The Impact of TC Heartland on Hatch-Waxman and BPCIA

Litigation*

Naples RoundtableFebruary 18–20, 2018

George F. Pappas and Jihong LouCovington & Burling LLP

* The views expressed herein are those of the authors and do not reflect the views of Covington & Burling LLP or its clients. This paper is for general information purposes and is not intended to be and should not be taken as legal advice.

TABLE OF CONTENTS

TC Heartland and the First (Residency) Prong of Patent Venue Statute.........1The Second Prong of the Patent Venue Statute.............................................................3

Regular and Established Place of Business...................................................................4Acts of Infringement in Hatch-Waxman and BPCIA Cases.................................12

Should the Patent Venue Statute Apply to Hatch-Waxman and BPCIA Litigation?...........................................................................................................................................18Impact of TC Heartland on Hatch-Waxman and BPCIA Litigation....................20

Other Issues.......................................................................................................................................21Waiver of Venue or Change in Law...................................................................................21

Burden of Proof...........................................................................................................................22Nexus Between Acts of Infringement and Place of Business............................25Multi-District States.................................................................................................................26Case Filing Statistics................................................................................................................27

1

TC Heartland and the First (Residency) Prong of Patent Venue Statute

28 U.S.C. § 1400(b), the patent venue statute, provides: “Any civil action for patent infringement may be brought in the judicial district [1] where the defendant resides or [2] where the defendant has committed acts of infringement and has a regular and established place of business.”

VE Holding Corp. v. Johnson Gas Appliance Co., 917 F.2d 1574 (Fed. Cir. 1990), interpreted “resides” in § 1400(b) as defined by § 1391(c)(2), the general venue statute, which provides: “For all venue purposes, an entity . . . shall be deemed to reside, if a defendant, in any judicial district in which such defendant is subject to the court’s personal jurisdiction.”

o Before TC Heartland, venue was proper where there was personal jurisdiction. The second prong of the patent venue statute (“acts of infringement” + “place of business”) was rarely invoked.

o For Hatch-Waxman litigation, Acorda Therapeutics Inc. v. Mylan Pharmaceuticals Inc., 817 F.3d 755 (Fed. Cir. 2016), held that specific jurisdiction exists where an ANDA applicant intends to market the generic product after FDA approval. Because an ANDA applicant would typically market a generic product throughout the United States, brand name companies had wide latitude on where to bring suit and could sue multiple ANDA filers in one judicial district.

In TC Heartland LLC v. Kraft Foods Group Brands LLC, 137 S. Ct. 1514 (2017) (decided May 22, 2017), the Supreme Court rejected VE Holding’s interpretation of “resides” and reaffirmed its precedent, Fourco Glass Co.

1

v. Transmirra Products Corp., 353 U.S. 222, 226 (1957), which held that a domestic corporation “resides” only in its state of incorporation for purposes of the patent venue statute. TC Heartland, however, left open several issues which required exploration in future cases.

o TC Heartland does not address the second prong of the patent venue statute (discussed further below).

o TC Heartland does not apply to unincorporated entities (e.g., LLC). See 137 S. Ct. at 1517 n.1. For purposes of patent venue, an unincorporated entity is likely “resident” in the state in which it has its principal place of business. Sperry Prods. Inc. v. Ass’n of Am. Railroads, 132 F.2d 408, 411–12 (2d Cir. 1942).

o TC Heartland does not apply to foreign corporations. See 137 S. Ct. at 1520 n.2 (stating that the Court expresses no opinion on its prior holding in Brunette Machine Works, Ltd. v. Kockum Industries, Inc., 406 U.S. 706 (1972), which determined proper venue for foreign corporations under then-existing venue statute).

Foreign Corporation: In Hatch-Waxman litigation, some generic companies are foreign corporations (e.g., from India, Canada, or Israel). For foreign corporations, venue is proper in any judicial district. Thus, a brand name company could sue a foreign corporation in a venue of choice, provided that the foreign corporation is the ANDA filer or has actively participated in the preparation and filing of ANDA to establish personal jurisdiction over the foreign defendant.

o In Brunette, 406 U.S. 706 (1972), the Supreme Court held that venue of patent infringement action against a foreign corporation, whose principal place

2

of business was outside the United States, was governed by the then-existing venue statute for actions against aliens, § 1391(d), not by the patent venue statute.

o 28 U.S.C. § 1391(c)(3), the current venue statute, provides that “a defendant not resident in the United States may be sued in any judicial district, and the joinder of such a defendant shall be disregarded in determining where the action may be brought with respect to other defendants.” Applying Brunette, § 1391(c)(3) should govern actions against foreign corporations, who may be sued in any judicial district.

o Although Brunette’s holding could be challenged by litigants in future cases, it is still good law as of today. District courts have applied Brunette in cases involving foreign corporate defendants.

o “[A]lthough Defendants contend that venue in this District is improper as to Defendant HTC America, Defendants do not dispute that the Court properly possesses venue over Defendant HTC Corp., a foreign corporation.” Infogation Corp. v. HTC Corp., No. 16-CV-01902-H-JLB, 2017 WL 2869717, at *4 (S.D. Cal. July 5, 2017); see also 3G Licensing SA v. HTC Corp., No. 1:17-cv-00083, ECF No. 73 (D. Del. Dec. 18, 2017) (holding that HTC Corp., a foreign defendant, may be sued in any judicial district).

o “In Brunette, the Supreme Court expressly distinguished Fourco and Stonite, holding that § 1400(b) was supplemented by § 1391(d), the [then-existing] general venue provision applicable to aliens, in patent suits involving a foreign corporation.” iLife Techs., Inc. v. Nintendo of Am., Inc., No. 3:13-CV-04987, 2017 WL 2778006, at *4 (N.D. Tex. June 27, 2017) (citing Brunette, 406 U.S. at 714).

3

o “It is undisputed that Kyocera Corp., as a foreign defendant, is subject to venue in Delaware.” Koninklijke KPN N.V. v. Kyocera Corp., No. 17-87-LPS-CJB, 2017 WL 6447873, at *3 (D. Del. Dec. 18, 2017) (citing Brunette, 406 U.S. at 706–07).

o A foreign defendant may file a motion to transfer venue for convenience under § 1404(a). In re Princeton Digital Image Corp., 496 F. App’x 73 (Fed. Cir. 2012).

The Second Prong of the Patent Venue Statute

TC Heartland significantly narrowed the scope of the first (residency) prong of the patent venue statute. After TC Heartland, litigants have increasingly relied on the second prong of the patent venue statute (“acts of infringement” + “place of business”), resulting in significant development in case law in these areas that had sparse precedent.

o “has committed acts of infringement” (unique to Hatch-Waxman and BPCIA): In Hatch-Waxman and BPCIA litigation, “acts of infringement” are artificial and forward looking. The language of the venue statute, “has committed,” however, is backward looking and seemingly in tension with the statutory purpose of the Hatch-Waxman Act and BPCIA to resolve patent disputes prior to FDA approval. Currently, there is a split in authority among district courts on interpretation of this part of the venue statute in the context of Hatch-Waxman litigation (Chief Judge Stark of D. Del. vs. Chief Judge Lynn of N.D. Tex.).

o “has a regular and established place of

business”: A large volume of case law has

4

developed since May 2017, interpreting the meaning of “regular and established place of business.” These cases generally do not concern pharmaceuticals or biologics, but the analyses and holdings should inform what constitutes a “regular and established place of business” in the context of Hatch-Waxman and BPCIA litigation.

o Recent case law addressing the second prong of the patent venue statute (“acts of infringement” + “place of business”) is discussed below.

Regular and Established Place of Business

There have been many district court cases addressing the issue of what constitutes a “regular and established place of business.” The Federal Circuit decided In re Cray in September 2017, setting out a test that emphasizes on physical presence, permanence/stability, and connection to the defendant.

o In In re Cray, 871 F.3d 1355 (Fed. Cir. 2017), the Federal Circuit rejected an expansive four-factor test developed by Judge Gilstrap and instead laid out three general requirements for “regular and established place of business”:

(1) there must be a physical place in the district; Physical location from which the business of

defendant is carried out; but it need not be a formal office or store; a virtual space or electronic communications from one to another will not satisfy this requirement;

(2) it must be a regular and established place of business; and

Regular if operating in a steady, uniform, orderly, and methodical manner, not sporadic;

5

Established , stable for a meaningful time, permanent, not transient;

If an employee can move his home out of the district at his own instigation, without approval of the defendant, that would cut against an employee’s home being considered a permanent place of business of the defendant;

(3) it must be the place of the defendant. Place of business of the defendant , not solely a

place of the defendant’s employee; the defendant must establish or ratify the place of business; it is not enough that the employee does so on his own;

Relevant considerations: (a) whether defendant owns or leases the place, or exercises other attributes of possession or control over the place; (b) whether defendant conditions employment on an employee’s continued residence in the district; (c) whether defendant stores materials at the place to be distributed or sold from that place; (d) whether defendant holds a place out as its own in marketing or advertising or otherwise represents that it has a place of business in the district, and defendant must actually engage in business from that place; and (e) the nature and activity of the alleged place of business of the defendant in the district in comparison with that of other places of business of the defendant in other venues.

o Applying the above test to the facts in Cray, the Federal Circuit found that an employee’s home located in E.D. Tex. was not a “regular and established place of business” of the defendant because there was no evidence that defendant owned, leased, or rented any portion of the employee’s home, that defendant played a part in

6

selecting the place’s location, stored inventory, or conducted demos there; that defendant conditioned the employee’s employment on the maintenance of an E.D. Tex. location; that defendant believed a location within E.D. Tex. to be important to business; or that defendant intended to maintain some place of business in E.D. Tex. in the event the employee decided to terminate their residence as a place where they conducted business.

o A number of district courts have applied the test set forth in Cray in various factual scenarios to determine whether defendant has a regular and established place of business. One issue of particular interest is whether, and under what circumstances, a related corporate entity’s place of business (such as an affiliate, subsidiary, or parent) in the judicial district can be attributed to the defendant, i.e., considered the defendant’s place of business. Chief Judge Stark of D. Del. recently ordered venue discovery in a few cases on this issue, for example, in Hatch-Waxman litigation against Mylan. Other courts (e.g., E.D. Va. in Symbology and E.D. Tex. in Soverain) have taken a stricter view on attribution of related entity’s place of business to defendant and have denied venue discovery on this issue.

o Automated Packaging Sys., Inc. v. Free-Flow Packaging Int’l, Inc., 5:14-cv-2022, 2018 WL 400326, at *7–8 (N.D. Ohio, Jan. 12, 2018) (finding no regular and established place of business).

No physical place of business : Defendant does not rent, lease, own, or control any buildings or real property in the district. Defendant does not employ any company to provide any services—such as secretarial or mail service—in the district, and the only technician

7

responsible for the State of Ohio lives outside the district. None of the employees with ties to Ohio keep inventory in their homes for sale to customers, and while three of the employees keep a limited amount of products in their home for demonstrative purposes (one of whom currently resides outside of this district), this relatively limited practice does not provide sufficient support for a finding that these homes constitute defendant’s physical place in the district. Moreover, the only support service these employees receive comes from outside the district.

No regular and established place : Plaintiff has failed to direct the Court to any evidence that would establish that defendant’s employees are required to live in this judicial district, and such a requirement would be inconsistent with the fact that their sales territory covers a number of states. Moreover, the fact that one of the employees moved his residence outside of this judicial district clearly cuts against these employee homes serving as a permanent place of business for defendant.

No place of the defendant : Defendant does not own, lease, or rent any property in this district, and there is no evidence that Defendant exercises any control over the residences of the two employees still residing in the district. Nor is there any evidence that their employment is conditioned on their continued presence in this district. Further, while a small amount of product is maintained in their homes, this product is not available for direct sale to customers. Finally, there is no evidence that Defendant has ever held out any of its employees’ private homes in this district as its

8

place of business. Defendant does not list any of these homes as its place of business on its website or in marketing or advertising literature. The address listed on the employees’ business cards is that of the company’s home office in Freemont, California, and the only employee to list on his business card a phone number within this judicial district, which he was permitted to do at his personal request, still answers his phone in his own—and not the company’s—name.

The Court also rejected arguments based on the facts that (1) defendant’s employees service a large number of customers within the district; (2) defendant provided its employees performing services in the district with “everything they need to do their jobs”; and (3) defendant supplied its customers with equipment to be used at the customer’s facility, even when (a) defendant retains ownership of the equipment, (b) once the customer selects the location for the equipment it cannot move the equipment without defendant’s permission, and (c) defendant retains the right to access the equipment to provide maintenance and service. The Court found these facts insufficient to show that defendant had a regular and established place of business in the judicial district.

o Reflection, LLC v. Spire Collective LLC, No. 17-CV-1603-GPC(BGS), 2018 WL 310184, at *3–4 (S.D. Cal. Jan. 5, 2018) (finding no regular and established place of business).

No physical place of business : Plaintiff does not present any evidence or legal authority to support its argument that the Amazon FCs

9

(fulfillment centers) are the physical, geographical location of Spire. While Amazon FCs are where Spire’s good are stored and orders are fulfilled, case law demonstrates that Spire does not have a physical presence in this district.

No regular and established place of business : A distributor or subsidiary of a parent corporation selling the infringer’s product does not demonstrate that a defendant has a regular and established business in this district. As noted by other district courts, merely selling products in California through a third party is not sufficient to satisfy the patent venue statute.

No place of business of defendant : Plaintiff has not conducted a legal analysis demonstrating that a monthly subscription fee equates to leasing space in the Amazon FCs. On the other hand, Defendant has presented evidence that it has no control over which FCs its products will be sent, and once stored at one Amazon FC, Amazon has discretion to redistribute Spire’s products to another Amazon FC. Since Spire has no control over its products once they are sent to Amazon FCs, these storage centers cannot be said to be the “place of Defendant.”

o Soverain IP, LLC v. AT&T, Inc., No. 2:17-CV-00293-RWS, 2017 WL 6452802, at *1–2 (E.D. Tex. Dec. 18, 2017) (no attribution of a subsidiary’s presence in a venue to the parent).

Attribution : A subsidiary’s presence in a venue cannot be imputed to a parent unless the corporations disregard their separateness and act as a single enterprise.

10

Attribution : Soverain does not point to any cases where courts have imputed the “regular and established place of business” of a subsidiary to a corporate affiliate under an “agency” theory, much less point to any authority to support its contention that “[a] proper analysis of imputing venue proceeds on an agency or blending of identities theory.” To the contrary, as one court has recognized after TC Heartland and In re Cray, for a “regular and established place of business” of a subsidiary to be imputed to a corporate relative, there must be a lack of formal corporate separateness. (citing Symbology Innovations, LLC, v. Lego Sys., Inc., No. 2:17-CV-86, 2017 WL 4324841 (E.D. Va. Sept. 28, 2017)).

o Mallinckrodt IP v. B. Braun Med. Inc., No. CV 17-365-LPS, 2017 WL 6383610, at *3–7 (D. Del. Dec. 14, 2017) (allowing venue discovery to determine whether the “places” of affiliates and subsidiaries within the district may be attributable to defendant).

Attribution : The Court finds Plaintiffs’ theory—that the “places” of any B. Braun entity, including B. Braun affiliates, subsidiaries, parents, or alter egos, may be attributable to B. Braun for purposes of venue—is not frivolous and justifies some limited venue-related discovery. . . . As this legal theory was not addressed by Cray, the Court sees no basis on which to find that Plaintiffs’ theory as to how B. Braun might be found to have a regular and established place of business in Delaware, based on other B. Braun entities having a regular and established place of business here, to be frivolous. It does not appear that Cray disturbed the prior holding of the Federal Circuit

11

in Minnesota Mining & Manufacturing Co. v. Eco Chemicals, Inc., 757 F.2d 1256, 1265 (Fed. Cir. 1985), that “venue in a patent infringement case [may be] proper with regard to one corporation by virtue of the acts of another, intimately connected, corporation.”

Attribution : In the Court’s view, it follows from Cray that the “place” of a corporate affiliate or subsidiary of a named defendant may, in at least some circumstances, and similar to the place of a defendant’s employee, be treated as a “place of the defendant.” Among the pertinent circumstances to be considered is whether the formalities of corporate separateness are preserved. . . . The record presently before the Court does not establish, one way or the other, whether any entity related to B. Braun—be it a parent, subsidiary, affiliate, agent, or alter ego—has any regular and established place of business in Delaware. Nor does it address the formal corporate separateness between, or the interrelationships among, the named defendant and the related B. Braun entities, including the Delaware subsidiaries. It is appropriate, then, for Plaintiffs to have an opportunity to take discovery on these matters, and for Defendant thereafter to renew, should it wish to do so, its challenge to the propriety of venue in this District.

Physical place of business : The Court disagrees with Plaintiffs’ assertion that B. Braun “has a physical presence in Delaware through its appointment of an agent for the service of process in Delaware.”

Regular and established place of business : It follows that transient, sporadic visits to a District—for instance, to a courthouse to participate in

12

litigation—are not of sufficient permanence or steadiness to be “regular” or “established.” Furthermore, the fact that B. Braun “leases medical equipment” in Delaware that is “installed and maintained in the District by Braun employees” is insufficient, without more, to show that B. Braun has a physical place of business in Delaware. The Delaware hospitals housing this equipment do not appear, as the record now stands, to be a “place of the defendant,” as there is (as yet) no indication that B. Braun “establish[ed] or ratif[ied] the[se] place[s] of business” or “exercise[d] other attributes of possession or control over the place.” Still, discovery may reveal that some portion of one or more hospitals in Delaware—i.e., “a building or a part of a building set apart for any purpose or quarters of any kind from which business [of the defendant] is conducted,”—is dedicated to B. Braun (or one of its corporate affiliates) so it may operate its machines. If so, this could contribute to a finding that B. Braun has a regular and established place of business in Delaware.

Place of the defendant : It follows that a courthouse is not a place “of the defendant.” The courthouse is not owned or leased by B. Braun; nor does B. Braun exercise other attributes of possession or control over the courthouse.

o Javelin Pharm., Inc. v. Mylan Labs. Ltd., No. CV 16-224-LPS, 2017 WL 5953296, at *5–6 (D. Del. Dec. 1, 2017) (allowing venue discovery to determine whether the “places” of affiliates and subsidiaries within the district may be attributable to defendant); see also UCB, Inc. v. Mylan Techs., Inc., No. CV 17-322-LPS, 2017 WL 5985559 (D. Del. Dec. 1, 2017) (same).

13

Attribution : Under Plaintiffs’ theory, which could attribute regular and established, physical places of business in Delaware of any Mylan affiliate to one or more of the named Defendants in this case, it is possible that discovery of the relationships amongst the various Mylan entities, and of the Delaware places of business of those various entities, may show that these requirements are satisfied.

Like in Mallinckrodt, the Court reasoned that: (1) transient, sporadic visits to a District—for instance, to a courthouse to participate in litigation—are not of sufficient permanence or steadiness to be “regular” or “established”; and (2) a courthouse—even one in which a defendant like Mylan litigates frequently, as a necessary and predictable part of its business, in order to obtain approval to enter the market with its generic drugs—is not a place “of the defendant.” The courthouse is not owned or leased by Mylan; nor does Mylan exercise other attributes of possession or control over the courthouse. Note that the reasoning here is consistent with Cray and differs from the reasoning in Chief Judge Stark’s earlier decision in BMS v. Mylan (decided before Cray), which considered the fact that Mylan was a frequent litigant before the district court as relevant to the venue inquiry.

o Symbology Innovations, LLC v. Lego Sys., Inc., No. 2:17-CV-86, 2017 WL 4324841, at *9–11 (E.D. Va. Sept. 28, 2017) (finding no regular and established place of business, and declining to impute the retail stores of defendant’s subsidiary to defendant).

Revenue derived from the forum has no bearing on whether § 1400(b)’s requirements are met.

14

Symbology also observes that Lego Systems is registered as a foreign corporation with the Commonwealth of Virginia, and has appointed a registered agent to accept service of process in Virginia. . . . Neither fact has any bearing on whether Lego Systems maintains a physical place within the District.

Symbology also notes that Lego Systems hosts various events throughout the year in Virginia. . . . However, transitory promotional events do not suggest that Lego Systems maintained a physical place of business here.

Attribution : Although Lego Systems operates no retail stores in this District (or anywhere else), its subsidiary Lego Brand Retail has three stores here. For the Lego Stores to serve as the “regular and established place of business” permitting venue in this District, Lego Systems and Lego Brand Retail must lack formal corporate separateness. This is a high standard . . . . Lego Systems and Lego Brand Retail are distinct corporate entities with separate finances, assets, officers, and records. They keep separate general ledgers, prepare their own distinct financial reports, and have separate assets.

Attribution : Here, as in Shapiro and Cannon, the parent company produces goods that are sold by the subsidiary. The parent-subsidiary connection here is even more attenuated because, unlike those cases, Lego Brand Retail is not the exclusive distributor for Legos Systems’ products in Virginia. Legos are sold by a wide variety of retailers in this District and across the country.

o Chief Judge Stark in Bristol-Myers Squibb Co. v. Mylan Pharmaceuticals Inc., C.A. No. 17-379-LPS, 2017

15

WL 3980155, at *17–22 (D. Del. Sept. 11, 2017) (decided before Cray) granted plaintiff’s request for venue discovery, noting that “[t]he Mylan family of companies includes at least 55 U.S. subsidiaries, of which more than 40 are incorporated in Delaware.” Chief Judge Stark allowed discovery to understand the relationships among the 40 Delaware Mylan entities and the Mylan defendant. Venue discovery is ongoing in that case.

Acts of Infringement in Hatch-Waxman and BPCIA Cases

This presents an issue unique to Hatch-Waxman and BPCIA litigation. Unlike other patent infringement actions, in Hatch-Waxman and BPCIA litigation, the “act of infringement” is the submission of an application (e.g., ANDA, 505(b)(2) application, or BLA) to FDA seeking approval of a generic version of a brand name drug product. The anticipated future act of infringement—the commercial manufacture and marketing of a generic product after FDA approval—has not yet occurred.

Moreover, under the safe harbor provision of 35 U.S.C. § 271(e)(1), it is not an act of infringement to make, use, offer to sell, or sell within the United States, or import into the United States, a patented invention solely for uses reasonably related to the development and submission of information to FDA. Thus, the activities of a generic drug maker to develop a generic product for FDA approval are generally exempt under the safe harbor provision and are not “acts of infringement.”

However, the second prong of the patent venue statute requires that the defendant “has committed acts of infringement” within the judicial district. The statute’s use of present prefect tense suggests that the “acts of infringement” must have occurred in the past. This is in conflict with the safe harbor provision of § 271(e)(1) and the

16

forward looking nature of the Hatch-Waxman Act and BPCIA, which anticipate future infringing activities after FDA approval.

Currently, there is a split in authority among district courts (Chief Judge Stark of D. Del. vs. Chief Judge Lynn of N.D. Tex.) on what constitutes an “act of infringement” that the defendant “has committed” in a judicial district in the context of Hatch-Waxman litigation. The Federal Circuit will eventually resolve this split, which will impact where a brand name drug maker can bring a patent infringement suit under the second prong of the patent venue statute.

Before this split in authority is finally resolved, brand name drug makers should consider bringing protective suits where a domestic corporate defendant resides (its state of incorporation), in addition to suing where the defendant “has committed acts of infringement” and “has a regular and established place of business,” in order to preserve the 30-month stay under the Hatch-Waxman Act, in case venue is found to be improper under the second prong of the patent venue statute. Under 28 U.S.C. § 1406, after finding that venue is improper, the district court “shall dismiss, or if it be in the interest of justice, transfer such case to any district or division in which it could have been brought.” Thus, a plaintiff could request the district court to transfer the case, but it is at the discretion of the district court to transfer, rather than dismiss, a case in the interest of justice.

In BPCIA litigation, although there is no automatic 30-month stay, if the parties comply with the statutory requirements to exchange patent information pre-suit (often called the “patent dance”), a patentee is expected to bring an action for infringement within a 30-day period in order to preserve its right to obtain injunctive relief. See 42 U.S.C. § 262(l)(6); 35 U.S.C. § 271(e)(6) (no injunctive relief if a patentee fails to bring suit within 30 days); id. § 271(e)(4)(B) & (D) (injunctive relief if a patentee timely brings suit

17

within 30 days). In these cases, it may be advisable to bring protective suits where a domestic corporate defendant resides, in addition to suing where the defendant “has committed acts of infringement” and “has a regular and established place of business.”

In BPCIA cases where the biosimilar applicant fails to comply with the statutory requirements to exchange patent information pre-suit, a patentee may bring a declaratory judgment suit for a declaration of infringement, validity, and enforceability of its patents. See 42 U.S.C. § 262(l)(9)(B) & (C). It remains to be seen whether these BPCIA declaratory judgment suits are governed by the patent venue statute, § 1400(b), or the general venue statute, § 1391. One may argue that such declaratory judgment action of patent infringement brought by a patentee (unlike a declaratory judgment action for a judgment on non-infringement and invalidity brought by an alleged infringer) is a civil action for patent infringement, and if so, it should be governed by the patent venue statute, § 1400(b). The Federal Circuit has not ruled definitively on this issue.

Below is a detailed discussion of Chief Judge Stark’s and Chief Judge Lynn’s decisions.

o In September 2017, Chief Judge Stark of D. Del. decided Bristol-Myers Squibb Co. v. Mylan Pharmaceuticals Inc., C.A. No. 17-379-LPS, 2017 WL 3980155 (D. Del. Sept. 11, 2017), in which he took a prospective, broad view on “acts of infringement,” relying heavily on the Federal Circuit’s decision in Acorda. 2017 WL 3980155, at *6–13.

o Chief Judge Stark reasoned that § 1400(b) applies in all patent cases, including Hatch-Waxman cases.

o Chief Judge Stark concluded that in the context of Hatch-Waxman litigation, the “acts of infringement” an

18

ANDA filer “has committed” include all of the acts that would constitute ordinary infringement if, upon FDA approval, the generic drug product is launched into the market. Accordingly, Chief Judge Stark concluded that an applicant’s submission of an ANDA, in conjunction with other acts the ANDA applicant non-speculatively intends to take if its ANDA receives final FDA approval, plus steps already taken by the applicant indicating its intent to market the ANDA product in the judicial district, must all be considered for venue purposes, and can be sufficient to demonstrate that the ANDA-filing defendant “has committed” “acts of infringement” in the judicial district.

o In reaching this conclusion, Chief Judge Stark noted the “almost impenetrable problem” created by Congress’ choice of verb tense in the patent venue statute in the particular context of Hatch-Waxman litigation. This is because the temporal focus of the Hatch-Waxman infringement analysis is the future, not the past, or even the present. In a Hatch-Waxman suit, the subject of the dispute is the generic drug product that the defendant will manufacture and sell and offer for sale in the future after obtaining FDA approval; a Hatch-Waxman suit is not about a generic product the defendant has sold or is selling. Thus, “on the surface there appears to be a complete mismatch between the backward-looking nature of the patent venue statute and the forward-looking nature of Hatch-Waxman litigation.”

o Chief Judge Stark recognized the Hatch-Waxman Act’s express purpose of resolving patent disputes before a generic drug product is launched, and that ANDA litigation is all about whether a valid patent “will or will not” be infringed by the manufacture, use, or sale of the new drug for which the application is submitted. Thus, the submission of an ANDA is a stand-in that

19

serves to move forward in time the infringement and invalidity challenges that otherwise would come later in time, such as after approval or marketing of the ANDA drug. Despite the fact that the allegedly-infringing products have yet to be approved and marketed, the patent infringement inquiry concerns the real-world impact and consequences that would flow from the approval of an ANDA.

o Chief Judge Stark relied heavily on Acorda (a Federal Circuit decision on personal jurisdiction in Hatch-Waxman litigation) and concluded that an ANDA filer’s future, intended acts must be included as part of the “acts of infringement” analysis for purposes of venue. In particular, the filing of an ANDA reliably confirms a plan to engage in real-world marketing after FDA approval. Thus, the planned, future acts that the ANDA filer will take in the district must be considered now in determining whether venue is proper. In other words, in the context of Hatch-Waxman litigation, such future acts are properly considered part of the “acts of infringement” that the defendant “has committed” within the meaning of § 1400(b).

o Chief Judge Stark reasoned that, otherwise, there typically will never be an act of actual infringement in an ANDA case. If the ANDA filer prevails in the litigation, there is no infringing activity because the Court will have held that the patent claims either were not infringed or were invalid. Conversely, if the patentee prevails, the ANDA filer will not be permitted to obtain final FDA approval and sell its ANDA product until after the listed patents expire. But the implication to be drawn from these facts cannot be that the second prong of § 1400(b) can never have any application in a Hatch-Waxman suit, simply because no real “act of infringement” has been (or even will be) committed. There is no basis to believe that Congress intended for the second prong of § 1400(b) to have

20

essentially no application in Hatch-Waxman cases or that, in Hatch-Waxman cases, Congress intended venue to be proper solely and exclusively where the defendant resides.

o Chief Judge Stark rejected Mylan’s argument that the act of infringement occurs only where the ANDA submission is made (i.e., Maryland where FDA is located), where the submission is made from (e.g., where the ANDA applicant places the ANDA in the mail or presses a button to submit it electronically), or where the center of gravity of the work associated with the preparation and submission of the ANDA took place.

o Applying the above conclusions, Chief Judge Stark found that Mylan “has committed acts of infringement” in the District of Delaware, because Mylan’s ANDA filings and its distribution channels establish that Mylan plans to market its proposed drugs in Delaware and the lawsuit is about patent constraints on such in-State marketing. The Court found unpersuasive Mylan’s argument that the ANDA was prepared in West Virginia and electronically submitted to FDA in Maryland, and that there has been no manufacture, sale, or offer for sale of the generic products that are subject of the ANDAs in the United States or Delaware.

o Chief Judge Stark then moved on to analyze whether Mylan has a “regular and established place of business” in the District of Delaware. On the record before him, Chief Judge Stark was unable to determine whether Mylan has a regular and established place of business in Delaware. Chief Judge Stark granted BMS’ request to conduct venue-related discovery and denied Mylan’s motion to dismiss for improper venue without prejudice, allowing

21

Mylan to renew its venue challenge after venue discovery is complete.

o Chief Judge Stark’s BMS v. Mylan decision issued before the Federal Circuit’s decision in In re Cray. Thus, although Chief Judge Stark provided insightful analysis on the issue of “regular and established place of business,” which is mostly consistent with Cray, his analysis may not be controlling to the extent that it conflicts with Cray. For example, in BMS v. Mylan, Chief Judge Stark considered the fact that Mylan is a frequent ANDA litigant in Delaware as relevant to the issue of “regular and established place of business,” which he clarified in subsequent opinions as not relevant to that issue because a courthouse is not a place of business of Mylan.

• • • • • • • • • • • • • • • • • • • • •

o In November 2017, Chief Judge Lynn of N.D. Tex. decided Galderma Laboratories, L.P. v. Teva Pharmaceuticals USA, Inc., No. 3:17-cv-01076-M, 2017 WL 6505793 (N.D. Tex. Nov. 17, 2017), in which she took a narrow view on “acts of infringement” that an ANDA filer “has committed” for venue purposes in Hatch-Waxman litigation.

o Chief Judge Lynn issued her decision after allowing Plaintiffs to conduct limited venue-related discovery.

o In this case, the ANDA was prepared in New Jersey at Teva USA’s office and electronically submitted to FDA in Maryland.

o Chief Judge Lynn reasoned that it is undisputed that under the Hatch-Waxman Act, filing an ANDA with a Paragraph IV certification constitutes an act of infringement. She then considered, but declined to follow, Chief Judge Stark’s decision, finding it

22

inconsistent with the plain language of the patent venue statute.

o Chief Judge Lynn reasoned that the patent venue statute requires that the defendant “has committed acts of infringement” within the judicial district, and that the only act of infringement that actually has occurred is the filing of the ANDA. Citing Schnell v. Peter Eckrich & Sons, Inc., 365 U.S. 260, 264 (1961), and the Federal Circuit’s In re Cray decision, Chief Judge Lynn reasoned that § 1400(b) “is not to be given a liberal construction.” Chief Judge Lynn also reasoned that “[t]he commencement of a lawsuit effectuates the purpose of the Hatch-Waxman Act; it is not necessary to recognize additional speculative acts of infringement to give the statute effect.”

o Chief Judge Lynn thus concluded that in determining proper venue in a Hatch-Waxman litigation, courts should look to the forum where the ANDA was prepared and submitted. She also explained that she was not relying on research or activities other than the preparation and actual submission of the ANDA itself, which may be exempt under the safe harbor of § 271(e)(1).

o Here, because there is no evidence or allegation that Teva USA prepared or submitted the ANDA in or from N.D. Tex., the Court determined that venue is improper in the district because no act of infringement occurred there.

o Chief Judge Lynn then moved on to analyze whether Teva USA had a regular and established place of business in N.D. Tex. She applied the test in In re Cray and concluded that this statutory requirement was not met, because, among other reasons, the sales representatives identified by Plaintiffs are not Teva USA employees; rather, they are employed by a

23

separate, but related entity, TSM. Chief Judge Lynn found that there is no evidence that TSM and Teva USA are not separate corporate entities. Citing Symbology (E.D. Va.) and Soverain (E.D. Tex.), she reasoned that “[a] subsidiary’s presence in the district cannot be imputed to the parent for venue purposes so long as the two entities maintain formal corporate separateness.”

Should the Patent Venue Statute Apply to Hatch-Waxman and BPCIA Litigation?

A recent Law360 article (Jane Love et al., TC Heartland and Hatch-Waxman: Square Peg in Round Hole, published January 30, 2018) raises the question of whether the patent venue statute, § 1400(b), should apply in Hatch-Waxman cases at all. The authors argue that “[a] Hatch-Waxman case is not simply a ‘civil action for patent infringement,’” as “FDA approval of the proposed generic drug can depend on the outcome of the Hatch-Waxman case,” and thus “the Hatch-Waxman Act is a hybrid statute with both regulatory and patent elements,” and it is not a simple “civil action for patent infringement.” While this article raises an interesting issue, the Federal Circuit has not directly ruled on whether the patent venue statute, § 1400(b), or the general venue statute, § 1391, governs a Hatch-Waxman litigation. District courts have applied the patent venue statute in Hatch Waxman litigation. See, e.g., Bristol-Myers Squibb Co. v. Mylan Pharm. Inc., No. 17-379-LPS, 2017 WL 3980155, at *3 (D. Del. Sept. 11, 2017); Galderma Labs., L.P. v. Teva Pharm. USA, Inc., No. 3:17-cv-01076-M, 2017 WL 6505793, at *4 (N.D. Tex. Nov. 17, 2017); Mallinckrodt IP v. B. Braun Med. Inc., No. CV 17-365-LPS, 2017 WL 6383610, at *2 (D. Del. Dec. 14, 2017); Javelin Pharm., Inc. v. Mylan Labs. Ltd., No. CV 16-224-LPS, 2017 WL 5953296, at *2 (D. Del. Dec. 1, 2017); UCB, Inc. v. Mylan Techs., Inc., No. CV 17-322-LPS, 2017 WL 5985559, at *2 (D. Del. Dec. 1, 2017).

24

Similarly, in another article published shortly after the Supreme Court decided TC Heartland (Rao et al., Will TC Heartland Control Venue in BPCIA Litigation?, 94 Patent, Trademark & Copyright Journal 1036, published August 11, 2017), the authors argued that the patent venue statute may not control BPCIA litigation because, among other reasons, (1) § 1400(b), which is backward looking, is incompatible with BPCIA, which is forward looking; (2) legislative intent limiting venue for traditional patent infringement litigation conflicts with BPCIA intent and history; and (3) legislative history of BPCIA suggests Congress intended to apply § 1391, not § 1400(b), to BPCIA litigation. As of today, however, courts have not address this issue. A Westlaw search for district court and Federal Circuit decisions on venue-related issues in BPCIA litigation revealed only one opinion, addressing transfer of venue under 28 U.S.C. § 1404. Genentech Inc. v. Amgen Inc., No. 17-1471-GMS, 2018 WL 503253 (D. Del. Jan. 22, 2018) (denying Amgen’s motion to transfer to C.D. Cal.); see also Amgen, Inc. v. Genentech, Inc., No. 17-7349-GW, 2018 WL 718418 (C.D. Cal. Feb. 2, 2018) (in a related case, dismissing a declaratory judgment action brought by Amgen in view of the D. Del. decision denying transfer).

Thus, it remains to be seen whether the Federal Circuit will hold that the patent venue statute does, or does not, apply to Hatch-Waxman and BPCIA litigation. Because both the Hatch-Waxman Act and the BPCIA define the submission of an application for FDA approval of a generic or biosimilar product as an artificial “act of infringement,” a more likely compromise approach may be that adopted by Chief Judge Stark in BMS v. Mylan, which treats a Hatch-Waxman litigation as a civil action for patent infringement governed by the patent venue statute, and then interprets “has committed acts of infringement” more broadly to give full effect to the statutory intent and purpose of the Hatch-Waxman Act and BPCIA.

25

Impact of TC Heartland on Hatch-Waxman and BPCIA Litigation

Assuming that the patent venue statute applies to Hatch-Waxman and BPCIA litigation (as certain district courts have held in the context of Hatch-Waxman litigation), TC Heartland significantly narrowed the choice of venue under the “residency” prong of the patent venue statute to a defendant’s state of incorporation. It deprives brand name companies of the ability to sue generic companies virtually anywhere in the country under Acorda’s expansive view of personal jurisdiction.

Brand name companies may seek to bring suit under the second prong of the patent venue statute, where a defendant “has committed acts of infringement and has a regular and established place of business.” However, the current split in authority among district courts on what constitutes an “act of infringement” that a defendant “has committed” gives rise to uncertainty on where venue is proper. Before that uncertainty is resolved, brand name companies may need to ensure proper venue by bringing protective suits in a defendant’s state of incorporation in addition to suing in venues under the second prong of the patent venue statute, or by suing a foreign defendant without suing its U.S. affiliates in a judicial district where there is personal jurisdiction over the foreign defendant.

Moreover, in cases of multiple ANDA filers, brand name companies may have to file suits for infringement of the same patents in multiple districts in order to ensure proper venue as to each ANDA filer. Prior to TC Heartland, brand name companies generally could sue multiple ANDA filers in one district and consolidate the infringement actions, and generic defendants could form joint defense group to save litigation costs. After TC Heartland, although brand name companies may request the Judicial Panel on Multidistrict Litigation to consolidate related ANDA cases in one district court for pretrial purposes, trials may still have to be

26

conducted in multiple district courts, which will heighten the risk for inconsistent judgment, including the risk that the patents may be found invalid by at least one district court. Bringing suits in multiple districts will certainly increase litigation costs for both brand name companies and generic defendants who could form joint defense group before TC Heartland.

If the Federal Circuit adopts Chief Judge Stark’s interpretation of what constitutes an “act of infringement” that a defendant “has committed” in the context of Hatch-Waxman litigation (which means that a generic defendant would have committed acts of infringement across the United States by virtue of their plan to market the generic product nationwide after FDA approval), then venue would generally be proper where the defendant has a regular and established place of business. In re Cray has set out a relatively strict test for what constitutes a “regular and established place of business.” Regardless, a company could have multiple regular and established places of business, not limited to its principal place of business, for example, in places where it owns or maintains corporate offices, manufacturing facilities, distribution centers, retail stores, or warehouses. In addition, some district courts have reasoned that a related corporate entity’s place of business within a judicial district (such as an affiliate, subsidiary, or patent) may be attributed to the defendant, and have allowed venue discovery on that issue. It remains to be seen whether the Federal Circuit will set out a test or otherwise provide guidance on circumstances under which a related entity’s place of business may be properly attributed to a defendant for venue purposes.

Other IssuesWaiver of Venue or Change in Law

Soon after the Supreme Court decided TC Heartland in May 2017, many litigants filed venue motions seeking to

27

dismiss or transfer their cases. District courts split on the issue of waiver of venue challenge and whether the “change in law” exception applied. Some courts found waiver and no change in law because the Supreme Court in TC Heartland merely reaffirmed its own precedent in Fourco, and VE Holding could not have overruled Fourco. Other courts concluded that TC Heartland constituted a change in law and that venue challenge was not waived because it was unavailable before the Supreme Court decided TC Heartland when VE Holding’s broad interpretation of “resides” controlled.

o “In the wake of the ruling in TC Heartland, district courts were flooded with motions challenging venue in patent cases. Two lines of cases quickly emerged addressing the question of whether the defendants bringing these motions had waived their right to challenge venue, or whether the waiver provision of Rule 12(h) was inapplicable because the venue argument was ‘unavailable’ prior to TC Heartland based on the long-standing precedent of VE Holding. See Maxchief Investments Ltd. v. Plastic Dev. Grp., LLC, No. 3:16-cv-63, 2017 WL 3479504, at *3 (E.D. Tenn. Aug. 14, 2017) (collecting cases from both lines).” Automated Packaging Sys., Inc., v. Free-Flow Packaging Int’l, Inc., No. 5:14-CV-2022, 2018 WL 400326, at *3 (N.D. Ohio Jan. 12, 2018).

In November 2017, the Federal Circuit resolved the split by holding that “TC Heartland changed the controlling law in the relevant sense: . . . before the [Supreme] Court decided TC Heartland, the venue defense now raised [by these defendants] was not ‘available,’ thus making the waiver rule of Rule 12(g)(2) and (h)(1)(A) inapplicable.” In re Micron Tech., Inc., 875 F.3d 1091, 1094 (Fed. Cir. 2017).

28

The Federal Circuit also explained that “apart from Rule 12(g)(2) and (h)(1)(A), district courts have authority to find forfeiture of a venue objection” in light of other factors. Thus, a district court may exercise its discretion and deny a venue motion for other reasons, such as timeliness of the venue motion, prior consent of the defendant, and how near is the trial.

With the passage of time, waiver or forfeiture will become less of a contested issue because venue challenges in suits commenced prior to TC Heartland should have been, or soon should be, raised.

Burden of Proof

Currently, there is a split in authority on which party (plaintiff who brings a patent infringement action in a given venue, or defendant who files a Rule 12 motion to challenge venue) bears the burden to establish venue is proper (for plaintiff) or improper (for defendant).

One subsidiary issue is whether Federal Circuit law or regional circuit law applies to the issue of burden of proof in a venue challenge. It remains to be seen whether and how Federal Circuit will rule on the choice-of-law issue. If the Federal Circuit holds that this issue is governed by Federal Circuit law, then such ruling would bring uniformity across district courts sitting in different regional circuits. On the other hand, if the Federal Circuit determines that this is a procedure issue governed by regional circuit law, then the split in authority on burden of proof will remain, as different circuits have arrived at different conclusions on this issue.

Chief Judge Stark in BMS v. Mylan reasoned that burden of proof is a procedural issue not pertaining to patent law, and thus it is controlled by the law of the regional circuit. He then applied Third Circuit law, which places the burden on Defendant to prove improper venue.

29

o Chief Judge Stark also explained that the interpretation of patent venue statute, § 1400(b), is governed by Federal Circuit law, as § 1400(b) is a patent-specific statute.

o Chief Judge Stark reasoned: Courts are not uniform in their views as to which party bears the burden of proof with respect to venue. Some hold that a plaintiff must prove that venue is proper in its chosen district, while others hold instead that a defendant must prove that such district is an improper venue. See 14D Wright & Miller, Federal Practice & Procedure § 3826 (4th ed. 2017) (“There are many cases—predominantly, but not exclusively, from the Third and Fifth Circuits—holding that the burden is on the objecting defendant to establish that venue is improper, because venue rules are for the convenience and benefit of the defendant.”). At present, it appears the majority view is that “when the defendant has made a proper objection, the burden is on the plaintiff to establish that the chosen district is a proper venue.” Id. Notably, however, the Court of Appeals for the Third Circuit—the Circuit in which this District is located—has expressly held that the moving party has the burden of proving that venue is improper. See Myers v. Am. Dental Ass’n, 695 F.2d 716, 724 (3d Cir. 1982) (“[O]n a motion for dismissal for improper venue under Rule 12 the movant has the burden of proving the affirmative defense asserted by it.”); see also Great W. Mining, 434 F. App’x at 87 (“Because improper venue is an affirmative defense, the burden of proving lack of proper venue remains—at all times—with the defendant.”).

o While the parties here are in agreement as to what the Third Circuit has held with respect to the burden on venue motions, they disagree as to whether Third Circuit law governs the pending motion. BMS contends

30

that Third Circuit law applies, while MPI insists that, rather, the Court must apply the law of the Court of Appeals for the Federal Circuit. Notably, however, MPI concedes that there is no Federal Circuit precedent as to either (i) whether Federal Circuit law controls a motion to dismiss for improper venue, or (ii) which party bears the burden of proof on such a motion.

Chief Judge Lynn in Galderma v. Teva reasoned that the Fifth Circuit has not ruled on which party bears the burden of proof on a motion to dismiss for improper venue. She reasoned that most district courts within the Fifth Circuit have imposed the burden on the plaintiff once a defendant has objected to the plaintiff’s chosen forum. She also noted that “[t]his court, in particular, has consistently held that the plaintiff bears the burden of sustaining venue in the district in which the suit was brought.” Thus, consistent with her past decisions, Chief Judge Lynn placed the burden on plaintiff.

One district court in E.D. Tex. looked to regional circuit decisions prior to the formation of the Federal Circuit and concluded that the burden is on plaintiff. Pers. Audio, LLC v. Google, Inc., No. 1:15-CV-350, 2017 WL 5988868, at *4, *6 (E.D. Tex. Dec. 1, 2017).

o Accordingly, the court has reviewed cases decided before VE Holding for guidance as to the proper placement of the burden of proof when a corporate defendant in a patent infringement action asserts that venue is improper under § 1400(b). Although these cases were decided before the Federal Circuit was created, they are persuasive as to how courts, guided by Supreme Court precedent, placed the burden of proof when a § 1400(b) challenge to venue was raised.

o The consistent assignment of burden of proof to the plaintiff in § 1400(b) cases decided by Circuit and district courts before the creation of the Federal

31

Circuit and before the Federal Circuit’s opinion in VE Holding carries greater weight than broad pronouncements on general venue concepts or other venue statutes. The court concludes that the burden of proof is on Plaintiff in this case.

Another district court in E.D. Tex. came to a different conclusion, i.e., that the burden is on defendant. Intellectual Ventures II LLC v. FedEx Corp., No. 2:16-CV-00980-JRG, 2017 WL 5630023, at *5 (E.D. Tex. Nov. 22, 2017).

o It therefore follows that the party to whom this privilege is afforded and by whom the privilege must be invoked, the defendant, should explain how a particular venue fails to provide them with the benefits conferred by the venue requirement. It also follows that a defendant is better positioned to explain why these benefits are lacking with respect to a particular forum. For these reasons, the Court concludes that opinions placing the burden on the defendant represent the better view.

Symbology Innovations, LLC v. Lego Sys., Inc., No. 2:17-CV-86, 2017 WL 4324841, at *4 (E.D. Va. Sept. 28, 2017) (burden on plaintiff).

o When a defendant challenges venue under Rule 12(b)(3) in the Fourth Circuit, the plaintiff bears the burden of establishing that venue is proper. See, e.g., Smithfield Packing Co. v. V. Suarez & Co., 857 F. Supp. 2d 581, 584 (E.D. Va. 2012); Colonna’s Shipyard, Inc. v. City of Key W., 735 F. Supp. 2d 414, 416 (E.D. Va. 2010); Dunham v. Hotelera Canco S.A. de C.V., 933 F. Supp. 543, 550 (E.D. Va. 1996). The weight of this burden varies with the nature of the parties’ dispute.

32

When a defendant asserts a venue challenge under this prong, the plaintiff bears the burden of establishing venue. Cordis Corp. v. Cardiac Pacemakers, 599 F.2d 1085, 1086 (1st Cir. 1979).

Nexus Between Acts of Infringement and Place of Business

Whether there must be a nexus or some relationship between “acts of infringement” and the “regular and established place of business.” Some defendants have argued that the “acts of infringement” must be related to the “regular and established place of business” within the judicial district. The Federal Circuit has not ruled on this issue. A number of district courts, including Chief Judge Stark in BMS v. Mylan, have rejected this argument because the statute only requires that the defendant has committed acts of infringement and has a regular and established place of business within the district. The statute does not require the “acts of infringement” to arise from the “regular and established place of business.” Chief Judge Stark reasoned:

o As noted, under § 1400(b) venue is proper in a judicial district “where the defendant has committed acts of infringement and has a regular and established place of business” (emphasis added). The Federal Circuit has yet to address explicitly whether those requirements must be connected, such that a defendant’s regular and established place of business within a district results in or gives rise to its infringing acts. Courts that have considered the question have reached differing results. It appears that a majority of cases has determined that no relationship is required. On this issue, the Court agrees with what appears to be the majority view.

o The statutory language supports this conclusion. Section 1400(b) provides that venue is proper “where a defendant has committed acts of infringement and has

33

a regular and established place of business.” So long as the two requirements are satisfied in a particular district—that is, so long as the defendant has committed acts of infringement in the district and has a regular and established place of business in that same district—venue is proper. The statute does not state that in order for venue to be proper the defendant is to have committed acts of infringement in a district “arising from” a regular and established place of business in that district. The statute is silent as to any necessity of relationship or connection between the two requirements. The Court does not read this statutory silence to contain an implicit nexus requirement.

See also Plexxikon Inc. v. Novartis Pharm. Corp., No. 17-CV-04405-HSG, 2017 WL 6389674, at *2 (N.D. Cal. Dec. 7, 2017): Defendant devotes much of its motion to the argument that “the patent venue statute requires a connection between the alleged acts of infringement and the regular and established place of business.” It supports this argument by reading into the statute a level of ambiguity, invoking the “policy underlying the patent venue statute,” and examining the provision’s legislative history. The Court need not consider these contentions, because it concludes that the plain language of the statute does not include a nexus requirement. Courts should “ordinarily resist reading words or elements into a statute that do not appear on its face,” Bates v. U.S., 522 U.S. 23, 29 (1997), and this is one of the many cases where that is true. The Court declines to read into section 1440(b) a nexus requirement.

Multi-District States

Another issue currently before the Federal Circuit is where the proper venue lies in a state with multiple judicial districts. For example, if a defendant is incorporated in a state and has a place of business in one judicial district

34

within that state, but has no physical presence in any other judicial districts within the same state, would venue be proper in those other judicial districts?

BigCommerce, a Texas corporation, argues that venue is improper in E.D. Tex. because the company’s headquarter is in Austin (W.D. Tex.). Judge Gilstrap disagreed, holding instead 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.” Diem LLC v. BigCommerce, Inc., No. 6:17-cv-00186, 2017 WL 3187473, at *2–3 (E.D. Tex. July 26, 2017). BigCommerce filed a petition for writ of mandamus to the Federal Circuit. It remains to be seen whether, and how, the Federal Circuit will decide this issue.

Case Filing Statistics Statistics of where patent infringement suits have

been filed after TC Heartland

35

36