In re: Cray Inc.Federal Circuit, Granting Mandamus Petition, Rejects Eastern District of Texas’ New Patent Venue Rules and Provides Guidance Under Supreme Court’s Decision in TC Heartland

Sullivan & Cromwell LLP - September 22, 2017

In TC Heartland LLC v. Kraft Foods Group Brands LLC, the Supreme Court reversed decades of authority that essentially allowed a defendant to be sued for patent infringement anywhere the accused product was sold.  Since that decision, the lower courts have disagreed over where venue is proper.  In In re Cray the Federal Circuit granted a mandamus petition and overturned a district court decision finding venue in the Eastern District of Texas.  The Court directed the district court to transfer the case out of the District pursuant to the patent venue statute, 28 U.S.C. § 1400(b), which provides that “[a]ny civil action for patent infringement may be brought in the judicial district where the defendant resides, or where the defendant has committed acts of infringement and has a regular and established place of business.”  Rejecting the district court’s analysis, the Federal Circuit set forth a new three-part test to determine when a defendant has  a “regular and established place of business” for purposes of venue.  The new test requires that defendant have (1) a physical location in the district, (2) a regular and established place of business in the district, and (3) that the physical location and business be those of the defendant, not merely its employees.