IP Law Daily Venue transfer denied in patent infringement suit against Taiwanese corporation
Wednesday, May 9, 2018

Venue transfer denied in patent infringement suit against Taiwanese corporation

By Nicholas Kaster, J.D.

The U.S. Court of Appeals for the Federal Circuit has denied a petition for a writ of mandamus vacating an order by a federal district court in Delaware which denied a motion to dismiss or transfer a patent infringement suit against a Taiwanese corporation for improper venue (In re HTC Corporation, May 9, 2018, Prost).

A patent infringement suit was filed against HTC Corporation, a Taiwanese corporation with its principal place of business in Taiwan, and its wholly-owned U.S. based subsidiary, HTC America, Inc., a Washington corporation with its principal place of business in Seattle, Washington. HTC Corporation and HTC America filed a motion to dismiss for improper venue, or in the alternative, to transfer the case to a federal district court in the Western District of Washington. The federal district court found that venue was not proper as to HTC America, but was proper as to HTC Corporation. Following this order, the suit against HTC America was voluntarily dismissed without prejudice. HTC Corporation then filed a mandamus petition seeking dismissal for improper venue.

A party seeking mandamus relief must demonstrate, among other things, that the right to such relief is "clear and indisputable." The federal appellate court ruled that this burden was not met.

The district court relied on Brunette Machine Works, Ltd. v. Kockum Industries, Inc., 406 U.S. 706 (1972) to hold that HTC, as a foreign corporation, is subject to suit in any judicial district. In that case, the Supreme Court reaffirmed the longstanding rule in 28 U.S.C. 1391(d) that a patent infringement suit could be brought against a foreign defendant in any district court, and was not restricted to where the defendant resided, committed acts of infringement, or had a regular and established business, as otherwise required under the patent venue statute, 28 U.S.C. Sec. 1400(b).

HTC contended that Sec. 1400(b) should apply to it because Congress abrogated Brunette—and the alien-venue rule—when it enacted the Federal Courts Jurisdiction and Venue Clarification Act of 2011. The Court of Appeals disagreed.

The 2011 law enacted the current version of 28 U.S.C. Sec. 1391(c) to include express definitions for residency for natural persons and for unincorporated entities and to remove venue protections for U.S. citizens domiciled abroad. The Federal Circuit held that Congress did not intend the 2011 Act changes to upend the centuries-old understanding that the venue laws (as opposed to requirements of personal jurisdiction) do not restrict the location of suits against alien defendants.

First, the court noted that, in Brunette, the Supreme Court held that Sec. 1400(b) itself was not intended to apply to alien defendants. Second, nothing in the 2011 amendments to Sec. 1391 changed this understanding of Sec. 1400(b). Third, against the historical background leading up to and including Brunette, the 2011 amendments do not sufficiently indicate an intent to make venue protections applicable to alien defendants. Fourth, the court found that HTC’s interpretation of the venue laws would create a venue gap, where at least some alien defendants would be entirely exempt from patent infringement actions.

Without clear guidance from Congress, the Federal Circuit ruled that it would "not broadly upend the well established rule that suits against alien defendants are outside the operation of the federal venue laws." The court thus found no error in the trial court’s decision to deny HTC’s motion to dismiss for improper venue. Accordingly, the petition for a writ of mandamus to vacate that order was denied.

The case is No. 2018-130.

Attorneys: Yar Roman Chaikovsky (Paul Hastings LLP) for HTC Corp. Andres Healy (Susman Godfrey LLP) for 3G Licensing, S.A., Koninklijke KPN N.V. and Orange S.A.

Companies: HTC Corp.; 3G Licensing, S.A.; Koninklijke KPN N.V.; Orange S.A.

MainStory: TopStory Patent FedCirNews

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