In re Micron Tech –Waiver and Improper Venue Challenges Post-TC Heartland | White & Case LLP International Law Firm, Global Law Practice
In re Micron Tech –Waiver and Improper Venue Challenges Post-TC Heartland

In re Micron Tech –Waiver and Improper Venue Challenges Post-TC Heartland

White & Case Technology Newsflash

In its recent In re Micron Tech opinion1, the Court of Appeals for the Federal Circuit answered one of the most hotly contested issues springing from the wake of TC Heartland—does the Supreme Court's TC Heartland opinion2 qualify as a change-of-law such that an alleged infringer who failed to raise the defense of improper venue pre-TC Heartland will not be adjudged to have waived the defense?

 

Overview

The Supreme Court's decision in TC Heartland represents a sea of change in the analysis to determine proper venue in patent cases.3 Soon after TC Heartland, the Federal Circuit provided a roadmap to determine if venue is proper in a patent case post-TC Heartland.4 However, an important question remained—may accused infringers who failed to raise the defense of improper venue pre-TC Heartland now challenge venue post-TC Heartland. The Federal Circuit squarely addressed the issue in its recent In re Micron Tech opinion, finding that TC Heartland qualifies as a change-of law and thus an alleged infringer's defense of improper venue has not been waived simply through the failure to raise the defense pre-TC Heartland.5 However, the Federal Circuit also warned that these same venue challenges are still vulnerable to rejection by other means.

 

Background

In In re Micron Tech, plaintiff Harvard sued defendant Micron for patent infringement in the District of Massachusetts in late 2016. Micron responded with a 12(b) motion to dismiss but did not include an objection to venue under 12(b)(3) in its motion. After the Supreme Court issued the TC Heartland opinion, Micron filed a motion to dismiss or transfer based on improper venue. The district court denied Micron's motion, finding that Micron had waived its improper venue defense by not including it in its initial 12(b) motion, and Micron appealed by filing a petition for a writ of mandamus.

 

Alleged Infringers Have Not Waived Improper Venue Defense by Failing to Object Pre-TC Heartland

First, the Federal Circuit began its analysis of whether Micron waived its improper venue defense with a general discussion of waiver of defenses under Rule 12 of the Federal Rules of Civil Procedure. The Federal Circuit noted that a defendant typically waives an improper venue defense if it initially files a Rule 12(b) motion but fails to include as part of the motion an improper venue objection under Rule 12(b)(3).6 However, the Federal Circuit explained that in order for the improper venue defense to be waived through the filing of an initial 12(b) motion, the 12(b)(3) improper venue defense must have been "available to the defendant" at the time of the filing of the initial 12(b) motion.7 The real question presented on appeal then became whether the improper venue defense raise by Micron was "available" when Micron filed its initial 12(b) motion before the TC Heartland opinion issued. The Federal Circuit held that as a matter of law the improper venue defense was not available to Micron prior to the Supreme Court's issuance of its TC Heartland opinion.8

 

TC Heartland Changed Controlling Federal Circuit Patent Venue Law

Second, the Federal Circuit found that the improper venue defense was not available to Micron because TC Heartland changed the controlling law of patent venue.9 The Federal Circuit explained that a defense is not "available" to a defendant if the controlling law at the time precludes the district court from adopting the defense.10 The controlling law at the time Micron filed its initial 12(b) motion was the precedent of VE Holdings[11], under which the district court clearly would have been barred from adopting Micron's venue challenge.12 However, TC Heartland essentially rejected VE Holdings and changed the controlling law of patent venue.13 And through this change in law resulting from TC Heartland, the district court was no longer precluded from adopting Micron's defense that venue is improper because Micron does not reside in the District of Massachusetts.14 Accordingly, the Federal Circuit found that Micron did not waive its improper venue defense because it was not available at the time Micron filed its initial 12(b) motion.15

 

District Courts Are Still Entitled to Reject Venue Defenses Based on Forfeiture

The Federal Circuit concluded that while Micron had not waived its improper venue defense, the inquiry of whether the district court must consider the merits of Micron's venue challenge was not over.16 The Federal Circuit stated that apart from waiver under Rule 12, district courts maintain the authority to find forfeiture of a venue objection under their inherent powers to manage their own affairs to achieve orderly and expeditious disposition of cases.17 While the Federal Circuit left it up to future cases to determine in what circumstances forfeiture is appropriate, it did emphasize that one discretionary factor includes the timeliness of the challenge; both with respect to when the defense became available and at what stage in the litigation the challenge was presented.18 Accordingly, the Federal Circuit vacated and remanded the case back to the district court to consider forfeiture arguments before considering the merits of Micron's venue challenge.19

 

District Courts Will Likely Split Again on the Forfeiture Issue

This opinion will also likely spark a new wave of fights on the proper analysis for finding forfeiture of a venue objection under a court's inherent powers. Indeed, district courts grappling with the decision already show signs of divergence. The District of Delaware in Treehouse Avatar LLC v. Valve Corp. found that a defendant did not forfeit its venue objection relying, in part, on the fact that the defendant previously contested venue in its motion to transfer under 28 U.S.C. § 1404.20 However, confronting the same fact, the Eastern District of Texas in Intellectual Ventures II LLC v. FedEx Corp. reached the opposite conclusion that the defendants relinquished their venue objection "because a motion under § 1404 is premised on venue being proper in the transferor court[.]"21 Accordingly, differing applications of the In re Micron Tech opinion will likely emerge across district courts in the near future until the Federal Circuit provide further clarity on the issue.

 

Conclusion

The Federal Circuit's In re Micron Tech opinion that TC Heartland changed the law controlling proper venue in patent cases provides an opportunity for patent defendants to challenge venue even if they failed to raise it before the Supreme Court issued its TC Heartland opinion. However, the Federal Circuit also explained that the absence of waiver is not necessarily the end of the issue because other avenues are still available to the courts for finding that a defendant has forfeited an otherwise meritorious venue defense.

 

1 In re Micron Tech., Inc., No. 2017-138, 2017 U.S. App. LEXIS 22956 (Fed. Cir. Nov. 15, 2017).
2 TC Heartland LLC v. Kraft Foods Grp. Brands LLC, 137 S. Ct. 1514 (2017).
3 TC Heartland LLC v. Kraft Foods Grp. Brands LLC, 137 S. Ct. 1514, 1521 (2017) (finding that for the purposes of patent venue under 28 U.S.C. § 1400(b), a corporation "resides" only in its State of incorporation rather than in any judicial district in which it is subject to personal jurisdiction).
4 In re Cray Inc., 871 F.3d 1355, 1360-1363 (Fed. Cir. 2017) (illuminating three requirements for finding that defendant has a "regular and established place of business" within a district under §1400(b).)
5 In re Micron Tech., Inc., No. 2017-138, 2017 U.S. App. LEXIS 22956, at *2 (Fed. Cir. Nov. 15, 2017) (finding that TC Heartland qualifies as a change in the law making waiver under FRCP 12 for failure to include the defense of improper venue in a responsive motion inapplicable).
6 Id. at *8 (discussing the interaction between FRCP 12(g)(2) and FRCP 12(h)(1)(A) on waiver of 12(b) defenses).
7 Id.
8 Id. at *8-9.
9 Id. at *15.
10 Id. at *9.
11 VE Holding Corp. v. Johnson Gas Appliance Co., 917 F.2d 1574, 1583-1584 (Fed. Cir. 1990) (finding that for the purposes of patent venue under 28 U.S.C. § 1400(b), a corporation "resides" in any judicial district in which it is subject to personal jurisdiction).
12 In re Micron Tech., Inc., No. 2017-138, 2017 U.S. App. LEXIS 22956, at *14 (Fed. Cir. Nov. 15, 2017).
13 Id. at *15.
14 Id.
15 Id. at *15-16.
16 Id. at *16-17.
17 Id. at *17-19.
18 Id. at *20-21.
19 Id. at *22.
20 Treehouse Avatar LLC v. Valve Corp., No. 15-cv-427, 2017 U.S. Dist. LEXIS 191056, at * 7 (D. Del. Nov. 20, 2017).
21 Intellectual Ventures II LLC v. FedEx Corp., No. 2:16-cv-980, 2017 U.S. Dist. LEXIS 193581, at *11 (E.D. Tex. Nov. 22, 2017).