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Waiver and Forfeiture of Venue Challenges in Patent Lawsuits

Firm Thought Leadership

The Supreme Court stated in TC Heartland, LLC v. Kraft Foods Group Brands, LLC that venue in patent infringement cases is governed solely by 28 U.S.C. § 1400, as opposed to the general venue provisions.1 Subsequently, the Federal Circuit, in In re Micron Technology, held that TC Heartland represented a change of law, and that a defendant does not waive its defense of improper venue simply by having failed to raise the defense pre-TC Heartland.However, some courts, such as the Eastern District of New York, disagreed, finding that TC Heartland merely reaffirmed the Supreme Court’s decision in Fourco Glass Co. v. Transmirra Products Corp.3 In its November 2018 opinion in In re Oath Holdings, the Federal Circuit reiterated that its Micron decision TC Heartland represented a change in law regarding questions of venue in patent infringement cases, and clarified that Federal Circuit law (including its Micron decision) is controlling on issues of venue, waiver, and forfeiture in patent specific cases.4

I. The District Court Proceedings

In In re Oath Holdings, AlmondNET, Datonics, LLC, and Intent IQ, LLC (collectively, “Respondents”) sued Oath Holdings in the United States District Court for the Eastern District of New York, alleging patent infringement.5 Oath is a Delaware corporation and does not have a “regular and established place of business” in the Eastern District of New York within the meaning of the venue provisions for patent cases, 28 U.S.C. § 1400(b).6 In July 2016, Oath moved to dismiss the complaint for failure to state a claim under Federal Rule of Civil Procedure 12(b)(6).7 However, in January 2017, Oath withdrew its Rule 12 motion and filed an answer to Respondents’ complaint.8 In the answer, Oath expressly “reserved the right to challenge venue based upon any change in law, including the Supreme Court’s upcoming decision in TC Heartland, LLC v. Kraft Foods Group Brands, LLC,” to which the Supreme Court had granted certiorari to address whether venue in patent infringement cases is controlled exclusively by 28 U.S.C. § 1400.9

On May 22, 2017, the Supreme Court issued its decision in TC Heartland, holding that 28 U.S.C. § 1400 exclusively controls venue in patent infringement cases.10 Twenty-one days later, Oath filed a motion pursuant to Rule 12(b)(3) to dismiss the instant action for improper venue.11 Respondents opposed the motion, arguing that Oath had waived its venue defense under Rule 12(g)(2) and Rule 12(h)(1) because the venue defense was “available,” but not asserted, when Oath filed its Rule 12(b)(6) motion in July 2016 (before the Supreme Court’s decision in TC Heartland).12 The district court held that Oath waived its venue defense, and denied Oath’s motion under 12(b)(3).13

In October 2017, Oath filed a petition with the Federal Circuit for a writ of mandamus that would direct the district court to grant the motion to dismiss. 14 During the pendency of Oath’s petition, in November 2017, the Federal Circuit decided Micron, holding that TC Heartland represented a change of law, and that a defendant does not waive its defense of improper venue simply by failing to raise the defense pre-TC Heartland.15 The Federal Circuit denied Oath’s petition, citing Micron and holding that Oath’s failure to present a venue objection earlier did not result in waiver under Rules 12(g)(2) and (h)(1). 16 The Federal Circuit further stated that it would be more proper for Oath to move for reconsideration of the denial of the motion to dismiss, before the Federal Circuit considered the petition. 17 Oath properly moved the district court for reconsideration.18 However, the district court denied Oath’s motion, holding that TC Heartland was not a change in the law at the Supreme Court level, and did not cite to the Federal Circuit’s Micron decision.19

Oath filed a second petition for writ of mandamus with the Federal Circuit, again requesting the Federal Circuit to direct the district court to dismiss the lawsuit.20

The Federal Circuit reviewed whether Oath waived or forfeited the “right to have the case dismissed on the basis of waiting too long” to invoke such defenses under the Federal Rules of Civil Procedure.21

II. Federal Circuit Precedent Controls Issues of Waiver in Patent Infringement Actions

The district court held that Oath waived their right to assert a defense of improper venue because it did not assert the defense in a timely manner.22 Notably, the district court decided this issue without following Micron.23

At the Federal Circuit, the Respondents argued that the district court correctly refused to apply Micron because Micron arose under First Circuit law, while this case arises under Second Circuit law. 24 The Court disagreed, concluding that Micron is directly controlling law because interpretation of 28 U.S.C. § 1400, a patent-specific statute, “is a matter of Federal Circuit law,” as opposed to regional circuit law. 25 As such, issues involving waiver or forfeiture of patent venue rights under 28 U.S.C. §§ 1400(b) and 1406(a) are governed by Federal Circuit law.26

The Federal Circuit also noted even under Second Circuit law, the court would have arrived at the same result.27 For example, the Federal Circuit cited to Gucci America, Inc. v. Li28 and Holzsager v. Valley Hospital, 29 both Second Circuit precedent that found no Rule 12(h)(1) waiver where the Supreme Court overruled “circuit precedent that governed earlier in the case.”30 Furthermore, the Court noted that neither the district court nor the Respondents cited any Second Circuit decision to the contrary.31

Thus, the Federal Circuit, relying on Micron, held that the district court erred in denying Oath’s motion to dismiss for improper venue. 32 As such, Micron is binding precedent on all district courts when deciding issues of waiver in patent infringement cases, regardless of the regional circuit having appellate jurisdiction in non-patent matters.

III. Asserting the Defense of Improper Venue Early and Timely Could Prevent Forfeiture

The Court also reviewed whether Oath had forfeited the right to assert a defense of improper venue on a non-Rule 12 basis. 33 In Micron, the Federal Circuit held that a basis for forfeiture on a non-Rule 12 basis exists, and forfeiture may be present when a party is untimely or consents to such a forfeiture.34

Here, the Federal Circuit held that the district court did not have a sound basis for finding forfeiture under § 1406 because, in part, the district court provided “no analysis of why the circumstances of this case made a finding of forfeiture under § 1406(b) a sound exercise of discretion.” 35 The Court also noted that the Respondents’ arguments were insufficient. 36 For example, the Respondents argued that Oath admitted to venue in its answer, and on this basis, forfeited its right under § 1406(a) to seek dismissal of transfer for improper venue.37

However, the Court concluded that Oath did not forfeit its right to assert the defense of improper venue. 38 In doing so, the Court noted that Oath acted prudently by filing the writ of mandamus within 21 days of the TC Heartland  decision to preserve its defense, and that the case had not progressed far enough such that significant judicial investment would support a finding of forfeiture. 39 The Court further noted that Oath did not conduct itself in a manner post-TC Heartland that would indicate that Oath submitted or consented to venue, or that its conduct was anything close to the “wait-and-see” tactics in Micron. 40 Lastly, the Court noted that it was proper for Oath to hedge its answer on the outcome of TC Heartland because the case was in its infancy, the defense could not properly be asserted in the district court at the time, and it put the district court and Respondents on notice that Oath was waiting for the decision in TC Heartland to see if the venue defense would become available.41

IV. Conclusion

This decision confirms that Micron is binding precedent on all district courts, and that Federal Circuit law, as opposed to regional law, controls questions of venue, waiver of the venue defense, and forfeiture of the venue defense in patent cases. This decision also confirms that when questions arise regarding venue, a party must explicitly reserve the defense during the pleading stages, and move in a timely manner.



1 TC Heartland, LLC v. Kraft Foods Group, 137 S.Ct. 1514, 1516-17 (2017).
2 See In re Micron Technology, Inc., 875 F.3d 1091, 1094 (Fed. Cir. 2017).
3 353 U.S. 222, 226 (1957) (holding that a domestic corporation resides only in its state of incorporation); In re Oath Holdings, 908 F.3d 1301, 1303 (Fed. Cir. 2018).
4 See In re Oath Holdings Inc., 908 F.3d 1301, 1303 (Fed. Cir. 2018).
5 Id. at 1302.
6 Id.; 28 U.S.C. § 1400(b) states that “[a]ny 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.”
7 In re Oath Holdings, 908 F.3d at 1302.
8 Id. at 1303.
9 Id.see also TC Heartland, LLC v. Kraft Foods Group, 137 S.Ct. 1514, 1516-17 (2017).
10 In re Oath Holdings, 908 F.3d at 1303; TC Heartland, LLC, 137 S.Ct. at 1517.
11 In re Oath Holdings, 908 F.3d at 1303.
12 Id.
13 Id. at 1303.
14 Id.
15 See In re Micron Technology, Inc., 875 F.3d 1091, 1094 (Fed. Cir. 2017).
16 In re Oath Holdings, 908 F.3d at 1303.
17 Id.
18 Id.
19 Id. at 1303-04.
20 Id. at 1304.
21 Id.
22 Id. at 1303.
23 Id. at 1303-04.
24 Id. at 1304.
25 Id. at 1305.
26 Id.See also 28 U.S.C. § 1406(a) (“The district court of a district in which is filed a case laying venue in the wrong division or district shall dismiss, or if it be in the interest of justice, transfer such case to any district or division in which it could have been brought.”).
27 In re Oath Holdings, 908 F.3d  at 1305.
28 768 F.3d 122, 135-26 (2d Cir. 2014).
29 646 F.2d 792, 794-96 (2d Cir. 1981).
30 In re Oath Holdings, 908 F.3d at 1305.
31 Id.
32 Id.
33 Id.
34 Id.
35 Id. at 1305.
36 Id. at 1306.
37 Id.
38 Id.
39 Id.
40 Id.
41 Id. at 1306.

 

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