Law \ Legal

Remote Work and Patent Venue

by Dennis Crouch

In re Monolithic Power Systems, Inc., — F.4th — (Fed. Cir. 2022)

In a 2-1 decision, the Federal Circuit has denied Monolithic’s petition for writ of mandamus seeking to escape from Judge Albright W.D. Tex. courtroom for improper venue.  Since MPS is a Delaware Corp., the only way venue is proper in W.D. Tex. is if it “has committed acts of infringement and has a regular and established place of business.”  28 U.S.C. § 1400(b).  The company has employees, and various sales-channels within the district, but argues that it lacks a “regular and established place of business.”  As an alternative to its improper venue argument, MPS also argued that venue is inconvenient under 28 U.S.C. § 1404(a) and that the case should instead be transferred to N.D. Cal.

Judge Albright denied the motions to dismiss/transfer — holding that the “regular and established place of business” prong of the 1400(b) test was satisfied by three key findings:

  1. MPS employed local engineers and sales managers in WDTX to serve local customers;
  2. MPS stored property in WDTX (in the homes of its employees) and that equipment was used to service MPS’s WDTX customers, and
  3. MPS continually maintain a physical presence within WDTX, including by advertising for replacement employees should any of MPS’s existing WDTX employees leave the company or move to a new location.

In considering these issues, the district court relied upon prior Federal Circuit’s cases such as Cray and Cordis and evaluated the factors established there for non-retail  and informal “places of business.”

On mandamus, the majority refused to grant the petition — finding that the distric court’s ruling “does not involve the type of broad, fundamental, and recurring legal question or usurpation of judicial power that might warrant immediate mandamus review.”  To be clear, the appellate panel did not endorse Judge Albright’s decision, but simply found that it was not appropriate for mandamus.  Rather, MPS should wait until the lawsuit concludes and, if MPS it can still appeal on improper venue. Regarding inconvenient venue, the court found no clear abuse of discretion in refusing transfer.

The majority opinion was issued per curiam by Judges Chen and Stark.  Judge Lourie wrote in dissent and argued that the outcome is clear — “Monolithic’s four employees in the Western District do not constitute Monolithic’s ‘regular and established place of business.’”  Judge Lourie raised the particular concern that changing work environments (i.e., work-from-home) will potentially open up venue in unexpected ways:

The district court’s erroneous ruling threatens to bring confusion to the law relating to where a patent infringement suit can properly be brought based on the location of employee homes and to erode the clear statutory requirement of a regular and established place of business. Given the increased prevalence of remote work, I think immediate review by way of mandamus would be important to maintain uniformity of the court’s clear precedent.

Slip Op. Lourie Dissent.  The majority agreed that the shift to remote work is an important consideration, just not important enough to overcome the strong presumption against hearing a mandamus action:

The dissent may well be correct that the issue of imputing employee homes to a defendant for purposes of venue will become an issue of greater concern given the shift to remote work. But, in our view, at present, the district court’s ruling does not involve the type of broad, fundamental, and recurring legal question or usurpation of judicial power that might warrant immediate mandamus review.

Slip Op. Majority.

The court does not delve into the new W.D.Tex. rules that randomly assign Waco patent cases to a handful of judges (not just Judge Albright).  I expect that we will see a sharp diminution in venue mandamus decisions as the court waits to see whether the new approach changes outcomes.

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Notes –  The underlying case alleges infringement of several patents relating to electric power modules.  U.S. Patent Nos. 6,936,999, 6,949,916, 7,000,125, 7,049,798, 7,080,265, and 7,456,617.  The primary accused product is a power management bus (MPM3695) used on integrated circuits

 

 


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