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28 May 2018
Two recent Federal Circuit orders have provided answers to certain venue-related questions that have arisen in patent cases.
The first order stipulates that alien corporate defendants remain subject to venue in any judicial district.
In In re: HTC Corporation, 2018-130, HTC Corporation (a Taiwanese company with its principal place of business in Taiwan) filed a mandamus petition asking the Federal Circuit to dismiss for improper venue a patent lawsuit brought against it in the District of Delaware. On May 9 2018 the Federal Circuit denied the petition, reaffirming the Supreme Court's long-established ruling in Brunette Machine Works, Ltd v Kockum Industries, Inc, 406 US 706 (1972) that "suits against aliens are wholly outside the operation of all the federal venue laws, general and special". Therefore, venue over alien corporate defendants in US patent cases is proper in any judicial district.
The Federal Circuit rejected HTC's argument that Congress had abrogated Brunette in its 2011 amendments to the general venue statute (28 USC Section 1391(c)). The Federal Circuit explained that there was no indication that Congress intended to do so through those amendments. Moreover, abrogating Brunette would, under certain circumstances, result in a "complete inability for a patent owner to bring its infringement claims against alien defendants".
The second order stipulates that when a defendant moves to dismiss for improper venue, the burden of proving that venue is proper rests with the plaintiff.
In In re: ZTE (USA) Inc (2018-113) ZTE (USA) Inc filed a mandamus petition asking the Federal Circuit to dismiss for improper venue a patent lawsuit brought against it by American GNC Corporation in the Eastern District of Texas. On May 14 2018 the Federal Circuit granted mandamus to answer two basic and undecided venue-related questions:
Regarding the first question, the Federal Circuit held that Federal Circuit law controls the burden of proof, explaining that the propriety of venue under Section 1400(b) is an issue "unique to patent law" and that:
"because all appeals in cases in which § 1400(b) is implicated will come to this court, adopting a uniform law on the burden obviates any uncertainty at the district court as to whether to apply regional circuit or Federal Circuit law."
As for the second question, the Federal Circuit held that "upon motion by the Defendant challenging venue in a patent case, the plaintiff bears the burden of establishing proper venue". While the Federal Circuit acknowledged that there was no Federal Circuit law addressing this question, it noted that other circuits, before the formation of the Federal Circuit, had uniformly placed the burden on the plaintiff in patent cases following a motion by the defendant challenging venue. The Federal Circuit further explained that Section 1400(b) is "intended to be restrictive of venue in patent cases" and that the intentional narrowness of that statute "supports placing the burden of establishing proper venue on the Plaintiff".
The Federal Circuit vacated the district court's denial of ZTE USA's motion to dismiss for improper venue and remanded to the district court with instructions to reconsider the motion, "placing the burden of persuasion on the propriety of venue on American GNC".
For further information on this topic please contact Christopher Loh at Fitzpatrick, Cella, Harper & Scinto by telephone (+1 212 218 2100) or email (email@example.com). The Fitzpatrick, Cella, Harper & Scinto website can be accessed at www.fitzpatrickcella.com.
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