Motion Trends After TC Heartland: What’s the Relief When Venue is Improper?

Lex Machina’s 2017 patent litigation year in review which is out today, says that “[w]hile the odds of success in E.D. Tex. for a motion to transfer filed prior to TC Heartland were roughly even, afterwards the grant rate increased to 75%” and notes that motions decided almost doubled in the period 180 days after compared to 180 days before (Report at p. 9).  Incidentally, some of these numbers are not new – the grant rate for motions to transfer in EDTX has hovered at 50% for the past three years.  But this puts a number on both the increased numbers of granted motions, and the increased percentage of grants.

Interestingly, it notes, as shown in the above graph, that this pattern was repeated in other districts – the grant rates went from 54% (51% in EDTX) to 74% (75% in EDTX), with the only statistically significant difference being that the number of motions decided in other districts increased even more than they did in EDTX, illustrating a little-reported effect of TC Heartland – it changed the basis for venue for patent cases across the nation – not just in EDTX.

The report doesn’t distinguish between motions to transfer under Section 1404, which was by far the most common motion to transfer under 1404, and motions to dismiss or transfer based on improper venue, which were more common after TC Heartland changed the law on patent venue, but there is one important distinction between the two and that is the relief granted.  While the grant of a motion to transfer is a transfer to a district that is “clearly more convenient”, the relief on a motion to dismiss or transfer for improper venue can be transfer, or it can be simply dismissal.

This is the decision presented in a recent case where an EDTX court considered whether a case where venue was improper should be transferred, or dismissed.

Motion to Dismiss Raises Personal Jurisdiction, Venue and Convenience

On the surface, it just says it’s a ruling on a motion to dismiss, or in the alternative to transfer venue, but under that plain exterior lurks  a detailed analysis of the defenses of personal jurisdiction (which is not, repeat NOT what you were taught in law school) , improper venue under  the general venue statute (and how to throw it away), and a motion to transfer under Section 1404.

So while it’s not exactly everything you need to know about these motions – it’s not the Magna Charta of venue law as Judge Heartfield once (well, maybe more than once) described his magnus opus Mohamed v Mazda, it’s still a thorough and useful recitation of the applicable standards.

Motion to Transfer Venue Denied – No Personal Jurisdiction over CoDefendant in Transferee Court

Obtaining a transfer requires a showing that the relevant factors show that the proposed transferee forum is “clearly more convenient”, and most motions focus on this test.  There is a threshold requirement that the proposed transferee district would have had personal jurisdiction over the defendant(s), but in most cases this requirement is not disputed and thus presents no barrier to a defendant seeking a transfer of venue.

Or at least that was the case prior to the Supreme Court’s decision in Daimler AG v. Bauman, 134 S. Ct. 746, 760 (2014) which essentially restricted general personal jurisdiction to a corporation’s place of incorporation and principal places of business. As a result, as this case shows, a motion to transfer can be defeated by the presence of a defendant who is not subject to this new shriveled and truncated form of personal jurisdiction in the transferee court.

Objections Resolved on Transfer After Non-Imputation of Contacts

A little over a month ago I posted on Judge Payne’s decision to grant a motion to dismiss for improper venue based on his decision not to consider the locations of a corporate subsidiary in the district for purposes of determining venue under Section 1400.  See “A Difficult Standard to Meet” – Imputing Places of Business Among Corporations.”   I thought readers might be interested in Judge Schroeder’s order resolving the objections to that ruling, which has some useful tips on how to (or not) to brief objections to a magistrate judge’s rulings.

(Ed. note: the scene of Dr. Frankenstein’s laboratory refers metaphorically to the concept of transferring something – here one corporation’s locations – from one entity to another.  It does not refer to methods which may or may not be used for the training or usage of law clerks. I express no opinion on its accuracy or metaphorical appropriateness for that use.)

No U-Turns on “Regular and Established Place of Business”

You probably won’t see this fact situation come up very often.  Defendant’s corporate rep gets on stand at trial and tells jury of its offices and facilities in the district and that “we’re moving a distribution center across to Marshall.”  Jury finds for defendant and in a follow-in case defendant moves post-TC Heartland to dismiss for improper venue claiming it does not have a “regular and established place of business in the Eastern District of Texas.

Venue discovery after In re Cray

One of the points I’ve been making in my recent papers and talks on patent venue is that the first place the issue can get before the court is at the venue discovery stage when the parties dispute which information is relevant to the analysis.  A recent case discusses this, and draws some lines on what is and isn’t discoverable on the issue of venue post In re Cray.

“Does The Path To The Right Venue Have To Be Narrow?” – Judge Sue Robinson

Interesting article by former D.Delaware judge Sue Robinson in Law360 today – Does The Path To The Right Venue Have To Be Narrow? Her subject, and conclusion, is this:

“The mantra seen in more than one venue decision — that venue statutes should not be given a liberal construction — is based on language from cases resolving discrete legal issues not necessarily related to § 1400(b), or policy considerations and not statutory interpretation. Consider as well the context of this discussion — patent litigation, where the property at issue is constitutionally protected, the subject matter involves cutting-edge technology, and the disputes generally are national in scope. To transform the Olberding dicta into a general principle of statutory construction[29] is, I propose, not mandated by Supreme Court precedent and, at least arguably, not consistent with a just determination of a proper venue as selected by an injured patent owner.”

It’s an interesting analysis of some of the cases discussed by the courts in TC Heartland and In re Cray.

Does The Path To The Right Venue Have To Be Narrow_ – Law360

Motion to Dismiss for Improper Venue Granted; Cordis & Cray analyzed

With In Re Cray clarifying to some extent when venue is proper based on the alleged existence of a regular and established place of business, cases are starting to get thumbs up or thumbs down on pending venue motions at an accelerating pace, providing additional analysis on where in the Cordis/Cray continuum they fit.

Like this one.