Federal Circuit Declares TC Heartland Changed Patent Venue Law

A recent Federal Circuit decision may give further hope to some accused infringers still looking to transfer venue in the wake of the Supreme Court’s TC Heartland decision. On November 15, 2017, a Federal Circuit panel vacated the U.S. District Court for the District of Massachusetts’ denial of Micron’s motion to dismiss or transfer and declared that TC Heartland was a change in the law. In re: Micron Tech., Inc., No. 2017-138 (Fed. Cir. Nov. 15, 2017) (precedential).

In mid-2016, President and Fellows of Harvard College sued Micron for patent infringement in the District of Massachusetts. Id. slip op. at 3. Shortly thereafter, Micron moved to dismiss Harvard’s complaint for failure to state a claim. Id. Micron, which is incorporated in Delaware and based in Idaho, did not include in that motion an objection to venue under Rule 12(b)(3). Id. Subsequently, in May 2017 the Supreme Court issued its decision in TC Heartland, ruling that “a domestic corporation ‘resides’ only in its State of incorporation for purposes of the patent venue statute.” Id. Based on TC Heartland, Micron then moved the district court pursuant to 28 U.S.C. § 1406(a) and Rule 12(b)(3) to dismiss the case for improper venue or to transfer the case to the District of Delaware or the District of Idaho. Id. The district court denied Micron’s motion, concluding that Micron had waived its venue defense when it did not object to venue in its initial motion to dismiss and rejecting Micron’s assertion that TC Heartland was a change of law that made the Rule 12(h)(1)(A) waiver rule inapplicable. Id. (citing President & Fellows of Harvard Coll. v. Micron Tech., Inc., No. 1:16-cv-11249-WGY, 2017 WL 3749419, at *2, 4 (D. Mass. Aug. 30, 2017)).

Micron then petitioned the Federal Circuit for a writ of mandamus to set aside the district court’s order. In considering Micron’s petition, the Federal Circuit reviewed the constraints of Rule 12. In relevant part, Rule 12(h)(1)(A) provides that a party waives a venue defense by “omitting it from a motion in the circumstances described in Rule 12(g)(2),” and Rule 12(g)(2) provides that “a party that makes a motion under this rule must not make another motion under this rule raising a defense or objection that was available to the party but omitted from its earlier motion.” Micron, slip. op. at 6-7 (emphasis added).

In analyzing the question of whether the venue defense was “available” to Micron at the time of its 2016 motion to dismiss, the Federal Circuit set forth its “common-sense interpretation” of Rule 12(g)(2), noting that “[t]he law of precedent is part of what determines what law controls” and that the Rule’s “language ‘was available’ focuses on the time of the motion in the district court, not some future possibility of relief on appeal.” Id. slip op. at 8. The Federal Circuit explained that “controlling precedent precluded the district court from adopting an objection to venue before the Supreme Court decided TC Heartland” and that “[o]n the patent-specific issue of the proper interpretation of 28 U.S.C. § 1400(b), the district court was bound by this court’s precedent.” Id. slip op. at 10-11.

Specifically, the Federal Circuit referred to its decision in V.E. Holding Corp. v. Johnson Gas Appliance Co., 917 F.2d 1574 (Fed. Cir. 1990), which held that § 1391(c)’s definition of “resides,” as amended in 1988, applied to § 1400(b). Micron, slip op. at 11. The Federal Circuit contrasted that holding with the Supreme Court’s earlier decision in Fourco Glass Co. v. Transmirra Products Corp., 353 U.S. 222 (1957), which held that the then-current version of § 1391(c) did not apply to § 1400(b). Micron, slip op. at 12. The Federal Circuit reasoned that the V.E. Holding precedent combined with the now-current 2011 version of § 1391(c) precluded the district court in this case from finding venue improper until the Supreme Court decided TC Heartland. Id. slip op. at 12-13. The panel went on to conclude that the Supreme Court’s TC Heartland holding that the definition of “resides” in § 1391(c) does not apply to § 1400(b) clearly rejected then-binding precedent of V.E. Holding. Id. slip op. at 12-13. Because of this change in law, the Federal Circuit held that Micron’s position was not available for the district court to adopt before TC Heartland and was therefore not “available” under Rule 12(g)(2) at the time of Micron’s 2016 motion to dismiss, and that Rule 12(h)(1)(A)’s waiver rule is inapplicable here. Id. slip op. at 13. Ultimately, the Federal Circuit panel vacated the district court’s order denying Micron’s Rule 12(b)(3) motion and remanded for further proceedings consistent with the Order. Id. slip op. at 18-19.

Despite its conclusion, the Federal Circuit declined to simply dismiss or transfer the case, or even remand for consideration of solely the venue question. Rather, the Federal Circuit recognized that under various circumstances, district courts have authority to find forfeiture of a venue objection even if the objection is not waived under Rule 12. Id. slip op. at 16. In particular, the Federal Circuit noted that district courts may properly exercise this authority based on the discretionary framework set forth in the Supreme Court’s recent decision in Dietz v. Bouldin, Inc., 136 S. Ct. 1885 (2016), which summarizes limits on such authority under “two principles—an inherent power must be a reasonable response to a specific problem and the power cannot contradict any express rule or statute.” Id. slip op. at 14-15. The Federal Circuit left open what specific factors might lead to such forfeiture but referred to timeliness of the assertion of the defense as a potentially relevant consideration. Id. slip op. at 17-18.

While this decision does not resolve all questions related to the viability of a post-TC Heartland venue defense, the Federal Circuit provided clarification on the change of venue law and the unavailability of the defense prior to the Supreme Court’s review of TC Heartland. As this issue has been one of widespread disagreement among district courts, this decision may be seen to open new doors to some defendants eager to transfer venue.

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