Venue, Vidi, Vici

Defendants hoping to make battle in a more favorable location are best advised to know where they are most vulnerable in advance of conflict.

Vanquishing an opponent in IP litigation is never easy. Especially when significant legal developments complicate matters for plaintiffs. On the patent side, 2017’s Supreme Court opinion on patent venue in TC Heartland (discussed here, and on these pages too) has definitely complicated matters for patent owners. The formerly liberal venue rules, where a patentee could hale a defendant into every federal court where it could establish jurisdiction, were suddenly no more. Instead, patentees were limited to bringing suit where the defendant was incorporated or wherever it had a regular and established place of business. Big change, if only because win rates in patent cases for patentees have been and remain impacted by where a case is brought.

Before TC Heartland, proving venue was proper was easy in most patent cases. That has changed since that opinion was issued, with venue fights a more common occurrence — especially where the defendant is motivated to avoid facing suit in what it considers an unfavorable jurisdiction. While most plaintiffs have adapted to the new venue requirements by filing where the defendant is incorporated — hello, Delaware — or where it is physically headquartered, there are some plaintiffs that have persisted in pushing the envelope on the question of what a regular and established place of business is in America today. Not such a simple question, with customer behaviors changing rapidly. Just consider the ubiquitous uptake of the mobile phone as more than just a communication device and its impact on ecommerce, for example.

Two recent district court decisions are illustrative of the types of venue questions that district courts are grappling with post-TC Heartland. Both cases involve huge technology companies seeking to avoid litigating in unfavorable districts. In one, Google tried to avoid the clutches of the Eastern District of Texas with a motion under 12(b)(3) seeking dismissal of the complaint for improper venue. In the other, Amazon tried a motion to transfer based on improper venue; it sought to remove a case from the plaintiff’s home forum in upstate New York all the way to Amazon’s Seattle home base. While both Google and Amazon were unsuccessful, their attempts to challenge venue confirm the continued importance of this threshold question to modern-day litigation, while illustrating the challenges faced by today’s tech giants in trying to limit their patent litigation venue exposure to a few select districts.

In some ways, the Google case (Super Interconnect Technologies LLC v. Google LLC, case no. 2:18-cv-00463, E.D. Tex.) is a replay of earlier Google venue battles. At the core of the issue was whether the physical presence of Google “Global Cache” servers — which are provided by Google to ISPs in the EDTX’s environs — constitute a regular and established place of business under patent venue law. Despite losing on the issue in a previous case, Google re-urged the question before the same district court judge that had found against them earlier. Perhaps unsurprisingly, the judge once again found that the physical presence of the Google servers, coupled with the fact that they generate revenue for Google (like a 21st-century digital goods vending machine, I guess), meet the physical place of business requirement. Perhaps anticipating some pushback, the district court also limited its decision on whether a server can be a place of business to the facts of the case before it. That said, however, it remains clear that the EDTX is a court where an expansive definition of what constitutes proper venue still holds sway.

From servers in the Google case, we now turn to lockers and grocery stores in the Amazon dispute. In deciding whether or not Amazon had an established place of business in upstate New York, the court in Rensselaer Polytechnic Institute and CF Dynamic Advances LLC, v. Amazon.com, Inc., (case no. 1:18-cv-00549 N.D. NY) considered the full scope of Amazon’s links to that forum. First, the Court noted that Amazon owns Whole Foods and that there was a Whole Foods in Albany that advertised other Amazon services. Next, the Court found that Amazon had announced plans to set up a distribution center in the district, while already maintaining an Amazon Locker program in the Whole Foods and two gas stations in the area. Importantly, those lockers were branded with Amazon logos, were listed on Amazon’s website, and Amazon negotiated specific terms for hosting the lockers with the gas stations. The point of the lockers, of course, is to provide Amazon customers with a convenient location to pick up their purchases. Taking into account all of Amazon’s “touches” with the forum, venue was proper. But the court found that only the lockers were valid bases for imputing venue to Amazon, unlike the Whole Foods store or the prospective distribution center. Even though the lockers were not staffed by Amazon personnel, but rather serviced by Amazon agents on an ongoing basis, the fact that these were clearly physical locations that Amazon had set up to conduct business was enough to carry the day for the plaintiff on venue.

Ultimately, these decisions suggest that venue issues will continue as a source of conflict in patent cases. While the question of whether Amazon lockers or Google servers may not be relevant to other companies, each company should consider whether or not they are exposed to venue because of physical business locations they are maintaining. We know for sure that patent Caesers will do their best to choose the battlefield they find most favorable. Defendants hoping to make battle in a more favorable location are best advised to know where they are most vulnerable in advance of conflict. No sense in making things easier for the conqueror.

Please feel free to send comments or questions to me at gkroub@kskiplaw.com or via Twitter: @gkroub. Any topic suggestions or thoughts are most welcome.

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Gaston Kroub lives in Brooklyn and is a founding partner of Kroub, Silbersher & Kolmykov PLLC, an intellectual property litigation boutique, and Markman Advisors LLC, a leading consultancy on patent issues for the investment community. Gaston’s practice focuses on intellectual property litigation and related counseling, with a strong focus on patent matters. You can reach him at gkroub@kskiplaw.com or follow him on Twitter: @gkroub.

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