Venue Challenges Part 2

While law professors call for venue patent reform, the TC Heartland venue and personal jurisdiction challenge appears to still have legs.  In April 2016, the Federal Circuit rejected the mandamus action, but the Supreme Court recently granted TC Heartland’s delay petition – allowing its petition for writ of certiorari to be filed by September 12, 2016.  In the case, TC Heartland argues that the statute itself (28 U.S.C. § 1400(b)) limits where patent claims can be brought and that the Federal Circuit has unduly broadened venue in ways that harm the system.  [SCT Docket]

= = = = = =

28 U.S.C. § 1400(b) provides the venue requirements for patent cases – limiting proper venue to (1) “the judicial district where the defendant resides” or (2) “where the defendant has committed acts of infringement and has a regular and established place of business.”   This appears to be quite narrow in that few defendants actually reside or have an established place of business in the Eastern District of Texas.  The catch, however, comes in the form of 28 U.S.C. § 1391(c). That provision expansively defines the term “reside” — indicating that “except as otherwise provided by law . . . [a defendant] shall be deemed to reside . . . in any judicial district in which such defendant is subject to the court’s personal jurisdiction with respect to the civil action in question.”  Section 1391(c) appears to completely gut the limits of 1400(b) to indicate that venue is proper whenever a court has personal jurisdiction.  TC Heartland argues that the statute should be interpreted differently – namely that the express limits of 1400(b) should take precedence over the broad definition of 1391(c) as suggested by the “otherwise provided by law” exception.

 

27 thoughts on “Venue Challenges Part 2

    1. There is simply no realistic potential for that, so the many day-dreams about that on patent blogs is a waste of everyone’s time. Instead, look for more useful Fed. Cir. decisions that will carve out exceptions and create distinctions.

        1. So whats your big plan – use Toto? Replace both the Sup. Ct. and Congress with disgruntled patent scriveners?
          Even your sure-fire unconstitutionality challenge to the entire AIA would not affect the Sup. Ct Alice decision.

          1. Never said that my previous comments on the Comatitutional infirmity of the AIA would, smarty pants.

            However, we do have several other avenues we could walk down. Separation of powers is one such avenue. Void for vagueness is another.

            But your “just don’t talk” is probably the biggest cowardly lion approach and smacks of the “don’t question authority” line that should be inimical to anyone who values critical thinking.

            1. However, we do have several other avenues we could walk down. Separation of powers is one such avenue. Void for vagueness is another.

              Don’t forget the Avenue of the Stars, also!

              Super serious stuff.

                1. Pilgrim,

                  Are you aware of the political story to The Wizard of Oz?

                  Perhaps your attempt at humor is meant to indicate the other golden rule (he who has the gold, makes the rules), in which case, I applaud the subtle point that “answers” by those already with the gold are being put in place (weakening the patent system benefits those already with the gold).

                2. Sorry. My attempt at humor was only to point out that when MM gave an example of an avenue, he didn’t mention the most obvious road name from the Wizard of Oz. No other implications were intended.

                3. No problem (but the “political” analogy of the story does fit, so even if it was not your attempt to augment my post, you have done so!)

  1. Does anyone else care that 28 U.S.C. § 1400(b) states:

    (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.

    ?

    Does the word “reside” in this statute have a different (special) patent law meaning?

    If not, 28 U.S. Code § 1391 states

    (c)Residency.—For all venue purposes—
    (1)[a natural person … ;]
    (2) an entity with the capacity to sue and be sued in its common name under applicable law, whether or not incorporated, shall be deemed to reside, if a defendant, in any judicial district in which such defendant is subject to the court’s personal jurisdiction with respect to the civil action in question and, if a plaintiff, only in the judicial district in which it maintains its principal place of business; and
    (3) [a defendant not resident in the United States … .]

    The issue is this definition – it is terrible, it makes no sense, but it fits logically with the statutory text.

    It should be changed (by Congress).

    And,

    (a)Applicability of Section.— Except as otherwise provided by law
    (1) this section shall govern the venue of all civil actions brought in district courts of the United States;

    Is asking: “what does the phrase “except as otherwise provided by law” mean? At what level do we need? Does 1400 need its own residency definition? Can we make our own special definition for patent law cases?

    If so, okay, why do we sneak a little common law judicial wizardry into the statutes Congress passes? I didn’t agree with Scalia on policy on a couple of things, but I did enjoy his willingness to shove Congress’ more inept statutes down the toilet. Exactly as they were written – unclear or stupid.

    I digress.

    1. Sorry, there was some additional bolded text within the statutory phrases, but that HTML marking didn’t survive the blockquote markup.

    2. This part of your digression caught my eye:

      Does 1400 need its own residency definition?

      and prompts a follow-up question:

      Is there any example of a “or otherwise provided by” that – on its face – actually does “provide by” in clear and unmistakable terms*** (or is the phrase “or otherwise provided by” meant to be expansive, also throwing in the eBay view of the Court not to treat patent law as immune from any such ‘expansiveness’)…?

      *** an example might show what “level” is necessary. Without an express and different definition of “reside,” on what basis would – or even could – an argument that the term was not meant to mean what the 1391 section states it to mean? Was 1391 enacted with any indication that the mere use (as in the patent section) was meant to be a carve-out? If mere use of the term is enough to cancel out the broadening effect, then the broadening effect itself will be turned inside out and cease to have any effect.

    3. Alex, yes, a clean and unambiguous legislative change would be the most desirable, but what the Sup. Ct. can easily do without an legislative change is to flip the Fed. Cir. panel decision mooting § 1400(b) since it is still on the books.

      1. Can the Supreme Court add into 1400 more than just the passing use of the word “reside”…?

        (I mean, of course, without violating the separation of powers and rewriting legislation itself)

  2. One of the strongest arguments that the Fed. Cir. got it wrong* is that if Congress HAD intended to overrule 28 U.S.C. § 1400(b) in amending a definition in 28 U.S.C. § 1391(c), why did they never say or suggest that, and why did they leave § 1400(b) on the statute books?
    I believe that Ned pointed out on an earlier blog that the Sup. Ct. denied cert on this issue from that Fed. Cir. decision? But that would not prevent the Sup.Ct. from taking it up now, with the evidence of the consequences, and that was back when they were not taking cert on so many Fed. Cir. patent decisions. However, it is still a long shot.

    *in 1990 in VE Holding, 917 F.2d. 1574.

    1. Another argument, being strongly made in this case, is that after the Fed. Cir. VE Holding decision § 1391(c) was revised again. Specifically, that “Federal Courts Jurisdiction and Venue Clarification Act of 2011” replaced the phrase “[f]or purposes of venue under this chapter…” with “[f]or all venue purposes.” That 2011 Act also introduced a new § 1391(a) entitled “Applicability of section.” § 1391(a) now states, in relevant part, that “[e]xcept as otherwise provided by law — (1) this section shall govern the venue of all civil actions brought in district courts of the United States[.]”
      But was there any more indication of Congressional intent to revive Since VE Holding, § 1391(c) has been revised once more by Congress. The Federal Courts Jurisdiction and Venue Clarification Act of 2011, in relevant part, replaced the phrase “[f]or purposes of venue under this chapter…” with “[f]or all venue purposes.”8 The 2011 Act also introduced a new § 1391(a) entitled “Applicability of section.” § 1391(a) now states, in relevant part, that “[e]xcept as otherwise provided by law — (1) this section shall govern the venue of all civil actions brought in district courts of the United States[.]”
      [Again leaving the courts to deal with the careless failure of Congress to consider the effect, or if any were intended, of changes in one of their venue statutes on another of their venue statutes?]

    2. Other than the fact that most cert petitions are denied, is there anything that makes this case a particulary long “long shot”?

      Seems like exactly the sort of thing we’d expect the Supreme’s to opine on, especially since we’ve had 26 years to see the effects of VE Holding on the system. I don’t think the earlier cert denial matters much. Heck, the Supremes have completely reversed their own published opinions within that time frame.

      1. I might be wrong on this timing, but it seems the extension of time to file the cert. petition means that this petition might not get caught up with all the others filed over the summer and considered (and denied) at the “long conference” at the end of September.

      2. MM, in addition to the roughly 300 to one odds against a cert grant, this is not even from a final decision [in THIS case], it is from a denial of mandamus.
        But you might be right that this kind of statutory interpretation confusion, involving the Fed. Cir., and involving the Supremes general responsibility for guidance of lower federal courts on an issue affecting many federal court cases, plus the legal academia appeals. might be appealing the Supremes? Someone else may have a much better tea leaves reader than me.
        I had argued that VE Holding was decided wrongly from its beginning for the reasons first cited above, but I am also old enough to remember how much patent litigation time was wasted on venue discovery, arguments and transfers under § 1400(b) before VE Holding effectively rendered that statute irrelevant and immaterial.

        1. I am also old enough to remember how much patent litigation time was wasted on venue discovery, arguments and transfers under § 1400(b) before VE Holding effectively rendered that statute irrelevant and immaterial.

          I will second this. VE Holdings was a sea change in the approach to the early stages of most every patent litigation. I think many folks don’t realize that venue “reform” will directly result in huge increased litigation costs as parties fight over where there is a “regular and established place of business.” Just like the old (pre-1990) days, only now with astronomically higher attorneys’ fees.

          1. I am shocked, shocked I say, that you would suggest that anyone would co-opt the word “reform” to make things actually worse for innovators, to make things more expensive, more uncertain, and take more time to arrive at clarity.

            (I need a bigger sarcasm sign to hold up for this comment)

            😉

      3. That this particular abuse is crippling high profile industries and regularly making national news gives the case much better odds than most certiorari petitions. The clerks will all have read about and remembered the rogue court and entrepreneurial judges embarrassing the third branch.

        And this is a case unlikely to be ruined by a 4-4 split since these CAFC flights of fancy get overturned unanimously often enough.

        Still, any certiorari petition has long odds.

        1. Straight from K Street…ridiculous.

          Let’s see: the greatest innovation engine the world has ever seen created by our patent system including software (10x bigger than any other country’s), and yet somehow now it has turned ev1l.

          Sounds a lot like what Goldman Sachs bought back in the 1990’s from the Clintons. No regulation in finance which led to 2008. Now tear down the patents for Google.

          And be clear that the real data is showing now that real innovation is starting to hurt in the US.

        2. Words like “abuse” and “crippling” first need to be re-adjusted to take into account the massive amount of false propaganda about “Tr011s” that has been (and continues to be) v0m1ted forth – and one needs to recognize that while the Left and the Right both have their animus, one needs to recognize just who benefits from such propaganda.

Comments are closed.