Venue in Multi-District States

by Dennis Crouch

The same panel that recently decided In re ZTE (Fed. Cir. May 14, 2018) (Judges Reyna, Linn, and Hughes) has now also decided another improper venue mandamus action: In re BigCommerce, Inc. (Fed. Cir. May 15, 2018).

BigCommerce focuses on the issue of proper venue in multi-district states. The potential confusion comes from the Supreme Court’s central holding in TC Heartland that “a domestic corporation ‘resides’ only in its State of incorporation for purposes of the patent venue statute.” BigCommerce is a Texas Company, but its HQ is in Austin (W.D.Texas) and argues that the Supreme Court’s statement was incomplete.  Now, on mandamus, the Federal Circuit has sided with BigCommerce — holding that the rule is more nuanced for multi-venue states.

[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.

Thus, the outcome here is that E.D.Texas is an improper venue for BigCommerce under 28 U.S.C. 1400(b) since the company neither (1) resides nor (2) has a place of business in the venue.

1400(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.

On remand, the District Court should either dismiss the lawsuits or grant a motion to transfer.

The Federal Circuit’s decision here has to be correct, and the only difficulty is the loose Supreme Court wording in TC Heartland.

In its analysis, the Federal Circuit started with the statute, which focuses on “the judicial district where the defendant resides.” The focus here is not on the “state” as a whole but on the district itself.  For its part, the appellate panel though emphasis should be added to the article “the judicial district” — i.e., what is the one single district where the defendant resides? “A plain reading of ‘the judicial district’ speaks to venue in only one particular judicial district in the state.”  The court also cited Stonite Products Co. v. Melvin Lloyd Co., 315 U.S. 561 (1942) for what it identified as the Supreme Court’s “view on the issue” — “that a corporation incorporated in a multi-district state is not a resident of every district in the state.”

7 thoughts on “Venue in Multi-District States

  1. 4

    Does anyone keep track of which districts and judges receive the most writs of mandamus from the Fed. Cir.? That never seems to be considered in those academic analyses proclaiming that, statistically, this district or that one are not really “plaintiff friendly.”

    1. 4.1

      ? No data, but certainly several important Mandamus grants and decisions were reversing E.D.TX preliminary decisions [plus this one] and did anyone ever accuse E.D. TX of not being plaintiff-friendly?
      The huge difference in the number of patent suits in particular D.C.s ought logically to have more to do with the number of mandamus motions, but note that the Delaware D.C. has also had a high a percentage of patent suits, and I do not think nearly as many mandamus attempts?

    2. 4.2

      I would think that somewhere, some academic has compiled that information for an article on forum shopping….

  2. 3

    Also, Greg, out of posts on the other post, your views evince an ignorance of technology.

    During the initial phase of technological advancement most machines replaced physical labor. Never was there an issue that a claim could read on the movements of a human because the invention was a method for machines to perform or the invention was a machine. Note too that the machines changed how physical labor was performed and the human interacted with the machines.

    Now we are in the phase of replacing mental tasks. And exactly the same characteristics are present with mental tasks as physical tasks. You stance that a method that “could” be performed by a brain renders it ineligible is absurd. The point is to build machines to perform the tasks.

    I often get the feeling that you hold some hidden agendas like perhaps you work for some company and you are adhering to their policies.

  3. 2

    “In its analysis, the Federal Circuit started with the statute”

    And yet, in TC Heartland, the Supreme Court did not “start with the statute”, because, if it did, it would have found that, in 2017, starting with the statute means starting with 28 USC 1391(c)(2) which defines “resides” for ALL venue purposes.

    Nice to see that the Federal Circuit starts with the statute for statutory interpretation, while the Supreme Court starts with stare decisis from a decades old decision when the statutes read much differently instead of analyzing the statutes as they read today.

    SMH.

    1. 2.1

      Actually, they started with the start of the statute, which reads, “Except as otherwise provided by law . . . .”

  4. 1

    Good thing this venue issue got quickly decided.

    Dennis, don’t you need to fix “in Austin (E.D.Texas)”?

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