“Place of Business” Means Place of Business, Says Federal Circuit


“Place of Business” Means Place of Business, Says Federal Circuit

Previously, on Patent Venue:

May 22, 2017: The Supreme Court issues its opinion in TC Heartland, returning to the rule of law that a corporate defendant can only be sued for patent infringement either in its state of residence or a judicial district in which alleged acts of infringement have occurred and the business has a “regular and established place of business.” The opinion promises to end the scourge of forum–shopping that led the Eastern District of Texas to become the host of more than one–third of all newly filed patent cases in the country.

June 29, 2017: In Raytheon v. Cray, Judge Gilstrap of the Eastern District of Texas creates a four–part test for what it means to have a “regular and established place of business.” The factors he identified were: (1) extent of physical presence; (2) extent the defendant represents that it has physical presence; (3) benefits derived by the defendant from its presence; and (4) extent of targeted interactions with others in the district. A fair reading of this test was that it interpreted “regular and established place of business” broadly, leaving the doors to the east Texas courthouse more widely open than TC Heartland might have suggested.

Which leads us to this week’s episode, Not So Fast, My Friend

September 21, 2017: The Federal Circuit orders Judge Gilstrap to transfer the Raytheon litigation, rejecting the four–part test in favor of a plain meaning approach to understanding “regular and established place of business.” In a unanimous order, written by Judge Lourie, the appellate court finds the applicable test in the language of the statute. To be a “regular and established place of business,” the defendant must have a “place of business” that is “regular” and “established.” More specifically:

  • “Place of business” means a “physical, geographical location in the district from which the business of the defendant is carried out.”
  • A business is “regular” if it operates in a “steady, uniform, orderly, and methodical manner” (brackets and quotation omitted). “Regular” does not mean sporadic.
  • “Established” means stable, e., “settled certainly or fixed permanently” (brackets and quotation omitted). “[I]t must for a meaningful time period be stable, established” (brackets added).

Applying this test to the facts at hand, the Federal Circuit had no trouble concluding that having an employee working remotely from home in the district did not, in this instance, satisfy the test. Thus, transfer out of the Eastern District of Texas was required.

We hope this clear order of the Federal Circuit will bring clear order to the application of TC Heartland—and that courts will hew more closely to the Supreme Court’s understanding of the patent venue statue as limiting where a corporate defendant may be sued for infringement.

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