Nearly a year has passed since the Supreme Court’s TC Heartland decision, which reaffirmed that 28 U.S.C. § 1400(b) “is the sole and exclusive provision controlling venue in patent infringement actions.” 1 Under TC Heartland, a plaintiff may bring a patent infringement suit in “the judicial district” either: (1) “where the defendant resides,” or (2) “where the defendant has committed acts of infringement and has a regular and established place of business.”2 As to the former, corporations are typically understood to “reside” in the state of their incorporation. However, when a defendant is incorporated in a multidistrict state, a question arises whether venue is proper in any judicial district within a multidistrict state, or whether venue is only proper within the judicial district where the defendant has its principal place of business. This issue is now coming to a head as courts from the Central District of California and the Eastern District of Texas have issued competing interpretations of § 1400(b), and the defendant in the latter case has sought mandamus from the Federal Circuit.
One of the first post-TC Heartland cases to address this venue issue was Diem LLC v. BigCommerce, Inc.3 In Diem, BigCommerce (a Texas corporation) sought dismissal for improper venue in the Eastern District of Texas because its principal place of business was in Austin, Texas (located in the Western District of Texas), and it had no business presence in the Eastern District.4 However, Judge Gilstrap denied BigCommerce’s motion to dismiss, ruling that “a domestic corporation resides in the state of its incorporation and if that state contains more than one judicial district, the corporate defendant resides in each such judicial district for venue purposes.”5
In determining venue was proper, Judge Gilstrap relied heavily on the language used by the Supreme Court’s TC Heartland opinion. Specifically, Judge Gilstrap emphasized a passage from TC Heartland, which stated “a domestic corporation resides . . . in its State of incorporation for purposes of the patent venue statute.”6 Based on this language, Judge Gilstrap reasoned that “venue is proper in the Eastern District of Texas because Defendant resides in Texas.”7 Judge Gilstrap also distinguished the Supreme Court’s decision in Stonite Prods. v. Melvin Lloyd Co., 315 U.S. 561 (1942), which interpreted a prior version of § 1400(b).8 Judge Gilstrap explained that reliance on Stonite was misplaced because the “only” issue before the Court in Stonite was whether “Section 48 of the Judicial Code . . . is the sole provision governing the venue of patent infringement litigation,” and not the issue of where a corporation resides when it is incorporated in a multidistrict state.9 The opinion explained that although the Supreme Court determined that “resident” was “synonymous” with “inhabitant” as used in the patent venue statutes, “the definition of “resident” as used in TC Heartland was “in tension with the definition of ‘inhabitant’ that the Supreme Court applied” in cases such as Stonite.10
Judge Otero in the Central District of California recently issued a competing interpretation of § 1400(b) in Realtime Data LLC v Nexenta System. Like BigCommerce, Nexenta (a California corporation) argued that venue was improper in the Central District of California because it had its principal place of business in Santa Clara, California, which is in California’s Northern District, and Nexenta did not have any physical places of business within the Central District. However, in contrast to Diem, Judge Otero granted Nexenta’s motion to dismiss for improper venue, ruling “in the context of 28 U.S.C. § 1400(b), a corporate defendant ‘resides’ only in the state of its incorporation and, within that state, only in the judicial district in which it maintains its principal place of business.”12
In his opinion, Judge Otero relied heavily on the Supreme Court’s decision in Stonite.13 From his review of Stonite, Judge Otero reasoned that the term “residence” is a “district-specific trait,”14 and found it persuasive that the Supreme Court referred to the defendant as “an inhabitant of the Eastern District of Pennsylvania” as opposed to just the state of Pennsylvania.15 Judge Otero further found that the patent specific venue statute “was intended to be a restrictive measure, limiting a prior broader venue statute.”16
In contrast to Judge Gilstrap, Judge Otero did not deem the Supreme Court’s statement in TC Heartland that “a domestic corporation ‘resides’ only in its State of incorporation” to be dispositive of this issue.17 This was because TC Heartland did not consider the question of venue in multi-district states. Rather, in TC Heartland, venue was challenged in an entirely different state.18 Judge Otero reconciled TC Heartland’s state-focused outcome with Stonite’s district-focused outcome by explaining that “the statement that a corporation resides ‘only in its state of incorporation’ merely provides a necessary condition for venue, not a sufficient condition.”19 Thus, Judge Otero found that “while venue may only be proper within the state of incorporation, a patent case must also be brought in the judicial district containing a corporation’s principal place of business.”20
The Federal Circuit may soon clarify which interpretation is correct. In December, BigCommerce filed a petition for writ of mandamus to the Federal Circuit in response to Judge Gilstrap’s opinion.21 Briefing has finished, and an order is expected soon. BigCommerce focused its arguments on the specific language of § 1400(b) and Supreme Court precedent holding that “the patent statute treated a corporation as an inhabitant of only one district, not multiple districts.”22 Diem argued that limiting venue to a single district in a multidistrict state would be unworkable when applied to the hypothetical situation where a corporation has no ties to a multidistrict state other than being incorporated in it.23 This set of cases is one of many that litigants should follow in discerning the full extent of TC Heartland’s impact on the issue of venue in patent litigation.
1 TC Heartland LLC v. Kraft Foods Group Brands LLC, 137 S. Ct. 1514, 1519 (2017) (quoting Fourco Glass Co. v. Transmirra Products Corp., 353 U.S. 222, 229 (1957)).
2 28 U.S.C. § 1400(b).
3 No 6:17-cv-00186, 2017 WL 3187473 (E.D. Tex. July 26, 2017).
4 Id. at *2.
5 Id. at *3 (emphasis added).
6 Id. (emphasis in the original).
9 Id. at *2.
10 Id. at *3.
11 No 2:17-cv-07690, Dkt. 28 (C.D. Cal. Jan. 23, 2018).
12 Id. at 5 (emphasis added).
13 Id. at 3 (discussing the Supreme Court’s analysis of 28 U.S.C. § 109 in Stonite).
14 Id. at 4.
15 Id. at 4 (emphasis added) (quoting Stonite, 315 U.S. at 562). Judge Otero also explained how the Supreme Court found that “inhabitant” and “resident” were synonymous as used in the two venue statutes.
16 Id. at 4 (internal citations omitted) (quoting Stonite, 315 U.S. at 566).
17 Id. at 4-5 (emphasis in the original).
19 Id. at 5 (emphasis in the original).
20 Id. (emphasis in the original).
21 See Petition for Writ of Mandamus, In Re BigCommerce, Inc., No. 18-120 (Fed. Cir. Dec. 21, 2017).
22 See BigCommerce, Inc.’s Reply in Support of Its Petition for Writ of Mandamus, In Re BigCommerce, Inc., No. 18-120 (Fed. Cir. Jan. 8, 2018).
23 See Respondent’s Opposition to Petition for Writ of Mandamus, In Re BigCommerce, Inc., No. 18-120 at 1, 7 (Fed. Cir. Jan. 4, 2018) (arguing that BigCommerce does “not offer any broader suggestions as to how it can be determined which district within a multi-district state qualifies as a corporation’s residence” if the corporation has no ties to the state other than being incorporated in it) (emphasis in the original).
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