by Dennis Crouch
On writ of mandamus, the Federal Circuit has sided with accused-infringer Micron – holding that TC Heartland was a sufficient change in the controlling law of venue to overcome the fact venue-challenge had been previously waived in the case. My sense is that this is quite poor analysis opinion, but the outcome will likely stick — allowing venue transfer many more cases.
Over the past three decades, the Federal Circuit had repeatedly interpreted the Federal venue statutes to allow infringement lawsuits to be filed in any court with personal jurisdiction over the accused infringer. In its 2017 TC Heartland decision, the Supreme Court changed course — holding that for business-defendants in patent cases venue is only proper in districts where (1) the defendant is incorporated or (2) the defendant infringes the patent and has a regular and established place of business. Except for nationwide retailers, this significantly limits the locations where venue is proper. And, remember, the focus here is “proper venue” – if venue is not proper then the case must be dismissed or transferred.
Waiver: The immediate focus following TC Heartland has been the several hundred already pending infringement lawsuits where venue is likely improper. The difficulty for those defendants is improper venue is subject to waiver — and the rules particularly indicate that a motion for improper venue is waived unless presented during the pleadings. FRCP 12(h)(1). Here, Micron is facing an infringement lawsuit in Massachusetts (Harvard v. Micron) but did not move for dismissal for improper venue as required by the rules. Once TC Heartland was decided, the defendant then asked the court to consider the issue.
No Waiver: However, R. 12(g) indicates that waiver occurs when the defense is “available to the party but omitted.” In the mandamus action here, the court ruled that the change in law is so significant that the defense was not truly available until after the Supreme Court’s decision.
The Rule 12 waiver question presented here is whether the venue defense was “available” to Micron in August 2016. We conclude as a matter of law that it was not. The venue objection was not available until the Supreme Court decided TC Heartland because, before then, it would have been improper, given controlling precedent, for the district court to dismiss or to transfer for lack of venue. . . .
This is a common-sense interpretation of Rule 12(g)(2). Where controlling law precluded the district court, at the time of the motion, from adopting a defense or objection and on that basis granting the motion, it is natural to say, in this context, that the defense or objection was not “available” to the movant.
Although the court is absolutely correct that its approach is the common-sense approach since we have been operating under the old rule for decades. However, the major analytical problem with the court’s decision here is its notion that its misinterpretation of Supreme Court law is somehow “controlling” law. Rather the Supreme Court decided the identical issue in Fourco (1957) and then in TC Heartland (2017) held the minor amendments made to the guiding statutes did not alter the holding of Fourco. In other words, the “controlling law” this entire time has been the Supreme Court precedent. Supreme Court writes:
The issue in this case is whether [the amendment to the statutes] supplants the definition announced in Fourco and allows a plaintiff to bring a patent infringement lawsuit against a corporation in any district in which the corporation is subject to personal jurisdiction. We conclude that the amendments to §1391 did not modify the meaning of §1400(b) as interpreted by Fourco.
Regardless of this technicality, the rule appears now that district courts should be considering and granting improper venue decisions moving forward.
In what appears to be dicta, the court did place important limitations on the improper venue challenges – noting that a motion that is not sufficiently timely (i.e., too close to trial) might be denied on that grounds.