Federal Circuit Continues To Clarify Patent Venue Rules In The Wake Of The Supreme Court’s TC Heartland Decision
Between May 8, 2018 and May 11, 2018, the United States Court of Appeals for the Federal Circuit issued a series of three opinions clarifying questions left open in the wake of the Supreme Court’s decision in TC Heartland LLC v. Kraft Foods Grp. Brands LLC, which held that for purposes of the patent venue statute, 28 U.S.C. § 1400(b), a domestic corporation “resides” only in its state of incorporation.
On May 8, 2018, in In re HTC Corporation, case no. 18-130, the Federal Circuit denied HTC Corporation’s petition for a writ of mandamus seeking an order directing the district court to dismiss a patent infringement case against it for improper venue. HTC, a non-resident alien corporation, argued that the district court erred by applying a general venue statute—28 U.S.C. § 1391(c)(3)—to a patent case, and by not applying the patent-specific venue statute, 28 U.S.C. § 1400(b). The court disagreed, holding that the venue statutes historically have not applied to aliens, and nothing in recent legislative amendments to the general venue statutes suggested that Congress intended to change that long-standing rule. Rather, “while § 1400(b) governs venue in patent cases, it governs only to displace otherwise-applicable venue standards, not where there are no such standards due to the alien-venue rule.” Moreover, the court reasoned that HTC’s proposed reading would leave a “venue gap,” such that some foreign corporations that infringe a U.S. patent would not be amenable to a domestic suit even though personal jurisdiction exists.
On May 10, 2018, in In re: ZTE (USA) Inc., case no. 18-113, the Federal Circuit granted ZTE’s petition for a writ of mandamus to the extent of vacating the district court order denying ZTE’s motion to dismiss a patent infringement action against it for improper venue, and remanding to the district court for reconsideration under the appropriate legal standard. ZTE’s petition was directed to a ruling by the United States District Court for the Eastern District of Texas that ZTE had failed to meet its burden of demonstrating that venue was improper under 28 U.S.C. § 1400(b), the patent-specific venue statute. In its mandamus order, the Federal Circuit addressed two “basic” and “undecided” questions, holding: (1) that Federal Circuit and not regional circuit law governs the burden of proof for determining the propriety of venue under § 1400(b), and (2) that the burden rests with the party asserting proper venue.
With respect to the first issue, the court reasoned that even though it generally defers to regional circuit procedure law, venue under § 1400(b) is an issue unique to patent law, and adopting a uniform law on the burden “obviates uncertainty at the district court as to whether to apply regional circuit or Federal Circuit law.” As to the second issue, the court reasoned that, prior to the formation of the Federal Circuit in 1982, regional circuits uniformly placed the burden to show proper venue in patent cases on the plaintiff following a motion by the defendant challenging venue. Moreover, the statute is intended to be restrictive and narrow, which “supports placing the burden of establishing proper venue on the Plaintiff.”
On May 11, 2018, in In re: BigCommerce, Inc., case no. 18-122, the Federal Circuit granted BigCommerce’s petitions for writs of mandamus to the United States District Court for the Eastern District of Texas (in two separate cases), holding that “a domestic corporation incorporated in a state having multiple judicial districts ‘resides’ for purposes of the patent-specific venue statute, 28 U.S.C. § 1400(b), only in the single judicial district within that state where it maintains a principal place of business, or failing that, the judicial district in which its registered office is located.” The court reasoned that this conclusion flowed from the text of the statute itself, which uses the phrase “the judicial district,” as well as the history of § 1400(b).