On November 15, 2017, Federal Circuit Judges Taranto, Chen, and Hughes in In re Micron Technology, Inc. (Appeal No. 2017-138) held that TC Heartland represents a “change of law,” and that Micron Technology Inc.’s failure to raise a TC Heartland venue objection in its initial motion to dismiss a patent suit brought by Harvard College did not waive the objection under Fed. R. Civ. P. 12(g)(2) and (h)(1)(A). But the Federal Circuit also explained that there may be bases other than a Rule 12 waiver by which a district court could determine that a defendant had forfeited a venue objection, including instances in which the defendant had consented to venue or had raised the venue objection in an untimely manner.
Background
Micron is incorporated in Delaware and has its principal place of business in Idaho. In June 2016, Harvard sued Micron in the District of Massachusetts for patent infringement. Harvard asserted that venue in Massachusetts was proper under 28 U.S.C. §§ 1400 and 1391. In August 2016, Micron moved under Fed. R. Civ. P. 12(b)(6) to dismiss Harvard’s suit, but did not include an objection to venue in that motion to dismiss.
28 U.S.C. § 1400(b), the patent venue statute, states that civil actions for patent infringement may be brought in “the judicial district where the defendant resides or where the defendant has committed acts of infringement and has a regular and established place of business.” (emphasis added.) Until recently, patent litigants have proceeded under the assumption that § 1400(b) permitted a defendant to be sued in any venue where the defendant was subject to personal jurisdiction. The primary basis for that assumption was a 1990 Federal Circuit decision, VE Holding Corp. v. Johnson Gas Appliance Co., 917 F.2d 1574 (Fed. Cir. 1990), which held that the term “resides” in § 1400(b) incorporated the definition of “residence” from a post-1988 version of the general venue statute, 28 U.S.C. § 1391(c). § 1391(c) in turn states that a corporation “shall be deemed to reside, if a defendant, in any judicial district in which such defendant is subject to the court’s personal jurisdiction with respect to the civil action in question.”
On May 22, 2017, the Supreme Court in TC Heartland LLC v. Kraft Foods Group Brands LLC overruled VE Holding, rejected the notion that post-1988 versions of § 1391(c) altered the meaning of “resides” in § 1400(b), and instead invoked a 1957 Supreme Court decision, Fourco Glass Co. v. Transmirra Products Corp., 353 U.S. 222 (1957), to hold that “resides” in § 1400(b) refers only to a domestic corporate defendant’s state of incorporation.
Following the Supreme Court’s TC Heartland decision, Micron filed a motion to dismiss or transfer Harvard’s suit on the ground that Massachusetts was an improper venue. The District Court for the District of Massachusetts denied the motion, concluding that Micron had waived its venue defense under Fed. R. Civ. P. 12(g)(2) and (h)(1)(A) by not including a venue objection in its August 2016 motion to dismiss. Fed. R. Civ. P. 12(g)(2) states that a party may not make a second motion under Rule 12 raising a defense or objection that was “available” to the party but omitted from its first motion. Fed. R. Civ. P. (h)(1)(A) states that a party waives any defense by omitting it from a motion “in the circumstances described in Rule 12(g)(2).”
The Federal Circuit Decision
Micron petitioned the Federal Circuit for a writ of mandamus, seeking a reversal of the district court’s order and that the case either be dismissed for improper venue or transferred to the Delaware or Idaho. Harvard asked the Federal Circuit to deny the petition, or to vacate the district court’s order and to remand for consideration of whether venue in Massachusetts was proper under the part of § 1400(b) that permits venue “where the defendant has committed acts of infringement and has a regular and established place of business.”
The Federal Circuit granted mandamus, noting that “in some circumstances, mandamus can be an appropriate means for the appellate court to correct a district court’s answers to ‘basic, undecided’ legal questions.” The Federal Circuit observed that district courts have been “deeply split” on the question of whether TC Heartland represented a “change of law,” thereby making a TC Heartland venue objection “unavailable” at the time of a defendant’s first motion to dismiss—and thereby rendering waiver under Fed. R. Civ. P. 12(h)(1)(A) inapplicable to such an objection. The Federal Circuit determined that TC Heartland constitutes a “change of law,” and that a TC Heartland venue objection thus was “unavailable” to Micron at the time of its August 2016 motion to dismiss. The Federal Circuit reasoned that, prior to TC Heartland, the district court was required to treat VE Holding as controlling precedent, and VE Holding “would plainly have barred the district court from adopting a venue objection had Micron made one before the Supreme Court decided TC Heartland. The 1957 Fourco decision had not (and could not have) addressed the post-1988 versions of § 1391(c), and no intervening Supreme Court decision had undermined VE Holding before the [Supreme] Court decided TC Heartland.”
The Federal Circuit further explained that TC Heartland, “by severing § 1400(b) from § 1391(c), made available to Micron in this case the objection that it does not come within the meaning of ‘resides’ for purposes of venue under § 1400(b). That position was not available for the district court to adopt before the Court decided TC Heartland, because controlling precedent precluded adoption of the position. For that reason, the objection was not ‘available’ under Rule 12(g)(2) when Micron made its motion to dismiss in 2016. Accordingly, contrary to the district court’s conclusion, Rule 12(h)(1)(A)’s waiver rule is inapplicable here.”
However, the Federal Circuit proceeded to note that the Federal Rules of Civil Procedure are not “all encompassing”; that district courts have the inherent authority to consider the adequacy and timeliness of a venue objection; and thus that there may be bases other than a Rule 12 waiver by which a district court could determine that a defendant had forfeited a venue objection, including instances in which the defendant had consented to venue or had raised the objection in an untimely manner. The Federal Circuit explained that:
As to timeliness, whereas the waiver rule of Rule 12(g)(2) and (h)(1)(A) requires a focus on the time the TC Heartland venue objection was “available” for the district court to adopt (i.e., on or after May 22, 2017), the non-Rule authority’s general concern with timeliness is not necessarily so limited. We have not provided a precedential answer to the question whether the timeliness determination may take account of factors other than the sheer time from when the defense becomes available to when it is asserted, including factors such as how near is the trial, which may implicate efficiency or other interests of the judicial system and of other participants in the case. But we have denied mandamus, finding no clear abuse of discretion, in several cases involving venue objections based on TC Heartland that were presented close to trial. We also note a scenario that presents at least an obvious starting point for a claim of forfeiture, whether based on timeliness or consent or distinct grounds: a defendant’s tactical wait-and-see bypassing of an opportunity to declare a desire for a different forum, where the course of proceedings might well have been altered by such a declaration. We do not here say how such a claim of forfeiture ultimately should be analyzed.
In view of those factors, the Federal Circuit remanded the case for the district court “to consider any such properly raised non-Rule 12(h)(1)(A) arguments that Micron has forfeited its venue defense and, if there are no such sound arguments, to consider the merits of venue under § 1400(b).”