Client Alert: Federal Circuit Rules That Plaintiffs Bear Burden Of Establishing Venue In Patent Infringement Litigation

On May 14, 2018, the Federal Circuit granted a petition for mandamus by ZTE (USA), Inc. ("ZTE USA"), vacating a district court order denying ZTE USA's motion to dismiss for improper venue. Importantly, the decision establishes that a plaintiff bears the burden of persuasion in establishing venue under the patent venue statute, 28 U.S.C. § 1400(b). Moreover, the opinion provides courts and litigants guidance on how to determine whether an accused infringer's relationship with a third-party - here, a third-party that provides call center services to the defendant - is sufficient to confer venue. In such circumstances, a conclusory opinion will not suffice; a district court must give reasoned consideration to all relevant factors or attributes of the relationship between the accused infringer and the third-party before deeming the third-party's facility to be a regular and established place of business of the defendant.

Recent Decisions on Patent Venue

A mere afterthought for nearly thirty years, venue has become a hotly contested issue in many patent infringement litigations. The Supreme Court's May 2017 decision in TC Heartland1 brought venue to the forefront, finding that 28 U.S.C. § 1400(b) is "the sole and exclusive provision controlling venue in patent infringement actions." This "patent venue statute" provides that an action for patent infringement may be brought (i) in the judicial district where the defendant resides or (ii) where the defendant has committed acts of infringement and has a regular and established place of business. From 1988 until the decision in TC Heartland, the Federal Circuit had interpreted "resides" broadly to confer venue in any district in which a defendant is subject to personal jurisdiction. Following TC Heartland, a corporate defendant in a patent infringement action is deemed to reside only in its state of incorporation.

At the time of the decision, many believed TC Heartland to have sounded the death-knell for forum shopping in patent infringement lawsuits. However, in many cases, TC Heartland merely shifted the focus from the first prong of the patent venue statute - where the defendant resides - to the second - where the defendant has committed acts of infringement and has a regular and established place of business.

On September 21, 2017, the Federal Circuit's decision in In re Cray provided guidance on the meaning of a "regular and established place of business."2 Simply put, to confer venue under the...

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