On February 5, 2019, the Court of Appeals for the Federal Circuit denied a petition for writ of mandamus, with a combined petition for rehearing and/or rehearing en banc, in In re Google LLC, the writ of mandate review stems from a patent infringement suit filed by SEVEN Networks, LLC, a mobile data analytics company, against Google, in the federal court’s Eastern District of Texas. Google sought to dismiss the suit for lack of proper venue under 28 U.S.C. §1400(b).[1] Specifically, Google had argued that the E.D. of Texas lacked jurisdiction over Google because Google did not retain a “regular and established place of business,” in the district. Judge Rodney Gilstrap disagreed, and hence, the writ of mandamus to the Fed Circuit.
The Fed Circuit en banc panel was composed of Chief Judge Prost, and Judges Newman, Lourie, Dyk, Moore, O’Malley, Reyna, Wallach, Taranto, Chen, Hughes, and Stoll. The denial of writ of mandamus was not without dissent. Three judges – Reyna, Newman, and Lourie – sharply retorted in the dissenting opinion (written by Judge Reyna), that:
The question poised before the court is whether Google’s servers (shown below in the black box), which have no physical interaction with Google employees and customers and are installed by third-parties in the facilities of third party internet service providers (“ISPs”) located in the Eastern District of Texas, constitutes a regular and established place of business under 35 U.S.C. §1400(b) and this court’s decision in Cray.
Judge Reyna noted that venue is a due process issue; refusal of proper venue creates a due process violation, and as such, borrowing from Cray, is not to be given “liberal construction.” He criticized the majority for denying mandate:
The court asserts that mandamus is inappropriate because, in the words of the panel majority, “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.”
Further, he noted mandamus as a procedural mechanism is appropriate for the Fed Circuit to issue a ruling in an unsettled, basic or undecided legal question, like the second prong of the venue statute:
Mandamus review is part of our bedrock supervisory duty as an appellate court to ensure proper judicial administration []. Given the nature of our exclusive subject-matter jurisdiction over federal questions involving patent law, this court in particular has a vital supervisory and instructional duty to further the goals of uniformity and predictability that are “the cornerstones of a well-functioning patent system.”
Recall that the Cray standard is the Fed Circuit’s response to the U.S. Supreme Court’s T.C. Heartland decision handed down in 2014. TC Heartland first enunciated that a federal court has jurisdiction over a patent infringement defendant in only the district that defendant is incorporated, rather than any district court throughout the country.[2] As an extension, and consistent with TC Heartland, Cray established the criteria to determine proper venue, including “regular and established place of business” and “place of defendant.”[3]
This decision does not render this issue moot. Google may certainly file for petition for writ of certiorari with the U.S. Supreme Court, bringing the issue back to the high court. There is, arguably, ripeness which makes it necessary for the Supreme Court to decide the “regular and established place of business” aspect of §1400(b) because there is an inconsistency in the application of the patent venue statute that still plagues district courts (namely, Texas’s eastern district) as they fight tooth-and-nail to hang onto the fewer patent infringement cases brought into its courts. Alternatively, Google could litigate the substantive patent issues in the Eastern District of Texas, and allow the case to return to the Fed Circuit under regular appellate review, at which time it could re-argue its position on the venue statute.
[1] ___F.3d___ (Fed. Cir. 2019) (slip op.), aff’g as to proper venue Seven Networks, LLC v. Google LLC, 315 F. Supp. 3d 933 (E.D. Tex. 2018).
[2] See TC Heartland v. Kraft Foods Grp. Brands, 137 S.Ct. 1514, 1517 (2017).
[3] See In re Cray, 871 F.3d 1355, 1362-63 (Fed. Cir. 2017).