On May 15, 2018, in In re BigCommerce,1the U.S. Court of Appeals for the Federal Circuit clarified venue in patent infringement cases, ruling that under 28 U.S.C. Section 1400(b), a domestic corporation 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 decision comes approximately one year after the U.S. Supreme Court decided TC Heartland LLC v. Kraft Foods Group Brands LLC, holding that “residence” for venue purposes, as applied to domestic corporations, refers only to the state of incorporation. In re BigCommerce resolved the uncertainty as to whether companies incorporated in states with multiple judicial districts, such as California, Washington, Texas, and New York, “resided” for purposes of patent venue in all the judicial districts within the state.
Background
The Federal Circuit’s holding arises from respondents Diem and Express Mobile’s separate allegations of patent infringement against the petitioner, BigCommerce, a Texas corporation. BigCommerce lists its registered office and its headquarters in Austin, Texas, which is in the Western District of Texas. Facing suit in the Eastern District of Texas, BigCommerce moved to dismiss both cases, arguing that venue was improper in the Eastern District, where it had no place of business. Upon denial, BigCommerce petitioned for a writ of mandamus in both cases. Recognizing a split in authority and an “undecided” question of law, the Federal Circuit proceeded with mandamus review.
The Federal Circuit's Analysis
In its decision, the Federal Circuit turned to the statute’s language, history, purpose, and precedent. Starting with the language of 28 U.S.C. Section 1400(b),2the Federal Circuit found that a plain reading indicated that “the judicial district” spoke to venue only in one judicial district in the state. The Federal Circuit also determined that the history of the statute bore out this interpretation. Similar to the Supreme Court in TC Heartland, the Federal Circuit looked at the 1897 patent-specific venue statute, and determined that where Congress intended that venue lie in multiple judicial districts, it used language accordingly. For example, outside of patent cases, Congress expanded the definition of corporate residence to include “any judicial district in which it is incorporated or licensed to do business or is doing business.”3The decision notes that the lack of similar language in Section 1400(b) indicated that Congress did not intend for residence to include all judicial districts.
Moreover, the Federal Circuit found the term “resides” to have had a well-known legal meaning at the time. Relying again on authority cited by the Court in TC Heartland, the Federal Circuit noted that “[p]rior to 1948, it was widely accepted that ‘for purposes of venue a corporation was a resident only of the state in which it was incorporated, and that it could be sued only in the judicial district within that state in which it kept its principal office and transacted its general corporate business.’”4
Using this logic, the Federal Circuit vacated the orders denying BigCommerce’s motions to dismiss and remanded the cases to the district court.
Takeaways
Last year, TC Heartland made clear that in order for venue to be proper in patent infringement cases, one of two conditions must be met: 1) the defendant must reside (i.e., be incorporated) in the venue; or 2) the defendant has committed acts of infringement and has a regular and established place of business in the venue. The In re BigCommerce decision clarifies prong one, holding that in a state with multiple judicial districts, a corporate defendant “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.
The decision will impact companies incorporated or organized in states with multiple judicial districts, such as California, Washington, Texas, and New York. For example, whereas a company incorporated in Texas could previously have been sued in any Texas judicial district, including the Eastern District of Texas—where roughly 40 percent of infringement suits were filed in the two years preceding TC Heartland—venue is now only proper in the district where that company has its principal place of business, or absent a principal place of business in the state, in the judicial district in which its registered office is located, which may not be in the Eastern District. For companies incorporated in Delaware, the In re BigCommerce decision has no impact, because Delaware has a single judicial district.
For more information about this ruling or any related matter, please contact any member of the patent litigation practice at Wilson Sonsini.
