Federal Circuit Weighs In: Updated Guidance on Post-'TC Heartland' Venue

The Supreme Court’s bright-line rule for patent venue based on a corporation’s “residency,” issued in TC Heartland on May 22, quickly shifted focus to the second prong of 28 U.S.C. Section 1400(b) and specifically to whether the corporation has a “regular and established place of business” in the proposed forum. Because there previously had been little occasion for the U.S. Court of Appeals for the Federal Circuit to offer guidance on this issue, district courts undertook the task of shaping new law. In particular, Judge Rodney Gilstrap of the Eastern District of Texas provided a comprehensive analysis and four-factor test as part of his ruling in Raytheon v. Cray, where he found venue proper under the second prong. Cray appealed the decision and, on Sept. 21, the Federal Circuit vacated the ruling and installed a new framework for the “regular and established place of business” inquiry of Section 1400(b). Notably, the court explained that “no precise rule has been laid down” and that “each case depends on its own facts.”

In an apparent reference to Judge Gilstrap’s “modern era” analysis, the court acknowledged the “world has changed” since its 1985 In re Cordis decision such that corporations no longer all operate under a “brick-and-mortar model” and can conduct some business “virtually.” Notwithstanding these changes, the court noted that the patent venue statute has remained unchanged. In setting up its analysis, the court recounted the statute’s legislative and judicial history, noting it was intended as a “restrictive measure, limiting a prior, broader venue” and therefore should not be given a “liberal construction.” In particular, the court warned against conflating patent venue analysis with other showings, such as personal jurisdiction or the general venue statute. Against this backdrop, and after stressing the importance of the statutory language, the court conducted a grammatical dissection of Section 1400(b) and explained there are “three general requirements” relevant to the second prong’s inquiry: the presence of a “physical place in the district,” whether it is a “regular and established place of business,” and whether it is “of the defendant.” In expounding on these requirements, the court identified certain factors that are relevant to the analysis, and its order represents a first glimpse into what the Federal Circuit views as proper venue following the Supreme Court’s ruling in TC Heartland v Kraft Foods Group.