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Patent Venue Ruling Gives Another Chance to Transfer Cases

Nov. 16, 2017, 5:38 AM

Defendants in patent infringement lawsuits may get another chance to transfer their cases to their preferred court, after an appeals court ruling Nov. 15.

The U.S. Court of Appeals for the Federal Circuit said the U.S. Supreme Court’s ruling in TC Heartland LLC v. Kraft Foods Grp Brands LLC, which made it harder for plaintiffs to choose the venue of their choice, was a change in law. The decision opens the door for defendants to request venue transfers on the grounds that the plaintiff chose the wrong court, even if they hadn’t raised the issue previously.

District courts have been split on whether defendants had waived their right to make a venue-transfer request because they’d waited too long. The Federal Circuit said that there was no waiver, in many cases, because the decision was an intervening change in the law. However, other factors can also come into play in deciding whether to grant a transfer motion, it said.

This is the second time the Federal Circuit has addressed a post TC Heartland issue since the decision came down in May. In the other case, In re Cray, the court rejected a broad reading of the patent venue statute that would have given plaintiffs more flexibility when choosing where to sue large companies.

“The holding that TC Heartland is an intervening change in the law is, as the court said, common sense,” Blair Jacobs, patent partner with Paul Hastings LLP in Washington, told Bloomberg Law. The alternative required parties to preserve arguments that have been rejected for nearly 30 years, he said, and which would simply bog down the courts.

Change in Law

Harvard University sued Micron Technology Inc. in the U.S. District Court for the District of Massachusetts nearly a year before TC Heartland was decided for allegedly infringing patents related to semiconductor manufacturing. Micron filed a motion to dismiss in August 2016, but didn’t argue that venue was improper.

Under the patent venue statute, 28 U.S.C. § 1400(b), patent owners can sue where the defendant resides, or where the defendant both committed an infringing act and has a regular and established place of business. The TC Heartland ruling restricted the first path by limiting “resides” to where the defendant is incorporated—not just where they make a sale.

After TC Heartland, Micron moved to transfer or dismiss on the grounds that Massachusetts is not a proper venue. The trial court rejected the request, saying Micron waived the argument by failing to raise it in its previous motion to dismiss.

The Federal Circuit disagreed, saying that TC Heartland was a change in the law. Before the May 2017 decision, district courts wouldn’t have granted Micron’s motion because doing so would have contradicted a Federal Circuit decision from 1990 that laid out the more lenient pre-TC Heartland venue standard, the court said.

The Federal Circuit rejected Harvard’s argument that the 1990 decision improperly contradicted a 1957 Supreme Court decision on the same issue, and so TC Heartland was actually just reaffirming the law.

From a common-sense perspective, requiring Micron to file what it knew was a losing motion isn’t reasonable, the court said.

“The decision answers a lot of questions involving post-TC Heartland motions out there, but it doesn’t resolve everything,” Matthew Rizzolo, patent counsel at Ropes & Gray LLP in Washington, told Bloomberg Law.

Look at Other Factors

The Federal Circuit, however, didn’t order the court to transfer or dismiss the case, saying that there may be other reasons to deny Micron’s request, such as a finding that it had forfeited the right to dispute venue. It sent the case back to the trial court to decide Micron’s motion.

The forfeiture discussion may have been the court’s way of reminding courts about the other considerations involved, such as whether granting a motion would be equitable, Rizzolo said.

Micron filed its motion about a week after TC Heartland, but if it had, for example, waited months until the eve of trial instead, then the court might say that it would be unfair to grant the request, he said.

The Federal Circuit may also be taking the opportunity to emphasize that district court judges have a lot of power and discretion to manage their cases, Jacobs said. Although judges have tremendous discretion to rule that any argument has been forfeited, they rarely use it, he added.

Judge Richard G. Taranto wrote the opinion, which is joined by Judges Raymond T. Chen and Todd M. Hughes.

Weil, Gotshal & Manges LLP represented Micron, while Pepper Hamilton LLP represented Harvard.

In addition to the Micron case, the same three judges sided with the defendant in a similar petition, In re: Cutsforth Inc.

However, they denied the petition in a third case, In re: DECA International Group, on the grounds that the defendant should ask the trial court for reconsideration instead.

To contact the reporter on this story: Peter Leung in Washington at pleung@bna.com

To contact the editor responsible for this story: Mike Wilczek at mwilczek@bna.com

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