Under the patent venue statute, 28 U.S.C. § 1400(b), a patent suit may be brought in a "judicial district where the defendant resides, or where the defendant has committed acts of infringement and has a regular and established place of business." After the U.S. Supreme Court clarified in TC Heartland v. Kraft Foods Group Brands that "'reside[nce]' in § 1400(b) refers only to the State of incorporation" — dramatically limiting venue under the first prong of § 1400(b) — focus has turned to the second prong of the statute, i.e., what it means to have a "regular and established place of business" in a judicial district.

The Federal Circuit Court of Appeals provided some guidance in In re Cray, Inc., when it interpreted the second prong of § 1400(b) as imposing "three general requirements": "(1) there must be a physical place in the district; (2) it must be a regular and established place of business; and (3) it must be the place of the defendant." The court clarified that a "virtual place" or "electronic communications" could not be a "physical place" under the statute.

Though straightforward on its face, courts continue to take varying approaches in applying the Cray standard, as demonstrated most recently in SEVEN Networks v. Google. There, the court considered a venue challenge by Google that hinged on a simple question: whether Google servers in leased server racks in a district could be a "regular and established place of business" under § 1400(b). The case specifically concerned "Google Global Cache" (GGC) servers, which, as described by the court, were responsible for serving content requested via YouTube and other Google services. These cache servers improved the user experience and saved bandwidth by directly handling requests for content by local users without making requests to Google's core data centers. The GGC servers were housed in rented server racks maintained by Internet Service Providers within the district.

The SEVEN Networks court found that the GGC servers were both a "physical place" and a "regular and established place of business" under § 1400(b). Noting that Google was "in the business of delivering information," the court characterized the GGC servers as a "local data warehouse[]" akin to a local warehouse operated by a shoe manufacturer that sells products nationwide. It found that the servers were "specifically localized: a physical server occupying a physical space" and noted that the agreements with ISPs gave Google "total control over the GGC server's physical presence within the ISP." According to the court, this level of control was characteristic of a physical rather than virtual space. Relying again on the analogy between the servers and a brick and mortar warehouse, the court found that the GGC servers were a place of business involved in Google's business of transmitting information to users. It thus found venue proper over Google in the Eastern District of Texas.

Google petitioned the Federal Circuit for a writ of mandamus, which the Federal Circuit denied per curiam. In re Google LLC, No. 2018-152, 2018 WL 5536478 (Fed. Cir. Oct. 29, 2018), petition for rehearing en banc filed Nov. 13, 2018. The panel majority declined to issue a writ because: (1) the district court opinion was based on facts specific to Google and did not present a "broad and fundamental legal question" for which mandamus relief would be appropriate; and (2) there was no widespread disagreement on the issue among district courts, because the issue had not had time to "percolate" in the courts below. In a dissenting opinion, Judge Reyna criticized the majority, stating that the district court's opinion likely "disregard[ed] the admonishments" of the Federal Circuit in Cray through an application of § 1400(b) "even more expansive" than that vacated in Cray.

Given Judge Reyna's strenuous opposition, the fact that the Federal Circuit did not specifically endorse the district court's conclusions, and the fact that the majority left open the possibility of further review as the issue continues to "percolate" in district courts, it seems likely that the Federal Circuit will take up the issue again at a later time.

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