The Mountain View, California-based headquarters of Google. Credit: Shutterstock.com

Google's ownership of servers in the Eastern District of Texas does not grant a patent holder standing to sue the tech company in that venue, the U.S. Court of Appeals for the Federal Circuit ruled Thursday. 

In November 2018, Super Interconnect Technologies sued Google for patent infringement, claiming the Mountain View, California-based company's infringement occurred within the Eastern District of Texas, and that local internet service providers hosted Google Global Cache (GGC) servers in their data centers, giving the court Texas jurisdiction.

However, the Federal Circuit ruled the presence of the servers was not enough without an on-site employee and dismissed the case for lack of venue. 

"We conclude that the Eastern District of Texas was not a proper venue because Google lacked a 'regular and established place of business' within the district since it has no employee or agent regularly conducting its business at its alleged 'place of business' within the district," the judges wrote in an opinion filed by Federal Circuit Judge Timothy Belcher Dyk on behalf of Judges Evan Wallach and Richard Taranto. 

A Hogan Lovells team made up of Thomas Schmidt, Neal Katyal and Keith O'Doherty won the dismissal for Google.

The court didn't bite on Google's arguments that a place of business means the company has to own or lease a property.

In the opinion, the judges reminded the parties that In re Cray recognized a place of business could be "any physical space the defendant can 'possess or control.'" For example, a table at a flea market can be a place of business, in the same way Google's leased shelf space at the data centers in this case can be considered a "physical, geographical location" where it conducts business. Yet, the Federal Circuit stopped short of answering whether the server equipment itself could be considered a place of business.

The decision represents a reversal from the Federal Circuit's ruling in a case brought by SEVEN Networks against Google.

"Since our decision in Google, three related developments have convinced us that mandamus is appropriate to resolve this venue issue," the opinion asserts. "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. 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."

The jurists attributed the final justification for the shift in sentiment to the fact that district courts are split on whether a server or rack constitutes as a place of business and whether an employee needs to be present. "This court has not addressed this fundamental and recurring issue of patent law," the order states. "We thus conclude that mandamus is an available remedy."

Orrick, Herrington & Sutcliffe's Clement Roberts in San Francisco wrote an amici curiae brief for more than a dozen companies, including Twitter, Netflix, Fitbit, HP, eBay, DISH Network and RingCentral. Roberts said that while the court did not answer all the questions raised in the petition, the holding that venue requires the presence of an employee makes clear that equipment alone is not enough. 

"This should significantly reduce the number of venue disputes," he wrote in an email. "There will still be disputes over who is and is not an agent—but there is a well-developed body of case law governing that question."

Bragalone Conroy's Jeffrey Bragalone in Dallas, who argued for Super Interconnect Technologies, said in an email that he and his client are disappointed in the new "unwarranted" requirement of employees or agents to the patent venue statute. "It is also difficult to understand how mandamus under the facts is 'clear and indisputable,' given that the Federal Circuit previously declined to grant mandamus under identical facts."

Bragalone said Super Interconnect is continuing to evaluate all of its options related to the decision.