Ventures In Venue: Selecting The Proper Patent Venue

• Published date: 22 November 2024
• Subject Matter: Intellectual Property, Patent
• Law Firm: Proskauer Rose LLP
• Author: Joseph Drayton, Connor J. Villar and Elizabeth C. Shrieves

Amongst the many decisions an attorney makes throughout litigation, there is one choice that can shape the outcome of a case way before filing a motion, setting discovery and trial strategy, or even calling a witness: venue, where the case will be adjudicated. The governing statute limits patent venue to (i) the judicial district in which the defendant resides; or (ii) where the defendant has "committed acts of infringement and has a regular and established place of business." 28 U.S.C. §1400(b). If this sounds narrower than the "traditional" venue rules, that's because it is. Initially, the Supreme Court interpreted Section 1400(b) to be "a restrictive measure, limiting a prior, broader venue." Stonite Prods. Co. v. Melvin Lloyd Co., 315 U.S. 561, 563(1942). That said, plaintiffs are permitted to engage in "a certain amount of forum shopping" via Federal Rule of Civil Procedure 41(a)(1). In re TikTok, Inc., 85 F.4th 352 (5th Cir. 2023) (recognizing Rule 41(a)(1) permits voluntary dismissal to secure a plaintiff's preferred forum). Comparatively, defendants have the protection of 28 U.S.C. §1404(a), convenience transfer, to prevent brazen attempts at forum shopping.

Numerous factors are taken into account when determining the propriety of a chosen venue. Whether asserting patent infringement allegations or defending against them, these factors will impact a party's choice of forum and should be considered before filing a case or attempting to transfer venue.

Factors to Consider Regarding Venue

While there are numerous factors to consider regarding venue, below are ten important issues to examine before choosing where to file or where to request transfer. First and foremost, if you are looking to file a lawsuit you must ensure that venue is proper. If you are defending against an infringement allegation, a motion to dismiss for improper venue may be your first line of defense. With that in mind, here are ten of the most important considerations.

Proper Venue

Parties must look to the patent venue statute and determine in which district(s) either the defendant resides or the defendant has allegedly "committed acts of infringement and has a regular and established place of business." 28 U.S.C. §1400(b). Corporations reside wherever they are incorporated. See e.g., TC Heartland LLC v. Kraft Foods Grp. Brands, LLC, 582 U.S. 258, 262 (2017). To establish a party has a regular and established place of business within a venue, the plaintiff has the burden of showing that the defendant: "(1) [] ha[s] a physical place of business in the district; (2) that physical place of business must be regular and established; and that place of business must be the defendant's." In re Cray, 871 F.3d 1355, 1360 (Fed. Cir. 2017);In re ZTE (USA) Inc., 890 F.3d 1008, 1013 -14 (Fed. Cir. 2018). With that said, the business need not be a fixed, customer-facing location such as a brick-and-mortar office. Warehouses, employees' homes that store company documents and products, and other locations where customers would know they can reach employees have all been found to be places of business. Bel Power Sols. Inc. v. Monolithic Power Sys., 2022 U.S. Dist. LEXIS 86707, *3-4 (W.D. Tex. May 4, 2022) (collecting cases). And with remote work trends continuing, this has become an increasingly gray area.

A recent case out of the Southern District of New York, for example, sheds light on how remote workers will play a role in new venue considerations. Trackthings LLC v. Netgear, Inc. was transferred to the District of Delaware to address improper venue in New York instead of being dismissed because that is where the alleged infringer was incorporated. 2022 BL 252183 (S.D.N.Y. July 20, 2022). At issue was whether defendant, a California company incorporated in Delaware, had sufficient contacts for venue to be proper in the Southern District of New York. The defendant had acquired a start-up in New York City and let its office lease expire. Id. at *2. Four of the New York employees were allowed to work remotely from their homes outside of the district. Id. at *4 At the time of the suit, the defendant also had one summer intern in the district. Id. In finding that venue was improper because the defendant did not have a principal place of business in the district, the court opined that the presence of one remote worker in the district did not confer venue for patent infringement. Id. at *11. In aligning this with other cases, the court clarified remote workers can establish a principal place of business under certain circumstances including where (i) the business either requires the workers to be located there or owns/finances the lodging; (ii) documents and products are stored in the houses; or (iii) all of the employees are remote as part of the business model. Id. at *10-11 (discussing In re Cray, 871 F.3d 1355 (Fed. Cir. 2017); Zaxcom, Inc. v. Lectrosonics, Inc., 2019 U.S. Dist. LEXIS 16975 (E.D.N.Y. Feb 1, 2019) (finding venue improper with a remote employee); and RegenLab USA LLC v. Estar Tech., 335 F. Supp. 3d 526 (S.D.N.Y. 2018) (finding venue proper because all employees worked remote and stored inventory to conduct demonstrations within the district)).

Compare Trackthings with In re Tiktok, Inc., where the Fifth Circuit granted a writ of mandamus ordering the transfer out of the Western District of Texas in the context of a copyright issue and an appealed ruling on motion to transfer for convenience. 85 F.4th 352, 356 (5th Cir. 2023). There, the defendant had an entire office located within the district, but the case centered around source code accessible only to the software engineering team located in California, save one remote worker in Texas outside the western district's jurisdiction. Id. at 359 (acknowledging the one remote worker in Irving, Texas 116 miles away from the Waco courthouse). Accordingly, since the evidence was only accessible by employees outside the district, it did not matter geographically how far outside the district they were; venue was improper regardless. Id. As a general matter, courts have held where files are accessible via electronic transfers, it is irrelevant what office they've normally dealt with (i.e., if the accounting team is in New York but the case is in California it's easy enough to transfer files across districts). However, when sensitive data that is password protected or requires additional security clearances, then location of those with access matters. Id.

Forum Non Conveniens Factors

Any venue discussion would be remiss to omit the forum non conveniens considerations laid out in cases such as Piper Aircraft Co. v. Reyno, 454 U.S. 235 (1981) or more recently In re Volkswagen of Am., Inc.,< a href="http://www.bloomberglaw.com/citation/545%20f.3d%20304">545 F.3d 304 (5th Cir. 2008). After being served with a complaint, a defendant should consider moving to dismiss the complaint for improper venue or, in the alternative, transfer it to a more convenient venue. Courts look at eight factors in deciding whether to transfer. Those factors are as follows:

1) "the relative ease of access to sources of proof";

2) "the availability of compulsory process to secure the attendance of witnesses";

3) "the cost of attendance for willing witnesses";

4) "all other practical problems that make trial of a case easy, expeditious and inexpensive";

5) "the administrative difficulties flowing from court congestion";

6) "the local interest in having...