Intellectual Property News

Venue in Patent Infringement Cases – Where Do We Stand?

As has been widely publicized, the Supreme Court recently affirmed that the rules governing where a patent infringement case may be brought against corporate defendants are distinct from those involving other causes of action in the federal system. Specifically, the Court held that in patent cases, the relevant statute, 28 U.S.C. § 1400(b), mandates that the case be brought where the accused corporate infringer is incorporated or has committed acts of infringement and has a regular and established place of business, whereas in other federal cases, venue is proper wherever the corporation is subject to personal jurisdiction, 28 U.S.C. § 1391(c). TC Heartland LLC v. Kraft Foods Group Brands, LLC, ___ U.S. ___, 137 S. Ct. 1514, 1516-17 (2017). The Court affirmed that its 1957 decision in Fourco Glass Co. v. Transmirra Prod. Corp., 353 U.S. 222, 226 (1957) still controls on the issue of venue in patent cases, and held that the ruling by the Court of Appeals for the Federal Circuit (“Federal Circuit”) that Fourco had been overruled by intervening amendments to the venue statute – a rule that had controlled in patent infringement cases for 27 years – was incorrect. Id.

The impact of the TC Heartland decision is, on the one hand, straightforward, but not so much on the other. It is now clear that for purposes of patent infringement, a corporation “resides” only where it is incorporated. TC Heartland, 137 S. Ct. at 1517. At the same time, the rule still stands that a defendant can waive its challenge to venue, and a venue challenge must generally be made at the pleadings stage. Leroy v. Great W. United Corp., 443 U.S. 173, 180 (1979); Fed. R. Civ. P. 12(b), 12(h)(1). Accordingly, must cases where venue was proper under the now-rejected Federal Circuit rule be transferred in light of TC Heartland’s change of the law? And, what are the parameters of a “regular and established place of business” under TC Heartland? An early decision from the Eastern District of Virginia (“EDVA”), one of the first decisions applying TC Heartland, addresses both these questions.

Cobalt Boats, LLC v. Sea Ray Boats, Inc., No. 2:15cv21, 2017 WL 2556679 (E.D. Va. Jun. 7, 2017) involved a litigation filed in 2015 under the Federal Circuit’s interpretation that venue in a patent infringement case is proper in any district where the corporation is subject to personal jurisdiction. The defendants had initially conceded that venue was proper under what they believed was controlling law, but had moved to transfer to a more convenient forum. Id. at *1. Defendants’ motion was denied, and the parties moved forward with the litigation, including claim construction proceedings, a motion for summary judgment, and motions in limine. Id. Days after the final pretrial conference, the TC Heartland decision issued and defendants brought a renewed motion to transfer. Id.

The EDVA first found that defendants’ delay in bringing the venue challenge was not excused as an exception that is available “when there has been an intervening change in the law recognizing an issue that was not previously available.” See Holland v. Big River Minerals Corp., 181 F.3d 597, 605-06 (4th Cir. 1999). The EDVA found that defendants’ “assumption that Fourco was no longer good law was reasonable but wrong,” and the delay was therefore not excused because the law technically had not changed. Id. at *2-*3. Notably, the EDVA also found that the argument of the second defendant failed because it wanted to remain in the same jurisdiction as the other defendant, and had therefore waived its right to challenge venue. Id. at *4. In response to alternative theories of proper venue put forth by the plaintiff, the EDVA left open the possibility that proper venue could be established under TC Heartland by showing, for example, that salespeople in the district or activities such as warehousing by a related entity (e.g., a subsidiary or sister entity) related to the infringement could constitute a regular and established place of business. Id. at *4. The EDVA’s decision was upheld by the Federal Circuit two days later. See In Re Sea Ray Boats, Inc., 2017 WL 2577399, at *1 (Fed. Cir. Jun. 9, 2017).

From this early decision, we now know two things. First, transfer will not necessarily be automatic, despite TC Heartland’s seeming reversal of law that has been followed for 27 years, at least in cases where substantial preparation for trial has taken place. Second, the boundaries of what constitutes a “regular and established place of business” remain undefined, and must be determined under the facts of each case. What does seem clear is that “regular and established places of business” are not just headquarters. Thus, venue in jurisdictions with a large concentration of tech centers, such as Northern Virginia, seems likely to be proper in a large number of cases.

Cecil Key is a member of DiMuroGinsberg’s IP Group, along with Jay Kesan and Teresa Summers. For more information about this topic or any Intellectual Property matter, you may contact Cecil at

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Sedona Conference proposes heightened pleading standards in patent litigation

For many years, Form 18 of the Federal Rules of Civil Procedure provided a very basic format for pleading claims of direct patent infringement. The bright line standard provided by Form 18 largely avoided controversy over the level of detail required to plead a claim for patent infringement. The Federal Judicial Conference, however, repealed Form 18 effective December 1, 2015, opening the possibility for disputes over how much more information is required to plead claims for direct patent infringement under the Supreme Court’s Iqbal and Twombly decisions.

This Chapter on Heightened Pleading Standards provides guidance as to the level of detail to be now included with the pleadings, both from the perspective of the minimum requirements set by Iqbal/Twombly as applied to patent infringement suits, and also from the perspective of what additional information should be further encouraged from both parties to promote the efficient administration and resolution of patent disputes. All parties and the courts have an interest in avoiding extensive satellite litigation regarding the sufficiency of the pleadings, and, if adopted, the Principles and Best Practice recommendations presented in this Chapter will help streamline the pleadings process in patent cases.

Please review and send comments on this Chapter on Heightened Pleading Standards to by August 15, 2016. This is an essential part of the process in making our Sedona commentaries true consensus and non-partisan documents representative of the viewpoints of all stakeholders in patent litigation today, so please lend us your time and expertise!

For more information on the proposed pleading standards, you may contact DiMuroGinsberg lawyer, Cecil Key, a member of The Sedona WG10 Heightened Pleading Standards team, at

What does the new Defend Trade Secrets Act mean for your business?

DiMuroGinsberg attorneys discuss how the new Defend Trade Secrets Act offers important protections for your company’s intellectual property.

On May 11, 2016, President Obama signed into law the Defend Trade Secrets Act, 18 USC § 1831 et seq. (“DTSA”), which contains important provisions affecting companies and employers of all sizes. The DTSA amends the Economic Espionage Act of 1996 to authorize private companies to bring (and be subject to) suit in federal court for trade secret misappropriation, including misappropriation occurring outside the U.S., and to obtain a broad array of remedies. The DTSA also includes important provisions governing the obligations of employers and the rights of employees with respect to trade secrets, and extends those obligations and rights beyond traditional employees to contractors and consultants working for the employer.

Salient features of the DTSA are:

  • Provides a federal cause of action for trade secret misappropriation in addition to, but not in place of, the traditional state law trade secret protections. Private parties now can bring trade secret claims in a federal civil action, as opposed to being limited to criminal actions brought by the U.S. Attorney General, as was the case under the prior act.
  • Defines a trade secret as information in any form that derives independent economic value from not being generally known or ascertainable by others who can obtain economic value from it, and that is the subject of reasonable efforts to maintain its secrecy. A trade secret is covered by the DTSA if it is “related to a product or service used in, or intended for use in, interstate or foreign commerce.” Misappropriation means acquisition of the trade secret by improper means where the acquirer knows or has reason to know that the information is a trade secret.
  • Applies to conduct occurring not just in the U.S., but outside the U.S. if the offender is a natural person who is a citizen or permanent resident alien of the U.S., or is an organization organized under the laws of the U.S., including a U.S. state or territory.
  • Exempts employees, including contractors and consultants from liability for certain disclosures of trade secrets, such as to law enforcement, a government official, a court, or attorney, if to report or assert a violation of law, including whistle-blower actions, provided the disclosure is confidential. The employer is required to inform the employee of this immunity in an employment agreement or by cross-referencing a policy document, such as an employee manual, which sets forth practices and procedures the employee must follow.
  • Expands remedies for a DTSA violation to include seizure of property (subject to compliance with several procedural requirements); an injunction; an award of damages for actual loss and unjust enrichment (e.g., the offender’s profits), which can be calculated as a reasonable royalty for use of the trade secret; and exemplary damages up to 2 times the amount of actual or unjust enrichment damages for willful and malicious misappropriation. Where there is a threatened misappropriation of trade secrets by a former employee, a court may issue an injunction imposing restrictions on employee’s present or future employment.
  • Provides for an award of attorney’s fees to the prevailing party for willful and malicious misappropriation for bad faith assertion of misappropriation or for bringing or opposing a motion to terminate an injunction.
  • Increases criminal sanctions for trade secret theft, by increasing the fine for organizations to the greater of $5,000,000 or 3 times the value of the stolen trade secret, including expenses for research, design, and other costs of reproducing the trade secret that the organization has avoided as a result of the theft.

In a business environment that is substantially international, and becoming increasingly more so even for smaller companies and employers, the DTSA provides a significant tool for protecting intellectual property in the U.S. and abroad. However, the DTSA also places potentially significant obligations on employers to ensure that their agreements with employees, contractors and consultants comply with the requirements of the Act.

DiMuroGinsberg has an experienced team of lawyers who regularly help clients navigate the legal issues impacting their businesses, such as those raised by the DTSA. For further information, contact Cecil Key or Jonathan Mook.