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IP Alert: Federal Circuit Declares TC Heartland a “Change of Controlling Law”

November 17, 2017

Prior to the U.S. Supreme Court’s ruling in TC Heartland in May of this year, the Federal Circuit repeatedly interpreted 28 U.S.C. §§ 1391 and § 1400 (the federal venue statutes) to allow patent lawsuits to be filed in any district court having personal jurisdiction over the accused infringer. The Court’s ruling in TC Heartland severely curtailed where patent lawsuits could be commenced by finding that § 1391 was not applicable to venue determinations in patent lawsuits. In many cases, defendants currently defending patent lawsuits who did not move for a change of venue before the TC Heartland decision elected to do so afterward. Normally, a party waives the defense of improper venue by failing to raise the defense immediately. The waiver rule, however, will not apply if there has been a change in controlling law. After TC Heartland, there has been some disagreement in the district court as to whether that decision represented a change in the law (thereby allowing defendants to raise the venue defense) or did not represent a change in the controlling law (thereby precluding defendants from raising the venue defense).

On November 15, 2017, in In re Micron Technology, Inc., the Federal Circuit answered this question, holding that the Supreme Court’s decision in TC Heartland did indeed change the controlling law regarding venue for patent cases. Because the ruling in TC Heartland represented a “change of controlling law,” defendants that failed to raise a venue defense prior to the TC Heartland decision are not necessarily prevented from raising it in a timely manner.

The facts of the case were straightforward. In June 2016, the plaintiff, President and Fellows of Harvard College (“Harvard”) filed a patent infringement lawsuit against Micron. Although Micron filed a motion to dismiss under Fed. R. Civ. P. 12(b)(6) for failure to state a claim,  Micron did not include an objection to venue under Rule 12(b)(3).

In May 2017, the Supreme Court issued its ruling in TC Heartland, which held that under 28 U.S.C. § 1400(b), “a domestic corporation ‘resides’ only in its State of incorporation for purposes of the patent venue statute.” Micron subsequently filed a second motion to dismiss, arguing that venue was improper because it is incorporated in Delaware and not in Massachusetts where the case was pending. The district court denied Micron’s second motion and held that by not objecting to venue in its first motion to dismiss, Micron had waived its venue defense. Micron then filed a petition for writ of mandamus.

The Federal Circuit noted that the Rule 12 waiver question at issue was whether the venue defense was “available” to Micron when it filed its first motion to dismiss. The Federal Circuit concluded that the venue objection “was not available until the Supreme Court decided TC Heartland because, before then, it would have been improper, given controlling precedent, for the district court to dismiss or to transfer for lack of venue.”    

The Federal Circuit stated that its holding was a “common-sense interpretation” of Rule 12. Because controlling law precluded the district court from adopting a defense, the Federal Circuit stated that “it is natural to say” that the defense was not available to Micron. “The law of precedent is part of what determines what law controls.”

The Micron case is of significance principally to parties who were involved in existing litigation as of May of 2017. One point of caution: Although the Federal Circuit held that TC Heartland created a change in the controlling law, it noted that district courts can still determine that the venue defense can be waived in certain circumstances (e.g., if the defense is not timely asserted).

For more information about these decisions, please contact Fitch Even partner Eric L. Broxterman, author of this alert.

 

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