Ruling begins to explore the new patent venue landscape

Following the U.S. Supreme Court's groundbreaking TC Heartland LLC v. Kraft Foods Group Brands LLC decision narrowing venue in patent infringement cases, unanswered questions still remained around whether this decision qualified as a change in the law and whether it could be retroactively applied to cases where the improper venue defense had been waived. The U.S. Court of Appeals for the Federal Circuit answered these questions in In re Micron Technology.

The Case

On Nov. 15, the Federal Circuit granted a petition for a writ of mandamus in Micron to "clarify the basic legal framework governing determinations of forfeiture of a venue defense." The case had originated in 2016 in the District of Massachusetts when the president and fellows of Harvard College filed a patent infringement case against Micron, which is incorporated in Delaware and has its principal place of business in Idaho. A year before TC Heartland was decided, Micron had moved under Federal Rule of Civil Procedure 12(b)(6) to dismiss the complaint for failure to state a claim but did not object to the venue under Rule 12(b)(3). After the Supreme Court issued its decision in TC Heartland and narrowed venue in patent infringement cases, however, Micron moved to dismiss or transfer the case for improper venue. The district court denied the motion on the grounds that Micron had waived the defense, and Micron petitioned the Federal Circuit for a writ of mandamus to reverse the decision and to dismiss or transfer the case to the District of Delaware or the District of Idaho.

In its decision on Micron, the Federal Circuit found that the district court had erred in finding that Micron had waived the defense of improper venue. Instead, the Federal Circuit stated that the opinion in TC Heartland constituted a significant enough change in patent venue laws to release defendants from a waiver of an improper venue defense. It vacated the district court's order and remanded for consideration of forfeiture under a framework that it laid out in its decision. This decision will have immediate and significant implications on patent infringement cases initiated before the Supreme Court issued its decision in TC Heartland earlier this year.

Challenging Venue Post-TC Heartland

In rendering its decision, the Federal Circuit first looked to the general law on waiver of defenses under Rule 12 of the Federal Rules of Civil Procedure. Under this rule, a defense that is not included in an initial Rule 12(b) motion is deemed to be waived. However, the Federal Circuit clarified that in order to be waived, a defense must have been "available to the defendant" at the time of filing the initial Rule 12(b) motion. Here, the Federal Circuit held that the improper venue defense was "not available" to Micron at the time of the 12(b) filing because TC Heartland had "changed the controlling law" on patent venue. As such, the defense had not been waived as a matter of law.

This decision will likely trigger a new wave of motions to transfer or dismiss by patent infringement defendants looking to transfer out of inconvenient or unfavorable venues. While district courts had previously been split on the question of whether TC Heartland could retroactively be applied in cases where defendants had failed to raise venue objections, the Federal Circuit has now decisively settled that question and has made it easier for defendants to benefit from TC Heartland -- even for pending cases.

District Courts Afforded Discretion

Despite finding that Micron had not waived its improper venue defense, the Federal Circuit vacated and remanded the district court's decision rather than simply ordering a transfer of venue. It justified this decision by stating that the waiver rule in Rule 12(h)(1) was "not the sole basis on which a district court might, in various circumstances, rule that a defendant can no longer present a venue defense that might have succeeded on the merits." The Federal Circuit acknowledged that motions to transfer venue could be denied for a variety of reasons and held that the district courts "possess[] inherent powers that are governed not by rule or statute but by the control necessarily vested in courts to manage their own affairs so as to achieve the orderly and expeditious disposition of cases."

Litigators should be mindful of considerations other than waiver that district courts may look to when evaluating post-TC Heartland motions based on improper venue. The Federal Circuit has provided some guidance on this issue that could be helpful to defendants looking to bring a venue challenge in pending cases. The court specifically pointed to the importance of timeliness in challenging improper venue -- both in terms of when the defense becomes available and in what stage of litigation the challenge is introduced. On this issue, the Federal Circuit turned to cases where the improper venue defense was presented close to trial and declared that district courts did not abuse their discretion in denying those post-TC Heartland motions to transfer or dismiss. The discretion afforded to district courts in determining forfeiture could ultimately result in inconsistent applications of the rules set forth in Micron and may prompt the question to once again make its way to the Federal Circuit.

Conclusion

The Micron decision is yet another example of the impact TC Heartland has had on patent litigation. The number of patent cases filed in the Eastern District of Texas, for example, has dramatically declined in the wake of the Supreme Court's decision -- in the months following TC Heartland, the percentage of patent cases brought in the Eastern District of Texas had already dropped from nearly half of all new cases to just 13 percent. Micron affords defendants yet another possible opportunity to raise improper venue in pending cases, likely further diminishing the number of cases being litigated in that venue. As this body of law continues to develop, it is incumbent on patent litigators to stay up to date with all the changes.