On September 21, 2017, the Federal Circuit vacated the Eastern District of Texas court's denial of a motion to transfer holding that venue is proper under 28 USC 1400(b) only if all three requirements are satisfied--a physical place in the district, which is a regular and established place of business, and it's the place of the defendant. In re Cray Inc., No. 2017-129 (Fed. Cir. Sept. 21, 2017). According to the court, the "place" of business need not be a formal office or store but there must be a "physical, geographical location in the district from which the business of the defendant is carried out."
Raytheon, a Washington corporation, sued Cray for patent infringement in ED Texas. Cray filed a motion to transfer arguing that it did not "reside" in the district under TC Heartland and didn't have a "regular and established place of business" in the district as it had only two employees in the district and both worked remotely from their homes. The district court denied the motion concluding that the activities of Cray's sales executive were similar to the In re Cordis employees and therefore, Cray had a regular and established place of business in the district and venue was proper under 1400(b). Cray filed a writ of mandamus with the Federal Circuit.
On appeal, the panel vacated the district court's denial on the motion to transfer finding that the district court had misapplied the venue statute without considering the statutory language of 1400(b). Writing for the panel, Judge Lourie acknowledged that the "regular and established place of business" has been addressed only in In re Cordis in the context of a writ of mandamus. According to the court, "regular and established place of business" depends on the facts of the case and all three requirements--a physical place in the district, which is a regular and established place of business, and it's the place of the defendant--must be satisfied. While a formal office or store is not required, the term "place" means that there must be a physical, geographical location in the district from which the defendant carries out its business. The term "regular and established" refers to a stable and permanent location for a meaningful time period. An employee's home doesn't satisfy the requirement if the employee can move home out of the district without employer's approval. The place of business must be of the defendant, i.e., whether the defendant owns or leases the place, whether the defendant conditioned employment on employee's continued residence in the district, whether defendant is using it as a distribution center for storing inventory, whether defendant's literature, marketing or advertisements are stored in the location. Considering these factors, the Court concluded that Raytheon failed to prove that the home of Cray's sales executive was a regular place of business of Cray.
Order granting the writ of mandamus and directing transfer of the case from ED Texas to WD Wisconsin is available here.
Raytheon, a Washington corporation, sued Cray for patent infringement in ED Texas. Cray filed a motion to transfer arguing that it did not "reside" in the district under TC Heartland and didn't have a "regular and established place of business" in the district as it had only two employees in the district and both worked remotely from their homes. The district court denied the motion concluding that the activities of Cray's sales executive were similar to the In re Cordis employees and therefore, Cray had a regular and established place of business in the district and venue was proper under 1400(b). Cray filed a writ of mandamus with the Federal Circuit.
On appeal, the panel vacated the district court's denial on the motion to transfer finding that the district court had misapplied the venue statute without considering the statutory language of 1400(b). Writing for the panel, Judge Lourie acknowledged that the "regular and established place of business" has been addressed only in In re Cordis in the context of a writ of mandamus. According to the court, "regular and established place of business" depends on the facts of the case and all three requirements--a physical place in the district, which is a regular and established place of business, and it's the place of the defendant--must be satisfied. While a formal office or store is not required, the term "place" means that there must be a physical, geographical location in the district from which the defendant carries out its business. The term "regular and established" refers to a stable and permanent location for a meaningful time period. An employee's home doesn't satisfy the requirement if the employee can move home out of the district without employer's approval. The place of business must be of the defendant, i.e., whether the defendant owns or leases the place, whether the defendant conditioned employment on employee's continued residence in the district, whether defendant is using it as a distribution center for storing inventory, whether defendant's literature, marketing or advertisements are stored in the location. Considering these factors, the Court concluded that Raytheon failed to prove that the home of Cray's sales executive was a regular place of business of Cray.
Order granting the writ of mandamus and directing transfer of the case from ED Texas to WD Wisconsin is available here.
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