in litigation for months, the court did not take kindly to defendants’ motion. Citing In re Micron, the court reasoned that “defendants who take a ‘tactical wait-and-see’ approach in objecting to venue present ‘an obvious starting point for a claim of forfeiture.’” Further, the court noted that prior to the TC Heartland decision, defendants sought to transfer the case to the Western District of Tennessee under § 1404 rather than § 1406. Judge Gilstrap noted that this reliance on § 1404 was important because that statute “is premised on venue being proper in the transferor court whereas a motion under § 1406 reflects an objection to the current venue as being proper.” Accordingly, the court concluded that defendants’ waived their venue objection based on their own conduct, the judicial resources already expended, and the prejudice to plaintiff in reopening a dormant venue dispute “simply because it has become convenient for Defendants to litigate the issue now.” Continue Reading Lower Courts Continue to Grapple with Venue in the Wake of In re Micron and In re Cray
On November 15, 2017, the United States Court of Appeals for the Federal Circuit resolved a split among district courts on the question whether the United States Supreme Court’s TC Heartland decision constituted a change in the law, or merely a course-correction to honor preexisting law. The Federal Circuit held that the Supreme Court’s decision changed the controlling law. In re: Micron, No. 17-00138 at 13 (Fed. Cir. Nov. 15, 2017).
Micron Technology, Inc. asked the Federal Circuit to set aside the district court’s denial of its motion to dismiss or transfer the case for improper venue. The district court held that Micron waived its objection to venue because it failed to raise an available venue defense in its initial Rule 12 motion to dismiss, and concluded that TC Heartland was not a change in the law.
The Federal Circuit disagreed. It reasoned that the Supreme Court clearly rejected V.E. Holding and concluded that the definition of “resides” in § 1391(c) does not apply to § 1400(b). The Federal Circuit further reasoned that the Supreme Court changed the law by severing § 1400(b) from § 1391(c). As a result, the objection was not “available” under Rule 12(g)(2) when Defendant filed its motion to dismiss in 2016, before TC Heartland came down. On this basis, the Federal Circuit reversed and remanded the case. This decision resolves a previously open question in the wake of TC Heartland that we wrote about here.
Earlier this week, the United States Patent and Trademark Office (“USPTO”) published a new rule governing when privilege exists for communications between clients and their domestic or foreign patent attorneys and patent agents before the Patent Trial and Appeal Board (“PTAB”). For context, the originally proposed amendment sought to resolve ambiguity as to when privilege extends to USPTO patent practitioners during PTAB discovery proceedings in light of prior Federal Circuit, District Court and PTAB decisions. The now-published rule codifies the PTAB’s intent to protect communications between patent agents and clients from discovery, stating that:
“communication[s] between a client and a USPTO patent practitioner or a foreign patent practitioner that is reasonably necessary and incident to the scope of the patent practitioner’s authority shall receive the same protections of privilege under Federal law as if that communication were between a client and an attorney authorized to practice in the United States, including all limitations and exceptions[;]”
“USPTO patent practitioners and foreign jurisdiction patent practitioners shall receive the same treatment as attorneys on all issues affecting privilege or waiver, such as communications with employees or assistants of the practitioner and communications between multiple practitioners.”