The first big post-TC Heartland shoe has dropped on the patent world.
U.S. District Judge Rodney Gilstrap of the Eastern District of Texas set down ground rules last week for maintaining cases in the district following the Supreme Court's decision in TC Heartland v. Kraft Foods resetting venue rules.
Gilstrap laid out four factors he will consider when deciding whether a company has a regular and established place of business that gives rise to venue. While a fixed physical presence such as a store or office will tend to be persuasive, that is not a prerequisite to proper venue, Gilstrap wrote. His rules appear to open the door for internet companies to continue being sued in the Eastern District in some circumstances.
Although Gilstrap ruled in a case between two competitors, many nonpracticing entities file their cases in the Eastern District, making it far and away the most popular forum for patent infringement cases in the country. That makes Gilstrap's interpretation of TC Heartland especially important, unless and until the U.S. Court of Appeals for the Federal Circuit weighs in.
Technological advances have significantly changed the way businesses operate throughout our nation, Gilstrap wrote. Courts should employ analytical methods that are rooted in the wisdom of the past, but which also embrace the future's changes.
Gilstrap's Thursday ruling in Raytheon v. Cray was prompted by the U.S. Supreme Court decision in May that overruled a 1990 Federal Circuit decision that had made it possible to sue for patent infringement almost anywhere. The Supreme Court reinstated the requirements that had been in place before, which are limited to the district where the defendant is incorporated or where it has a regular and established place of business and infringement occurs. The decision has already led to a drop in filings in Eastern Texas and a rise in the District of Delaware.
But as Gilstrap pointed out, a lot has changed in the way businesses operate since 1990. And even back then courts found the meaning of regular and established perplexing. We can discern nothing even remotely approximating a uniform approach Gilstrap quotes one district judge as saying in 1989.
Gilstrap drew up a list of four factors he would consider when deciding transfer motions for improper venue.
A physical presence such as a retail store, warehouse or other facility in the district will weigh strongly for venue, he wrote, while the presence of inventory, property or employees also will be considered. Secondly, Gilstrap will consider the extent to which a defendant represents, internally or externally, that it has a presence in the district, such as by advertising the location of its agents there.