Abstract

A corporation is not a resident of every district in the state of incorporation for purposes of the patent venue statute.  So corporations may be sued for patent infringement in the judicial district of where their principal place of business is located in the state where they are incorporated.  If their principal place of business is outside the state where they are incorporated, then they can be sued for patent infringement in the judicial district where their registered office is located in the state where they are incorporated. 

The venue statute for where patent suits may be brought provides that patent infringers may only be sued in the judicial district (1) where they "reside" or (2) where they "committed acts of infringement" and have "a regular and established place of business." 

The Supreme Court's TC Heartland case addressed the question of where corporations "reside."  It decided that corporations "reside" only in their state of incorporation and that suits based on their residence could only be brought in that state.  But TC Heartland did not address whether corporations could be sued in any judicial district in its state of incorporation based on their residence in that state. 

The Federal Circuit's In re: Bigcommerce case addressed that issue, deciding that corporations could only be sued, based on their "residence" in a state, in the judicial district where they had their principal place of business, and not in other judicial districts in that state. 

To be clear, the In re: Bigcommerce case addressed where patent infringers could be sued based on where they "reside."  However, as noted above, patent infringers can alternatively be sued based on where they "committed acts of infringement" and have "a regular and established place of business"—a test that is not addressed in this case.

Background

BigCommerce is incorporated in the State of Texas with a registered office and headquarters in Austin, Texas, which lies in the Western District of Texas.  BigCommerce, Inc. was sued for patent infringement in the District Court for the Eastern District of Texas, where it has no place of business.

Shortly after BigCommerce was sued, the Supreme Court issued its TC Heartland decision, affirming that a domestic corporation "resides" only in its state of incorporation under the patent venue statute and that it could not be sued outside of its state of incorporation based on its "residence."  BigCommerce then moved to dismiss the case that had been filed against it in the Eastern District of Texas, arguing that it only resides in the Western District of Texas.  The district court rejected this argument, holding that if a state contains more than one judicial district, a corporation "resides" in each judicial district for venue purposes and can be sued in any one of those districts in the state, based on its residence in the state.

The BigCommerce Decision

BigCommerce asked the Federal Circuit to review the decision of the lower court by filing a petition for a writ of mandamus, which the Federal Circuit granted, holding that a company incorporated in a state having multiple judicial districts does not "reside" in each and every judicial district in that state under the patent venue statute.

The court found that the plain reading of the statutory language "in the judicial district where the defendant resides" refers to only one particular judicial district in the state, not all districts in the state. And the Federal Circuit also looked to the history of patent and other venue statutes that specify where a defendant may be sued, finding that Congress maintained a restrictive approach in patent cases while clearly specifying for venue in multiple districts in other areas of the law when it intended to do so.  For example, in another area of the law, Congress authorized suit against a company "in any judicial district in which it is incorporated or licensed to do business or is doing business."

Where a domestic corporation has facilities in more than one district of a state, the Federal Circuit clarified that it "resides" only in the judicial district where its principal place of business is located—normally its headquarters.  In such a case, the corporation may only be sued in that judicial district based on where it "resides."  However, it may possibly be sued in other judicial districts based on the "regular and established place of business" prong of the patent venue statute.

The Federal Circuit also found that domestic corporations that do not maintain their principal place of business within the state in which they are incorporated are deemed to reside and may be sued for patent infringement in the district of their registered office in the state of incorporation.

Strategy and Conclusion

Corporations may be sued for patent infringement in the judicial district where their principal place of business is located.  If their principal place of business is outside the state where they are incorporated, then they can be sued for patent infringement in the judicial district where their registered office is located.  Corporations may not be sued for patent infringement in other judicial districts under the venue provisions relating to corporate "residency," but may be sued for patent infringement in such districts if they "committed acts of infringement" and have "a regular and established place of business" in such judicial districts.

Further Information

The BigCommerce decision can be found here.

Originally published in LES Insights

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