Federal Circuit vacates Gilstrap’s decisions on patent venue
The US Court of Appeals for the Federal Circuit has concluded that when a domestic company is incorporated in a state with multiple judicial districts, only one of them is the proper venue for a patent infringement claim.
Yesterday, the Federal Circuit granted e-commerce platform BigCommerce’s petitions for writs of mandamus which had challenged the US District Court for the Eastern District of Texas’s denial of motions to dismiss or transfer cases for improper venue.
Respondents Diem and Express Mobile each filed a patent infringement suit against BigCommerce in the Eastern District of Texas.
However, BigCommerce lists its registered office in Austin, the Western District of Texas, and has no place of business in the Eastern District.
In May last year, during the discovery phase of the cases, the US Supreme Court issued its decision in TC Heartland v Kraft Foods.
Tightening the rules on where a patent lawsuit can be filed, the court reaffirmed that a domestic corporation ‘resides’ only in its state of incorporation for purposes of the patent venue statute under section 1400(b).
BigCommerce then moved to dismiss Diem’s case and transfer Express Mobile’s case, claiming that under TC Heartland, the company only resided in the Western District.
District Judge Rodney Gilstrap rejected both motions to dismiss.
In Diem’s case, the court adopted the magistrate judge’s recommendation that the objection had been waived.
The Eastern District of Texas court also concluded that even if the defence hadn’t been waived, the venue would still be proper.
“In doing so, it explained 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’,” said the Federal Circuit.
In Express Mobile’s case, the magistrate judge issued an order denying BigCommerce’s motion to transfer, noting that the district court had “already considered and rejected” BigCommerce’s arguments in the Diem order.
BigCommerce petitioned for a writ of mandamus in both cases.
Overturning the lower court’s decisions, the Federal Circuit held that a domestic corporation is not incorporated in each and every judicial district in the state.
Looking at the statute’s language, Circuit Judge Richard Linn said: “A plain reading of ‘the judicial district’ speaks to venue in only one particular judicial district in the state … This language is simply inconsistent with the understanding that a defendant resides in all districts in the state.”
The respondents argued that more flexibility should be allowed in these types of cases, “given the realities of modern business”.
However, the court said it could not ignore the requirements of the statute because different requirements may be more suitable for a modern business environment, and that policy-based arguments are best directed to Congress.
The Federal Circuit granted BigCommerce’s motions, vacating the cases and remanding them for further proceedings.
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