Federal Circuit: TC Heartland changed the law; pre-decision waiver of venue challenges are nullified

by Dennis Crouch

In re Micron (Fed. Cir. 2017)

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.


23 thoughts on “Federal Circuit: TC Heartland changed the law; pre-decision waiver of venue challenges are nullified

  1. 13

    Professor, I’m not sure how you can say this is poorly reasoned but yet somehow is common sense. “The law of precedent is part of what determines what law controls.” On a practical level (and where is practically less important than the Federal Rules of Civil Procedure?), the defense was unavailable. Trying to dissect the poorly worded section of TC Heartland to hold that this was not controlling law does a disservice to the federal rules. There is no difference between a change of law by statute and change of law by cases. The FRCP nor common sense supports such a distinction.

    It would be downright annoying have every defendant plead EVERY DEFENSE in EVERY CASE just in case a 20 year old controlling case is overturned by the Supreme Court. What a headache, no thanks.

    This holding is the aspirin to stop that migraine from happening.

    On this one Federal Circuit, bravo.

  2. 12

    Power of the Federal Circuit (in the area of patents and patent litigation) both substantively and procedurally should never be underestimated nor should the continual struggle of that Court to maintain it and to maintain the appearance of it in all they do!

    1. 12.1

      I agree. And, Obama has stacked that CAFC with lots of circuit judges that are smart and anti-patent (and selected by Google.) Perhaps, Taranto is smartest of the goon squad.

  3. 11

    Are the FRCP jurisdictional or procedural as a general question?

    Hamer v. Neighborhood Housing Services of Chicago suggests that if Congress did not mandate something in statue, courts are free to adjust their procedural rules- notionally I would assume in the interest of justice or equity.

    “If a time prescription governing the transfer of adjudicatory authority from one Article III court to another appears in a statute, the limitation is jurisdictional; otherwise, the time specification fits within the claim-processing category”.

    While a defense waiver is not a time prescription, exactly, it’s surely in the family….

  4. 10

    No one thinks that TC Heartland nullifies choice-of-venue clauses in private contracts that impose a venue that would be invalid under TCH in the absence of a contract, right?

  5. 9

    Dennis, you may find this decision to be poorly reasoned, and think that ever since the CAFC decided that defendants could be sued just about anywhere, it was up to the hundreds (or thousands) of defendants who, under the eventual TC Heartland standard, might have been been able to obtain a venue transfer, to plead that at the district court level and on appeal, even though such pleadings were clearly going to fall on deaf ears and just waste defendants’ time and money.

    Myself, I view this decision as this CAFC panel saying, “We got it wrong for all those years, so we’re not going to penalize those current litigants who relied on our pre-SCOTUS TC Heartland decisions and accordingly didn’t raise venue challenges at the earliest opportunity.” The admission of mistake is a refreshing thing to hear from judges. I wish the nine judges sitting on SCOTUS would admit their (or their predecessors’) mistakes and correct them.

    1. 9.1

      Probably good points, except it isn’t admitting mistakes but the Google appointed judges wiping the old decisions. Taranto (Google selected with no patent law experience and no science background) is a very clever man that disdains patents and is smart enough not to openingly admit it.

      1. 9.1.1

        Taranto… [had] no patent law experience and no science background…

        I have no idea about his undergraduate training, but it is hard to square his professional history with the assertion that he had “no patent law experience.”

  6. 8

    The holding about Dietz is not dicta. If it were dicta, then the case would have been reversed and remanded with instructions to transfer.

  7. 5

    I suppose that the Feds will come the opposite conclusion about waiver after Oil States, otherwise all those IPRs will be undone.

    1. 5.1

      “The Rule 12 waiver question presented here is whether the venue defense was ‘available’…”

      So…they’re saying that the mere fact you can always appeal and hope to change the caselaw isn’t enough to make the defense “available”?

      How then could they possibly distinguish IPR, since it’s pretty much in the same boat (i.e., there’s a reasonable argument for changing the caselaw, but the “anti-IPR position” was otherwise “unavailable” under existing Federal Circuit caselaw)?

      1. 5.1.1

        Maybe the patent maximalists should challenge the venue statute as unconstitutional. Did the Englishmen in Nottingham Forest in 1782 have a venue statute that would allow you to transfer a case from New York to Alaska? No? Well, then.

  8. 4

    My sense is that this is quite poor analysis opinion, but the outcome will likely stick

    The Ends justify the Means…

    (note that here the reach of the Court – change or otherwise – reaches a “significant level vis a vis law making that is not constrained due to Constitutional allocations of statutory law writing authority; unlike say certain other areas of law…. )

  9. 3

    I do wonder if SCOTUS would agree. And I can hear the wave of trees being felled to feed the motions for reconsideration about to be filed.

  10. 2

    And per the panel:

    “But we have denied mandamus, finding no clear abuse of discretion, in several cases involving venue objections based on TC Heartland that were presented close to trial.4 We also note a scenario that presents at least an obvious starting point for a claim of forfeiture, whether based on timeliness or consent or distinct grounds: a defendant’s tactical wait-and-see bypassing of an opportunity to declare a desire for a different forum, where the course of proceedings might well have been altered by such a declaration.”

    The court makes clear that the “change of law” analysis pursuant to Rule 12(g)(2) and (h)(1)(A) is not the only question to ask when ruling on a venue transfer motion.

  11. 1

    How in any sense can you call the court’s discussion about Dietz dicta?? The whole point of that discussion is for the panel to provide guidance to the district court when assessing transfer motions.

    And you say:
    “Regardless of this technicality, the rule appears now that district courts should be considering and granting improper venue decisions moving forward.”

    Um, no, it’s not that simple. No doubt, the majority of transfer motions should now be granted. But the court expressly states that there may be circumstances, per Dietz, that do not require transfer. For example, a court may decline to transfer if the case is on the eve of trial.

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