Details Matter: Two Courts’ Approaches to Personal Jurisdiction and Venue

Report & Recommendation to Deny Motion to Dismiss or Transfer, MyMail, Ltd. v. Yahoo!, Inc., E.D. Tex. (August 17, 2017) (Magistrate Judge Roy Payne)

Order Granting Motion to Dismiss, The Proctor & Gamble Company v. Ranir, LLC, S.D. Ohio (August 17, 2017) (Judge Timothy Black)

As we’ve been reporting, patent venue case law continues to develop on multiple fronts in the aftermath of the Supreme Court’s decision in TC Heartland.  In a pair of decisions discussed below, two jurisdictions—the Eastern District of Texas and the Southern District of Ohio—took contrasting approaches to how a defendant’s response to personal jurisdiction allegations affected the defendant’s ability to challenge venue.

In MyMail v. Yahoo!, Magistrate Judge Payne recommended that defendant Yahoo’s motion to dismiss be denied.  While Yahoo had “denie[d] venue is proper in this Court under 28 U.S.C. §§ 1391(c) and 1400(b),” Magistrate Judge Payne found that the denial was too specific.  He declined to accept or reject Yahoo’s argument that a general denial was sufficient to preserve a defense for a subsequent Rule 12 motion.  Instead, he interpreted Yahoo’s answer as “specifically” denying that venue is proper “based solely on the argument that this District does not have personal jurisdiction over Yahoo because it does not infringe.”

Unsurprisingly, Eastern District of Texas judges have seemed reluctant to relinquish their patent cases after TC Heartland.  Among other rulings, Texas judges have held or recommended that TC Heartland was not a change in law, thus making it easier to find a defendant waived any venue objection, and that defendants bear the burden to demonstrate improper venue, rather than requiring plaintiffs to plead or establish proper venue.  The decision in MyMail appears more of the same, suggesting that Texas judges will try to interpret a defendant’s pleadings in favor of finding waiver.  Indeed, Magistrate Judge Payne describes the rule thus: “a defendant’s acknowledgement of the applicability of § 1391(c), without more, results in waiver.”  Because Yahoo “conceded” the applicability of § 1391(c) without specifically mentioning the “regular and established place of business” test, it had waived its venue objection.

In contrast, in The Proctor & Gamble Company v. Ranir, Judge Black found that not objecting to personal jurisdiction at all did not result in waiver of the venue objection.  Before TC Heartland, some courts had denied improper venue motions where a defendant waived its objection to personal jurisdiction.  However, this reasoning assumed that conceding personal jurisdiction establishes venue.  Judge Black observed, “A defendant’s waiver of personal jurisdiction can only ‘establish’ venue if venue is proper everywhere the defendant is subject to personal jurisdiction,” which was no longer true for patent defendants after TC Heartland.

Defendant Ranir may have had an easier time avoiding a waiver finding since it had specifically relied on TC Heartland, then still pending, in its motion to dismiss.  Thus, while Judge Black agreed with the majority of district courts that TC Heartland did not change the law, this simply meant there was no retroactivity inquiry—under Fourco, reaffirmed in TC Heartland, “venue was never proper in this case.”

Nonetheless, the decisions together suggest that allegations and denials will be parsed finer and finer as courts continue to entertain motions to dismiss for improper venue.  Both plaintiffs and defendants should carefully study the pleadings to find the best arguments for supporting or defeating a charge of waiver.