Venue After TC Heartland – Attending a trade show or location of CEO’s abode not enough to prove “regular and established place of business”

We have been tracking how district courts have handled venue challenges in a post-TC Heartland[1] world, and have reported changes to some of the more popular patent venues, as well as a continuing split among district courts on whether TC Heartland provides grounds to raise new challenges. Another development we have noticed is the refining by District Courts of the patent venue statute’s phrase “regular and established place of business.”

In a patent case, proper venue exists in the judicial district where the defendant resides, or “where the defendant has committed acts of infringement and has a regular and established place of business.” 28 U.S.C. §1400(b).  In TC Heartland, the Supreme Court made clear that “a domestic corporation ‘resides’ only in its State of incorporation for purposes of the patent venue statute.” TC Heartland 137 S. Ct. at 1517. Thus, if a plaintiff wishes to litigate in a jurisdiction outside of where the defendant is incorporated or headquartered, the plaintiff must base venue on “where the defendant has committed acts of infringement and has a regular and established place of business.” §1400(b).

Courts continue to refine the meaning of “a regular and established place of business” post-TC Heartland, and creative plaintiffs have tried many arguments for venue in their desired jurisdiction. Some arguments have been less persuasive than others.

For example, merely offering goods for sale on the internet may not be sufficient to establish a “regular and established place of business” in a given jurisdiction. Order Granting Motion to Dismiss, Glasser v. Barboza et al., 1-17-cv-00322-CMH E.D. Va. (Aug. 11, 2017) (Judge Claude M. Hilton) (“[T]he fact that Defendant Cinelinx Media has made its product available online through Amazon.com is not sufficient to create a regular and established place of business for the purposes of the patent venue statute.”). Similarly, merely attending a trade show in a given jurisdiction also may not be enough to establish venue in that jurisdiction. Percept Techs. v. FOVE, Inc., No. 215CV02387RFBCWH, 2017 WL 3427971, at *1 (D. Nev. Aug. 8, 2017) (Judge Richard F. Boulware, II)  (“In this case, Plaintiff argues that based on Defendant’s attendances at the CES conferences, as well as one alleged infringing product sale to a Nevada residence, the Court has specific personal jurisdiction over FOVE, and therefore venue is proper in the District of Nevada. The Court disagrees that, under the patent venue statute, the alleged conduct is sufficient to make venue in Nevada appropriate.”).

A plaintiff’s attempt to tie venue to where the defendant’s CEO lived, despite the company’s headquarters being in a different venue, also has been deemed to be unsuccessful to establish proper venue. Order Granting Defendant’s Motion to Dismiss and Denying Defendant’s Motion for Sanctions, Prolacta Bioscience, Inc. v. Ni-Q, LLC, Case No. CV 17-04071-SJO C.D. Cal. (Aug. 7, 2017 Order) (Judge S. James Otero) (“The gravamen of Prolacta’s venue-based arguments appears to be that the mere presence of a high-level employee of a corporate defendant within a particular judicial district is sufficient to satisfy the rigors of Section 1400(b). Case law and common sense dictates that it is not, and Prolacta cites to no authority, either binding or persuasive, suggesting otherwise.”).[2]

However, a defendant’s lack of physical presence alone does not resolve the issue of whether a defendant has a “regular and established place of business” in any given venue. As the defendant in Exinda learned the hard way, a motion to dismiss for lack of venue needs more evidence to support it than an affidavit simply stating that a company does not have any physical presence in the venue. Report and Recommendation of United States Magistrate Judge, Realtime Data LLC v. Exinda Inc., Case No. 6:17-CV-00124-RWS-JDL E.D. Tex. (Aug. 1, 2017 Order) (Magistrate Judge John D. Love) (ruling that an affidavit proclaiming a lack of physical present in the district is insufficient to establish improper venue) report and recommendation adopted by REALTIME DATA LLC v. EXINDA INC., No. 6:17-CV-00124-RWS, 2017 WL 3608195, at *1 (E.D. Tex. Aug. 21, 2017).

The definition of a “regular and established place of business” continues to evolve, and parties litigating patent disputes with potential venue challenges should continue to stay up-to-date on how courts are shaping the contours of “regular and established place of business.”

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[1] T.C. Heartland LLC v. Kraft Food Brands, LLC, 137 S. Ct. 1514, (2017)

[2] Note: one of the authors of this post represented Ni-Q in the referenced litigation.