A Domestic Corporation Can Reside in Only One District in the State of Its Incorporation for Patent Venue
The Federal Circuit in In Re BigCommerce recently held in a mandamus opinion that a domestic corporation incorporated in a state having multiple judicial districts “resides” for the purposes of 28 U.S.C. § 1400(b) only in a single judicial district within that state. In so holding, the Federal Circuit resolved a district court split with competing interpretations from the Eastern District of Texas and the Central District of California. The court’s opinion provides further guidance to practitioners and clarifies jurisprudence post TC Heartland.
The patent venue statute provides that patent infringement suits may be brought (1) “in the judicial district where the defendant resides,” or (2) “where the defendant has committed acts of infringement and has a regular and established place of business.” 28 U.S.C. §1400(b) (emphasis added). The Central District of California in Realtime Data LLC v Nexenta System held that a domestic corporation “resides” in the state of its incorporation “only in the judicial district in which it maintains in principal place of business.” No 2:17-cv-07690, Dkt. 28 (C.D. Cal. Jan. 23, 2018). The Eastern District of Texas in Diem v. BigCommerce came to a different conclusion, holding that “a domestic corporation resides in the state of its incorporation and if that state contains more than one judicial district, the corporate defendant resides in each such judicial district for venue purposes.” No 6:17-cv-00186, 2017 WL 3187473 (E.D. Tex. July 26, 2017).
In the underlying case, BigCommerce was incorporated in Texas, and maintained both its principal place of business and its registered office in Austin, in the Western District of Texas. In deciding against a motion to transfer for improper venue, the district court held that despite BigCommerce having no place of business in the Eastern District that it nevertheless resides in the Eastern District based solely on the fact that it incorporated in Texas. There was a companion case in which BigCommerce’s motion to dismiss for improper venue was similarly denied. Unsatisfied with the court’s holding in both cases, BigCommerce petitioned for mandamus on the question of interpretation of the patent venue statute. In granting the petition, the Federal Circuit noted that the question of where a party resides is a “basic” question that will be repeated unless the court provides further guidance.
In reaching its opinion, the Federal Circuit agreed with the Central District of California. A domestic corporation incorporated in a state having multiple judicial districts does not “reside” for purposes of § 1400(b), in each and every judicial district in that state. According to the Federal Circuit, a plain reading of the phrase “the judicial district” in § 1400(b) speaks to venue in only one particular judicial district in the state since the statute uses a definite article which is not ambiguous. The court further relied on the structure and history of § 1400(b) to support its interpretation. According to the court, the predecessor to § 1400(b) stated that jurisdiction could only be established “in the district” where the company is an inhabitant. The court further supported its interpretation noting that Congress has used the term “any judicial district” when it wanted venue to potentially lie in multiple districts pointing to the language of 28 U.S.C. § 1391(c).
With respect to the scenario in a multi-judicial district where the accused defendant does not have an inhabitance in any single location or may have facilities in more than one location, the court responded that it depends on whether the corporate defendant maintains a principal place of business in the state. If so, venue lies in the judicial district where the principal place of business is located. If not, then the default is to “deem it to reside in the district in which its registered office, as recorded in it corporate filings, is located.”
The Federal Circuit’s interpretation of the resides prong of Section 1400(b) adds clarity to the issue of venue in patent litigation under TC Heartland, further narrowing the realm of appropriate venues for patent defendants, and offering parties guidance on where to bring suit to overcome a potential venue objection.