Venue over Foreign Defendant; and Seeking Rehearing before Mandamus

by Dennis Crouch

In re: accessiBe Ltd., Docket No. 22-113 (Fed. Cir. 2021) (non-precedential)

This mandamus petition has been denied, although the Federal Circuit has suggested that Judge Albright reconsider his denial of venue transfer. [2021.10.29 56 Public Version – Memorandum Opinion]

AudioEye sued accessiBe for patent infringement (US10423709, et al.) as well as claims under the Lanham Act (false advertisement & product disparagement) and under New York State Law (product disparagement, tortious interference, etc).  But, instead of suing in New York, AudioEye sued in W.D. Tex.  The focus here is on screen-reader used to help individuals with disabilities better access the internet.  The software particularly helps to fix non-compliant websites to make them more accessible.

Suing a Non-Resident for Patent Infringement: In TC Heartland, the Supreme Court severely limited the scope of “proper venue” in patent cases.  Generally, the patentee can only sue a defendant in either (1) its state of incorporation or (2) some venue where it has a regular-and-established place of business.  These limitations stem back more than 100 years, and the “limitation” offered in TC Heartland might be more properly seen as a rejection of venue-expansion by the Federal Circuit.  One gap in the Supreme Court’s analysis in TC Heartland is how to treat foreign companies.  The answer though is pretty clear under Brunette Machine Works, Ltd. v. Kockum Industries, Inc., 406 U.S. 706 (1972).  In Brunette, the Supreme Court held that the more-expansive rules of the general law (Section 1391) apply when the defendant is not a US entity.  In particular, the statute states plainly that venue is proper in any judicial district:

(3) a defendant not resident in the United States may be sued in any judicial district …

28 USC 1391(c)(3).  Obviously, the court must also satisfy the constitutional requirement of personal jurisdiction.  And, the defendant may also pursue a change-of-venue based upon inconvenience under 28 USC 1404(a).

Motion to Transfer: accessiBe moved to transfer the case to W.D.N.Y. as a “clearly more convenient forum” under section 1404(a).   But, the statute only permits transfer to a venue where the case “might have been brought.”  In his decision, Judge Albright concluded that the movant had not shown personal jurisdiction was proper in NY state court — and therefore denied the transfer motion.  The mandamus motion indicates that neither party had argued that particular issue and instead that Judge Albright had “go[ne] out of [his] way to contrive a basis for denying accessiBe’s request for a transfer.” [Petition for Mandamus]

The Federal Circuit has now denied the mandamus petition, but has suggested that the petitioner first request reconsideration from the district court:

To obtain mandamus relief, this court must be satisfied that a petitioner has no “adequate alternative” means to obtain the desired relief. Mallard (1989). Here, we cannot say that it would be futile for accessiBe to ask the district court to first reconsider its decision in light of its arguments. We therefore deny the petition without prejudice to refiling after accessiBe first asks the district court for reconsideration. Any new petition for a writ of mandamus from the district court’s ruling on reconsideration will be considered on its own merits.

Slip Op.

Personal Jurisdiction: At the district court, the defendant had also argued for dismissal of the non-patent claims for lack of personal jurisdiction.  A court needs personal jurisdiction over the parties before moving forward.  Due process fails absent personal jurisdiction — and that’s a Constitutional violation.   The Supreme Court has offered three paths for finding personal jurisdiction in a court housed in a particular state: (1) waiver (the plaintiff is generally thought to waive personal jurisdiction by filing the lawsuit; defendants also waive by not immediately complaining); (2) general jurisdiction (defendant is truly resident in the jurisdiction); or (3) specific jurisdiction (the actions that led to the cause-of-action are directed to the state).  Here, the theory is specific jurisdiction.

Specific jurisdiction over the patent claims is easier to show. The defendant has Texas-based customers and is alleged to infringe the patent by providing services to those folks.  In other words, intentional infringement of the patent in TX ==> personal jurisdiction over the patent claims in TX.

The difficulty though with specific jurisdiction is that we also look at specific jurisdiction on a claim-by-claim basis. The defendant argues that the NY State claims are based upon actions that are somewhat separate from just selling software (alleged tortious interference activity beyond just selling software).   Still, Judge Albright found that “accessiBe’s website is sufficient to establish specific personal jurisdiction over accessiBe in Texas” with regard to most of the Lanham Act claims. The court then decided to exercise “pendent personal jurisdiction” over the New York state law claims since they “share a common nucleus of operative fact.”  The defendant did not petition for mandamus on the personal jurisdiction questions and so that issue appears dead until a post-judgment appeal.

 

10 thoughts on “Venue over Foreign Defendant; and Seeking Rehearing before Mandamus

  1. 5

    Off topic from DC Twitter on 12/6/21:

    “District court issued its order under seal. On appeal though, the order was included in a non-confidential appendix and thus is available via PACER (albeit buried).

    Any problem with me publishing the order?”

    I would say “yes.” Knowing that it was intended to be secret, as an attorney have a duty not to disclose it. If you were not an attorney, then it would be okay to disclose it. If you were a law student, I would think you would be under the duties applied to attorneys.

    1. 5.1

      As an attorney, a duty is owed to your client.

      If the ‘offending party’ is not your client, then no duty arises.

      1. 5.1.1

        Attorneys have a public duty to the court.

        This rule, like rule 11 of the Federal Rules of Civil Procedure, which it virtually mirrors, “emphasizes an attorney’s public duty as an officer of the court, as opposed to the attorney’s private duty to represent a client’s interest zealously.” See N. Klausner, The Dynamics of Rule 11: Preventing Frivolous Litigation by Demanding Professional Responsibility, 61 N.Y.U.L. Rev. 300, 301 (1986) (in re Fed. R.Civ.P. 11).

        Clark v. Booth, 821 P.2d 1146 (Utah 1991).

        1. 5.1.1.1

          How is the duty to the court impugned with such an action?

          “Intended” and another’s mistake are items that do not rise to impute a duty on others.

          I do not accept your analogy to FRCV 11.

          1. 5.1.1.1.1

            I assumed there would be a difference of opinion, which is why I called attention to it for discussion.

            Here’s another quote:

            “A lawyer should demonstrate respect for the legal system and for those who serve it, including judges, other lawyers and public officials. While it is a lawyer’s duty, when necessary, to challenge the rectitude of official action, it is also a lawyer’s duty to uphold legal process.”

            Utah Rules of Professional Conduct Chapter 13, paragraph [5].

            link to parkcitybar.org

            1. 5.1.1.1.1.1

              Nice.

              Inapposite to the present discussion, but nice.

  2. 4

    It was sloppy for the moving party to not address the threshold requirement for showing that the case “could have been brought” in the proposed transferee forum. I almost never defend Judge Albright’s venue decisions but in this one instance the moving party dropped the ball. Either the moving party did think that there was an issue with transferring the case, or else they were incompetent in their briefing.

  3. 3

    “Here, we cannot say that it would be futile for accessiBe to ask the district court to first reconsider its decision in light of its arguments.”
    [Because the parties here were deprived of any opportunity to argue an issue which the Judge had sua sponte raised and relied upon only in his venue decision?] [Instead of requesting limited supplemental briefing on it.]

  4. 2

    Nunez leaving got me looking up the Ways and Means Committee. They pushed all the buttons. They are at the top.

  5. 1

    “…the [venue] “limitation” offered in TC Heartland might be more properly seen as a rejection of venue-expansion by the Federal Circuit.”
    Or, even more properly, Sup. Ct. overruling Fed. Cir. refusal to enforce 28 U.S.C. §1400(b).

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