Earlier today Judge Gilstrap granted a motion staying a consolidated patent case pending the resolution by the Federal Circuit of a mandamus petition that has been filed in another case. The Court declined to stay the case pending resolution of two IPR proceedings. The ruling is worth studying because of what the motion sought, as discussed below.
This is a patent infringement case involving medical devices that are currently in clinical trials across the country, including at sites in the Eastern District of Texas. The original motion to dismiss for improper venue was denied pre-TC Heartland. The renewed motion was denied because the issue of improper venue could not be addressed at the motion to dismiss stage because the basis for the defense depended on factual questions that could not be resolved at that stage.
But once further discovery into the infringing acts in the EDTX was conducted, at the summary judgment stage the Court could address the question of the relevance of the § 271(e)(1) safe harbor defense in determining whether venue was proper.
I recently posted on a post-Micron decision finding no waiver and deciding to dismiss as opposed to transfer patent cases brought against three defendants. There’s an interesting followup to that decision now, in which the plaintiff asked the Court to “modify” the order to transfer instead of dismiss.
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.
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.
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.
Following In re Micron, district courts are addressing the issue of what level of delay in raising a Fourco venue defense following TC Heartland constitues a waiver. This recent opinion sets forth the relevant standards, and finds that defendants that waited four and five months, respectively, waived the defense of improper venue.
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.)
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.
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.