There Still May Be Time to Bring Belated Venue Challenges in Patent Litigation

November 17, 2017

By: Thomas P. McNulty

Plaintiffs in federal court must plead, and prove if challenged, that subject matter jurisdiction and personal jurisdiction exist – i.e., that the complaint is the type that federal courts may entertain and that the particular court  may exercise power over the defendant(s).  In addition, plaintiffs must demonstrate that the particular court is a proper venue for the case to take place.  Venue, concerned with the geographic location of the suit, is distinct from jurisdiction, which is concerned with the authority of the court to hear the case.

For thirty years, following changes to a statute governing venue in general federal cases, courts allowed infringement suits to proceed wherever personal jurisdiction existed.  In an increasingly interconnected world permitted patent suits virtually anywhere in the country.  This led to extensive forum shopping, where plaintiffs chose a venue based on criteria such as docket speed or perceived favorability to patentees.  This summer’s TC Heartland changed this.  The Supreme Court, interpreting the statute that identifies proper venue for patent cases, held that a defendant corporation can be sued for patent infringement only in the state in which they are incorporated or where it committed acts of infringement and have a regular and established place of business.  The decision is discussed in greater detail here.

TC Heartland was widely recognized as a major change by commenters in the patent field.  Courts in which infringement cases were pending when the decision came out, however, have had a mixed view.  A party who does not promptly challenge venue is generally deemed to have waived challenge.  Waiver does not apply if the defense was not available at the relevant time but later became available through a change in the law.  District courts had split on the issue of whether TC Heartland changed the law of venue such that a challenge could belatedly be brought

In In Re Micron, the Federal Circuit resolved the issue, determining that TC Heartland had effected a change in the controlling law of venue that prevented waiver under the Federal Rules form applying.  The district court had found that, by its own terms, TC Heartland merely affirmed previous Supreme Court precedent, and that Micron would have prevailed had they challenged venue through appeal to the Supreme Court, as the challenger in TC Heartland had done.  The Federal Circuit disagreed with this analysis.  The Federal Rules require a party to raise any defense, such as a venue challenge, available under Rule 12 that was “available to the party” in the first pleading or motion that it files.  A defense is only “available” if controlling precedent permits a district court to adopt the defense at the time the motion is filed, and is not available if an appeal would be required to obtain the relief sought.  Because controlling Federal Circuit precedent would have prevented the district court from granting venue challenge, had one been brought at the appropriate time, but that defense is now available under TC Heartland, the controlling law had changed and the venue challenge had not been waived under the Rules.

This decision allows defendants who had not previously challenged venue to raise the issue anew, despite having moved beyond the point that such a challenge could normally be brought.  Any such challenge must be brought with haste, however; the Federal Circuit expressly noted that, while the Rule 12 waiver does not apply, district courts retain the ability under their inherent powers to deem a venue challenge waived.  Chief among these would be failing to raise improper venue promptly upon the change in law brought about by TC Heartland.  Aside from this, courts can find waiver through continued litigation in the venue.  Because of this, defendants should raise a venue challenge soon, and certainly before taking any further action in the litigation that could be interpreted as submitting to the court.