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Raytheon Loses Troll-ish Texas Patent Venue Shopping Battle

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By George Khoury, Esq. on September 25, 2017 7:00 AM

Ever wonder why so many patent cases get filed in the Federal Eastern District Court of Texas? It might be that wild wild west Texas mindset, or it might be the fact that over 70 percent of patent holders win their cases in that judicial district.

While you might think that reputable companies like Raytheon might rise above the troll-ish act of venue shopping, you should never underestimate the desire of corporations to save money and to get a leg up in litigation. Unfortunately for Raytheon in their patent infringement case against Cray Inc. over supercomputer patent stuff, the Federal Circuit Court of Appeals just shipped the case out of the Texas district that has become the most popular for patent holders, and into Cray's home state of Washington.

Patent Venue Is as Easy as 1-2-3

Raytheon's loss at the appellate level helps to provide some guidance on the recent SCOTUS decision in TC Heartland v. Kraft which set the precedent for interpreting venue in patent cases pursuant to section 1400(b). Unlike the test for personal jurisdiction in a tort or contract action where sufficient contact with a jurisdiction renders jurisdiction and venue proper, patent infringement cases are controlled by a separate statute: 28 U.S.C. Section 1400.

Basically, there are three main factors that must all be met for venue to be deemed proper:

  1. The defendant's business must be a physical place in the district;
  2. That place must be a regular and established place of business; and
  3. That place must be the place of the defendant.

In the Raytheon v. Cray case, it was argued that a single Cray salesperson who worked out of their home within the district satisfied the above elements. While the district court agreed, the appellate court found that the one employee was not enough. It considered the fact that the employee worked out of their personal home, was supported by an out of state office, and no products or even product literature was stored in his home. Cray did not pay rent, or own the home, or any other property in the district. The court also strongly considered the fact that the one employee did not hold out their home as a regular or established place of business.

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