courtThis week, the Federal Circuit resolved three issues left in TC Heartland’s wake. TC Heartland held that 28 U.S.C. § 1400(b) uniquely governs venue in patent cases and is not coterminous with the scope of § 1391. The first prong of § 1400(b) creates venue in the judicial district where the defendant resides, which the Supreme Court held to be the state of incorporation for a domestic corporation. But, this begs the question: what about when the state has multiple judicial districts? Also, whose law governs burden under § 1400(b), and where does that burden lie? In the year after TC Heartland, district courts across the country split on these issues. In re ZTE (USA), No. 2018-113, addressed burden issues. In granting a writ of mandamus to the Eastern District of Texas to dismiss a case for improper venue, the court held that Federal Circuit law – not regional circuit law – governs which party bears the burden of persuasion in establishing proper venue under § 1400(b). ZTE further held that under Federal Circuit law, Plaintiffs bear the burden of establishing that venue is proper under § 1400(b).

Next, In re Bigcommerce, No. 2018-120, another mandamus case from the Eastern District of Texas, addressed the territorial bounds mapped by the phrase “judicial district” in the first prong § 1400(b). Unlike ZTE, the case was not remanded and the Court held that venue was clearly improper. In so finding, the Federal Circuit held that a domestic corporation incorporated in a state having multiple judicial districts “resides…only in the single judicial district within that state where it maintains a principal place of business, or failing that, the judicial district in which its registered office is located.” This meant that Bigcommerce, a Texas corporation headquartered in Austin, in the Western District of Texas, resides only in the Western District of Texas, where its principal place of business (headquarters) was located. If its headquarters had been out-of-state, venue would still lie in the Western District of Texas because Austin was also where Bigcommerce lists its registered office, as recorded in its corporate filings.

Bigcommerce does not impact Delaware corporations because Delaware is a one-district state, but entities incorporated in many other states will be impacted. ZTE results in the need for a Plaintiff to develop the record as early and as thoroughly as possible in support of venue and plead detailed facts to support its venue choice. Plaintiffs must be prepared to make their case for proper venue once challenged. Defendants seeking to avoid litigating in certain districts should assess their relationships with entities operating in that district. For example, a parent corporation is unlikely to be hauled into court in a district where a subsidiary operates, as long as the parent observes strict corporate formalities, doesn’t control representatives working there, and itself does not possess, rent, or own space or equipment there. Defendants should be aware that having signage at the business related to the defendant is also a consideration.

These decisions and TC Heartland will be an important consideration for clients dealing with non-practicing entities, whom we have seen in the past try to coral large groups of defendants in Texas. There also remains some question about the impact of TC Heartland in the context of ANDA cases (which under the AIA also have different joinder provisions from other patent infringement cases). Also pending before the Federal Circuit is how the first prong of 1400(b) applies, if at all, to unincorporated associations, such as LLCs. A prior TMT Industry Insider post also discussed implications following TC Heartland. For more information on these cases, please contact Erin Knese, Philip Segrest, or Steve Holtshouser.

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Photo of Erin Knese Erin Knese

Erin focuses her practice on commercial litigation. She has experience conducting discovery and drafting pretrial motions in patent infringement cases, and in briefing before the Federal Circuit. She also has experience in other forms of IP litigation, including trademark, copyright, and trade secrets…

Erin focuses her practice on commercial litigation. She has experience conducting discovery and drafting pretrial motions in patent infringement cases, and in briefing before the Federal Circuit. She also has experience in other forms of IP litigation, including trademark, copyright, and trade secrets cases under both state-law and the DTSA.

Photo of Philip Segrest Philip Segrest

Philip is an experienced litigator in patent and intellectual property matters in a wide variety of technologies and a registered patent attorney with a technical background in physics and computer related technologies. He has particular depth of experience managing pharmaceutical patent litigation under…

Philip is an experienced litigator in patent and intellectual property matters in a wide variety of technologies and a registered patent attorney with a technical background in physics and computer related technologies. He has particular depth of experience managing pharmaceutical patent litigation under Abbreviated New Drug Act (ANDA). Philip also has extensive litigation and patent prosecution experience in information and computer related technologies, including data compression, e-commerce systems, business methods and other technologies in electrical, mechanical and chemical technical arts. Philip’s litigation experience also includes all phases of patent, copyright, trademark and trade secret cases.

Photo of Steve Holtshouser Steve Holtshouser

Steve is a trial and appellate lawyer who concentrates his practice in the area of federal patent litigation. In addition, his litigation experience extends to protecting other key drivers of business success, including trademarks, trade secrets, cyber security and confidential information. Steve further…

Steve is a trial and appellate lawyer who concentrates his practice in the area of federal patent litigation. In addition, his litigation experience extends to protecting other key drivers of business success, including trademarks, trade secrets, cyber security and confidential information. Steve further relies on his background as an Assistant U.S. Attorney to practice in the area of white collar criminal defense, responding to government inquiries and conducting internal investigations.