by Dennis Crouch
In re OATH HOLDINGS, INC. (Formerly Known as Yahoo Holdings, Inc.) (Fed. Cir. 2018)
The outcome of this case is simple: Oath doesn’t have to defend a patent infringement lawsuit in E.D.N.Y. because that location is an “improper venue.”
Under TC Heartland (2017), patent owners in patent cases now have a fairly limited set of options for filing infringement actions. In particular, a lawsuit against a domestic defendant must be filed either:
- Where the defendant resides (i.e., its state of incorporation)
- Where the defendant has a regular and established place of business (i.e., physical building).
TC Heartland falls directly in line with the prior supreme court decision in Fourco Glass (1957). However, during the interim, the Federal Circuit had expanded its definition of proper venue to include any court that has personal jurisdiction over the defendant. Thus, for someone who studies only Supreme Court law, TC Heartland was a continuation of an unchanged law. On the other hand, the case was a major shift for those of us whose gaze is directed to the Federal Circuit (and practical district court litigation). The Federal Circuit has identified the latter frame of reference as appropriate — holding that TC Heartland was a change in the law. In re Micron Technology, Inc., 875 F.3d 1091 (Fed. Cir. 2017). The Micron decision was important because it prompted district courts to revisit the venue question even if the issue was seemingly waived.
In its decision here, the Federal Circuit holds that Oath/Yahoo should not be considered to have waived the venue issue because it promptly raised the issue immediately following TC Heartland.
There is no dispute that venue in the Eastern District of New York in this case is contrary to § 1400(b). The only question is whether Oath waived or forfeited the right to have the case dismissed on that basis by waiting too long to invoke it. The district court answered yes to that question. The district court’s principal ground for doing so, however, rests on its failure to follow our directly controlling Micron precedent addressing the issue of waiver under Rule 12(g)(2) and (h)(1) as applied to TC Heartland’s rejection of this court’s earlier, longstanding VE Holding precedent. . . .
Micron answers the entire question of waiver under Rule 12(g)(2) and (h)(1) for purposes of this case: there was no such waiver. In what is nearly the only basis for the district court’s denial of Oath’s venue motion, the district court clearly erred in not following the Micron precedent giving that answer. That error warrants mandamus relief.
On remand, the district court is ordered to either dismiss the case or transfer it to a proper venue.
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One tricky aspect of this decision involves the question of “binding precedent.” The Federal Circuit’s patent law precedent is binding on all of the district courts with regard to patent law questions. However, the Federal Circuit relies upon the law of the various regional circuit courts of appeals when deciding non-patent issues such as general civil procedure. Here, although the question of proper venue is a “patent law” question, the patentee argued that the waiver analysis of Micron was an interpretation of First Circuit law and didn’t bind the E.D.N.Y. judge sitting in the Second Circuit. On appeal, the Federal Circuit rejected that analysis holding that “issues of waiver or forfeiture of patent-venue rights under § 1400(b) and § 1406(a) are likewise governed by our [Federal Circuit] law.” Thus, Micron controls all the district courts.