Tuesday, February 18, 2020

CAFC Google decision analyzes mandamus, venue

Of interest:

Since our decision in Google, three related developments have convinced us that mandamus is appropriate to
resolve this venue issue. First, the prediction of our dissenting colleagues has proven accurate, and there are now
a significant number of district court decisions that adopt
conflicting views on the basic legal issues presented in this
case.2 Second, experience has shown that it is unlikely
that, as these cases proceed to trial, these issues will be
preserved and presented to this court through the regular
appellate process. “[W]hile an appeal will usually provide
an adequate remedy for a defendant challenging the denial
of an improper-venue motion, there may be circumstances
in which it is inadequate.” In re HTC Corp., 889 F.3d 1349,
1354 (Fed. Cir. 2018). While not alone sufficient to justify
mandamus, the substantial expense to the parties that
would result from an erroneous district court decision confirms the inadequacy of appeal in this case. See In re BP
Lubricants USA, Inc., 637 F.3d 1307, 1313 (Fed. Cir. 2011)
(“Not all circumstances in which a defendant will be forced
to undergo the cost of discovery and trial warrant mandamus.”). Finally, the wisdom of our decision to allow the issues to “percolate in the district courts” has been borne out,
Google, 2018 U.S. App. LEXIS 31000, at *8, as additional
district court decisions have crystallized and brought clarity to the issues: (1) whether a server rack, a shelf, or analogous space can be a “place of business” and (2) whether a
“regular and established place of business” requires the
regular presence of an employee or agent of the defendant
conducting the business.
3 The district courts’ decisions on
these issues are in conflict. This court has not addressed
this fundamental and recurring issue of patent law. We
thus conclude that mandamus is an available remedy.

Footnote 2

In re Google LLC, 914 F.3d 1377, 1380 (Fed. Cir.
2019) (Reyna, J., dissenting); see, e.g., CUPP Cybersecurity
LLC v. Symantec Corp., No. 3:18-CV-01554, 2019 U.S. Dist.
LEXIS 37960, at *7–8 (N.D. Tex. Jan. 16, 2019) (holding
that the defendant’s servers hosted in an datacenter operated by a third party were not a regular and established
place of business); CDX Diagnostic, Inc. v. US Endoscopy
Grp., Inc., No. 13-CV-5669, 2018 U.S. Dist. LEXIS 87999,
at *7 (S.D.N.Y. May 24, 2018) (holding that the defendant’s
storage units had “no ‘employee or agent’” conducting business and were therefore not regular and established places
of business); Peerless Network, Inc. v. Blitz Telecom Consulting, LLC, No. 17-CV-1725, 2018 U.S. Dist. LEXIS
49628, at *9 (S.D.N.Y. Mar. 26, 2018) (holding that a regular and established place of business “requires some employee or agent of the defendant to be conducting business
at the location in question”); Tinnus Enters., LLC v. Telebrands Corp., No. 6:17-CV-00170, 2018 U.S. Dist. LEXIS
79068, at *14 (E.D. Tex. Mar. 9, 2018) (holding that the defendant’s leased shelf space in the district was a regular
and established place of business where the defendant paid
“agents to monitor, clean, restock, and affix price signage”
to the shelf space); Automated Packaging Sys. v. Free-Flow
Packaging Int’l, Inc., No. 5:14-cv-2022, 2018 U.S. Dist.
LEXIS 5910, at *27–28 (N.D. Ohio Jan. 12, 2018) (holding
that the defendant’s equipment that was “moved onto the
customer’s property, and may be removed by [the defendant] or relocated by the customer with [the defendant]’s
permission, precludes any finding that this equipment
could serve as a physical, geographical location” for purposes of establishing venue under § 1400(b)); Pers. Audio,
LLC v. Google, Inc., 280 F. Supp. 3d 922, 935 (E.D. Tex.
2017) (holding that Google’s GGC servers were not regular
and established places of business). See also Rensselaer
Polytechnic Inst. v. Amazon, No. 1:18-cv-00549, 2019 U.S.
Dist. LEXIS 136436, at *34, *36 (N.D.N.Y. Aug. 7, 2019)
(noting that “[t]he Federal Circuit has not decided whether
a natural person must conduct business at the location for
it to be a ‘place of business’”).

Note also

We agree, however, with Google’s alternative argument that under the second Cray factor, a “place of business” generally requires an employee or agent of the
defendant to be conducting business at that place. This is
apparent from the service statute for patent cases, now codified at 28 U.S.C. § 1694. That provision originally appeared as the second sentence of a two-sentence statutory
section whose first sentence is now the patent venue
statute, 28 U.S.C. § 1400(b). Thus 54 Cong. Ch. 395, 29
Stat. 695 (1897), provided:
[I]n suits brought for the infringement of letters patent the circuit courts of the United States shall
have jurisdiction, in law or in equity, in the district
of which the defendant is an inhabitant, or in any
district in which the defendant, whether a person,
partnership, or corporation, shall have committed
acts of infringement and have a regular and established place of business. If such suit is brought in
a district of which the defendant is not an inhabitant, but in which such defendant has a regular and
established place of business, service of process,
summons, or subpoena upon the defendant may be
made by service upon the agent or agents engaged
in conducting such business in the district in which
the suit is brought.
54 Cong. Ch. 395, 29 Stat. 695 (1897) (emphasis added).4
Thus, the venue and service provisions were not just enacted together but expressly linked, and both have always
required that the defendant have a “regular and established place of business.” Id.


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