By Kevin E. Noonan --
The sequel to the original summer blockbuster movie, Jaws, had as a tagline "Just when you thought it was safe to go back in the water." This sentiment can describe much of U.S. patent law over the last decade and a half, between the ill-fated USPTO "claims and continuation" rules, the Leahy-Smith America Invents Act, and the Supreme Court's various forays into numerous areas of the law. The latest head-turner, the question of proper patent venue, has suffered the double whammy of changes enacted by Congress and the Supreme Court's interpretation of them (particularly in overturning the Federal Circuit's interpretation which had been in effect for decades). The Federal Circuit has provided some limited guidance (see "In re Micron Technology, Inc. (Fed. Cir. 2017)" and "In re Cray Inc. (Fed. Cir. 2017)") and these decisions have provided some illustrative district court decisions showing how these lower courts have understood and adopted whatever rubrics their judicial superiors have enunciated (see "More Views on Venue -- Federal Circuit Addresses In re Micron Fallout").
The latest head-turning wrinkle in the venue question comes from a decision denying Defendant's venue-related motions by Judge Haywood S. Gilliam, Jr., U.S. District Court Judge for the Northern District of California, in Plexxikon Inc. v. Novartis Pharmaceuticals Corp. Defendant put two venue-related motions before the District Court: a motion to dismiss (or in the alternative transfer) under 28 U.S.C. § 1406 and a motion to transfer under 28 U.S.C. § 1400(b). Citing the Supreme Court's decision in TC Heartland LLC v. Kraft Foods Group Brands LLC, 137 S. Ct. 1514, 1519 (2017), the District Court's opinion acknowledges that venue is proper either "in the judicial district where the defendant resides," i.e., its state of incorporation (in this case, Delaware) or "where the defendant has committed acts of infringement and has a regular and established place of business." Noting that for a motion to dismiss a Court must accept a plaintiff's allegations of infringement, the Court applies the "three general requirements" enunciated by the Federal Circuit in In re Cray: 1) that the defendant must have a physical place of business in the district (a "physical, geographical location in the district from which the business of the defendant is carried out"); 2) that it must be a "regular and established" place of business (that "operates in a steady, uniform, orderly, and methodical manner"); and 3) that "it must be the place of the defendant," i.e., where a defendant has an "establish[ed] or ratif[ied] place of business."
Applying these requirements, the Court found that venue was properly in the Northern District of California. While the facts underlying the Court's decision were straightforward, where the Court reached new ground was in the relationship between Defendant's "regular and established place of business" and the alleged acts of infringement. It was undisputed that Defendant "'leases and operates two adjacent facilities in San Carlos,' California — a manufacturing facility and a research facility," but Defendant argued that there must be a nexus between the actions forming the basis for the complaint and the facts supporting proper venue. The Court disagreed, finding that the plain meaning of the statute contained no such nexus requirement. If followed by other district courts, this interpretation of the venue requirements could again expand the scope of judicial districts that support venue, particularly for large corporations having more than one business unit or divisions selling disparate products -- wherever their commercial activities occur may be sufficient for finding proper venue even if the commercial activities have no relationship to the alleged infringing activities.
With regard to transfer on convenience grounds under 28 U.S.C. § 1406, the Court found that the relative inconvenience of California or Delaware was equal for Defendant and Plaintiff and that the deference due plaintiff on choice of forum favored denying the transfer motion (being generally given "great weight"). Also relevant to the Court's decision was that "the technology at issue was designed and developed" in the California district, providing a "significant connection" to the forum. Finally, in this case the Court also considered the congestion in the Delaware court (where two of the four district court judgeships were vacant), something appropriate due to these "unique circumstances" (and not simply because, inter alia, the District of Delaware's docket was particularly heavy).