Establishing Patent Venue

Establishing Patent Venue

The Federal Circuit. recently rejected the patent venue test established by Judge Gilstrap of the Eastern District of Texas.  The three-judge panel found that Judge Gilstrap applied an incorrect legal standard in Raytheon Co. v. Cray Inc. when he refused to transfer the patent suit after applying his own test and determining that Defendant Cray maintained a “regular and established place of business” in the district where only one of its employees worked from home.  The Federal Circuit, though, ordered the case to be transferred to a different district.

 

In its decision, the Federal Circuit set forth three general requirements to determine where a defendant maintains “a regular and established place of business” including: (1) there must be a physical place in the district; (2) it must be a regular and established place of business; and (3) it must be the place of the defendant.

 

Applying its own test, the Federal Circuit found that Defendant Cray’s employment of one sales representative who worked from home in the district was insufficient to establish proper venue when Cray did not store, display, distribute, or manufacture materials from this location and had no involvement in selecting or paying for the location in the district.  As such, the Federal Circuit found that Defendant Cray fails to maintain a regular and established place of business.

 

In light of the Federal Circuit’s rejection of the Gilstrap test and narrowing of the patent venue standards, we foresee a significant decrease in the number of patent infringement cases filed in the Eastern District of Texas.  Due to the fact that patent infringement suits can only be filed where a defendant resides or where a defendant has committed acts of infringement and has a regular and established place of business, other districts will most likely experience a significant increase in patent infringement cases.

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