This decision has generated much discussion and misleading commentary.
Judge Gilstrap denied Cray's Motion to Dismiss for lack of personal jurisdiction and improper venue, as follows:
The Federal Circuit resolved competing authorities on the issue of "an established place of business" in In re Cordis Corp. (Fed. Cir. 1985). The Federal Circuit denied Cordis's petition for a writ of mandamus and ultimately concluded that "the appropriate inquiry is whether the corporate defendant does its business in that district through a permanent and continuous presence there and not . . . whether it has a fixed physical presence in the sense of a formal office or store."
The activities performed by Cray are factually similar to the activities performed by the representatives in Cordis and therefore are sufficient to meet the "regular and established place of business" requirement of § 1400(b).
IN DICTA ONLY, Judge Gilstrap wrote:
There is uncertainty among the litigants regarding the scope of the
phrase "regular and established place of business." The
Court has also received a number of requests for venue related
discovery. Litigants have further expressed uncertainty regarding
the appropriate scope of such venue discovery.
For the benefit of such litigants and their counsel, the Court has conducted a thorough analysis of the existing case law regarding regular and established place of business.
This Court now attempts to provide guideposts to point the venue analysis in a single coherent direction.
Factor One: Physical Presence
First, the Court considers the extent to which a defendant has a
physical presence in the district, including but not limited to
property, inventory, infrastructure, or people. Consistent with the
reasoning of these earlier courts, this Court is persuaded that a
fixed physical location in the district is not a prerequisite to
proper venue. However, such a presence is a persuasive factor for
courts to consider.
Factor Two: Defendant's
Representations
Second, the Court looks at the extent to which a defendant
represents, internally or externally, that it has a presence in the
district. In Chadeloid Chemical:
Judge Hand, in Chadeloid Chemical, found that the defendant had accepted a New York representative's office as one of its own places of business based on, among other things, the advertising that defendant permitted regarding that location and the fact that the defendant naturally expected customer inquiries to be directed toward its agent there. Such representations weigh in favor of finding that a defendant has a regular and established place of business in a district.
Factor Three: Benefits Received
Third, the Court considers the extent to which a defendant derives
benefits from its presence in the district, including but not
limited to sales revenue, especially where a defendant has
generated significant revenue from such business.
Factor Four: Targeted Interactions with the
District
Finally, the Court looks at the extent to which a defendant
interacts in a targeted way with existing or potential customers,
consumers, users, or entities within a district, including but not
limited to through localized customer support, ongoing contractual
relationships, or targeted marketing efforts. Although such
contractual relationships are not dispositive, they weigh in favor
of finding that a defendant has a regular and established place of
business in the district.
Conclusion
None of these factors should alone be dispositive, and other
realities present in individual cases should likewise be
considered. Courts should endeavor to determine whether a domestic
business enterprise seeks to materially further its commercial
goals within a specific district through ways and means that are
ongoing and continuous. Such a conclusion should be driven by a
fair consideration of the totality of the circumstances, and not by
the siren call of bright line rules or an overt attachment to
form.
Technological advances have significantly changed the way businesses operate throughout our nation, and true to Moore's Law, such exponential progression will continue to expand and evolve. As a result, our courts should employ analytical methods for establishing patent venue which are rooted in the wisdom of the past, but which also embrace the future's changes.
Problematic or prophetic?
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.