Federal Circuit Rules Any Court Can Hear Patent Disputes Against Foreign Companies.
Legal document translation services for patent infringement litigation are often required these days. We’ve blogged about legal translation services in a commercial dispute between two Asian companies where an attempt was made to have the case decided in California on the basis of the forum selection clause, as had been stipulated in the agreement between the two companies. In In Re HTC Corporation, the petitioner, HTC Corporation, filed a writ of mandamus with the United States Court of Appeals for the Federal Circuit directing the district court to vacate its order denying HTC’s motion to dismiss and to dismiss the respondents’ complaint against HTC. A summary of the case and the court’s ruling is discussed below.
Patent Infringement Lawsuit Filed Against Taiwanese Corporation.
The dispute between the parties began in 2017, when the respondents filed a patent infringement lawsuit against the Petitioner. Petitioner is a Taiwanese corporation with its principal place of business in Taiwan. It also has a U.S.-based subsidiary located in Seattle, Washington. Respondents, 3G Licensing, S.A., subsequently filed an amended complaint, which Petitioner moved to dismiss on the grounds of improper venue, or alternatively, to transfer the case to another district court. In ruling on the motion to dismiss, the district court held that venue was proper as to the foreign corporation but improper as to its American subsidiary. In response to the court’s ruling, the respondents voluntarily dismissed their lawsuit against the American subsidiary. The Petitioner then filed the mandamus petition for improper venue.
Taiwanese Corporation Files Appeal.
On appeal, the Petitioner argued that the court erred by applying 28 U.S.C. Section 1391 (c)(3) to a patent case, by improperly relying on Brunette Machine Works, Ltd., v. Kockum Industries, Inc., 4-6 U.S. 706 (1972), and by failing to apply Section 1400 (b), the patent venue statute.
The federal circuit rejected the Petitioners’ arguments that venue was improper. In doing so, the court analyzed the long history of federal venue laws and whether they were intended to protect alien defendants. The court noted that, as explained in Brunettte, the original venue restriction set forth in the Judiciary Act of 1789 stated as follows:
“[N]o civil suit shall be brought before [district of circuit] courts against an inhabitant of the United States, by any original process in any other district than that whereof he is an inhabitant, or in which he shall be found at the time of
serving the writ…
Court Relies on Prior Venue Case with German Defendant to Reject Appeal.
The court went on to state how it previously discussed this venue rule in In re Hohorst, in which a German corporation was named as a defendant. In that case, the court held that the existing venue statute only applied to U.S. citizens, not foreign defendants; thus, a foreign defendant could be sued in any venue. Later, the court explained, in Brunette, the Supreme Court affirmed the Hohorst ruling in order to prevent “venue gaps” in cases in which there was no place to exercise proper venue against a foreign corporation. Specifically, the Brunette court explained that “in the 79 years since Hohorst was decided, Congress has never given the slightest indication that it is dissatisfied with the longstanding judicial view that the 1789 language continues to color the venue statutes, with the result that suits against aliens are outside the scope of all the venue laws.”
Court Holds 2011 Amendments to Venue Statute Do Not Apply to Foreign Defendants.
The court next rejected the Petitioner’s argument that Congress abrogated the court’s ruling in Brunette through the enactment of the “Federal Courts Jurisdiction and Venue Clarification Act of 2011.” The court held that it did not think that Congress intended to upend “centuries-old” venue laws in the 2011 amendments. Among the court’s reasons was the fact that if the court sided with the Petitioner, then some foreign corporations that infringed on a U.S. Patent would be ‘unamenable” to a lawsuit.
In deciding that Section 1400 did not apply, the court essentially held that it did not apply to patent infringement lawsuits involving foreign defendants. In doing so, the court specifically rejected the Petitioner’s other argument that Congress intended to discard all alien-venue rules through the enactment of Section 1400, the sole and exclusive provision governing patent venue. The court explained that Congress made but one change in 2011 to the alien-venue rule, which was limited to natural persons. It did not make any changes, or express an intent to make any changes, to the impact the rule had on foreign corporations. The court explained that it only modified the alien-venue rule in the respect that it protected alien natural persons with permanent resident status.
The court further reasoned that the House Report not only made no mention of alien defendants being afforded venue protection in Section 1391 (c)(2). Instead, the House Report stated that aliens would be without any venue defendants. Specifically, the House Report stated that “…aliens and United States citizens domiciled abroad could not claim a venue defense to the location of litigation.” In so holding, the court stated that it would “not broadly upend the well-established rule that suits against alien defendants are outside the operation of the federal venue laws.”
Based on the reasons set forth above, the Federal Circuit denied the Petitioner’s writ of mandamus on the grounds that Petitioners had not satisfied the “high standard” necessary for the court to issue such a write.
All Language Alliance, Inc. provides legal document translation services from Simplified Chinese, Korean, German, Traditional Chinese, Japanese, Spanish, Portuguese, Russian, French, and other foreign languages to English for patent infringement litigation.
The case is In re: HTC Corporation, decided on May 9 2018 by the United States Court of Appeals for the Federal Circuit, Court No. 2018-130.
**This legal translations blog article should not be construed as legal advice. You should always consult an attorney regarding your specific legal needs.