| Clayton R. Henson

Federal Circuit Summaries

Before Prost, Newman, Lourie, Dyk, Moore, O’Malley, Reyna, Wallach, Taranto, Chen, Hughes, and Stoll. Dissenting opinion to denial of petition for rehearing written by Reyna and joined by Newman and Lourie.

Summary: The Federal Circuit elected not to review en banc the issue of whether servers or similar equipment in third-party facilities constitute a regular and established place of business for purposes of determining whether venue is proper under 28 U.S.C. § 1400(b). The dissenters argued that the Federal Circuit’s denial sidestepped the purpose of mandamus relief and left unanswered a critical question that affects venue.

Judge Gilstrap, of the Eastern District of Texas, denied Google’s motion to dismiss or transfer SEVEN Networks, LLC’s patent infringement suit. SEVEN alleged that venue was proper because Google committed acts of infringement in the district, and Google’s servers, stored in a third-party ISP’s facility, constitute a regular and established place of business. Google petitioned the Federal Circuit for a writ of mandamus directing the district court to dismiss or transfer the case for improper venue. In an unpublished decision, the Federal Circuit found mandamus inappropriate because “it is not known if the district court's ruling involves the kind of broad and fundamental legal questions relevant to § 1400(b)," and "it would be appropriate to allow the issue to percolate in the district courts so as to more clearly define the importance, scope, and nature of the issue for us to review." Google unsuccessfully petitioned for a rehearing en banc.

In dissenting from the denial of rehearing, Judge Reyna asserted that mandamus review is part of an appellate court’s “bedrock supervisory duty” which includes a duty to further the goals of uniformity and predictability – “the cornerstones of a well-functioning patent system.” The dissent analogized this case to In re Cray Inc., 871 F.3d 1355 (Fed. Cir. 2017), where the Federal Circuit granted mandamus to ensure § 1400(b) was not given an expansive construction after TC Heartland LLC v. Kraft Foods Grp. Brands LLC, 137 S. Ct. 1514 (2017). The dissent also pointed to other district court decisions which evidence growing uncertainty and disagreement among the district court judges as to whether conducting business virtually through servers and similar equipment satisfied the requirements for venue under § 1400(b). The dissent cautioned that the district court’s holding could potentially reestablish nationwide venue for many companies that own and control computer hardware nationwide. Thus, the dissent viewed it as more prudent to answer this venue question now, rather than wait and allow dozens of cases to proceed through motion practice, discovery, claim construction, or even trial before potentially being thrown out by a reversal of a ruling on a motion to dismiss for improper venue.

This case is: IN RE: GOOGLE LLC

Editor: Paul Stewart