Venue Equity and Non-Uniformity Elimination (VENUE) Act of 2016 Introduced to Limit Where Patent Litigation Cases Can Be Filed

Senator Flake of Arizona recently introduced the Venue Equity and Non-Uniformity Elimination (VENUE) Act of 2016 to override the broad application of where a defendant "resides" as set forth in 28 U.S.C. § 1391(c) as held in VE Holdings v. Johnson Gas Appliance. Traditionally, 28 U.S. Code § 1400(b) limited venue for patent infringement litigation to "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." However, in VE Holdings v. Johnson Gas Appliance, the Federal Circuit held that 28 U.S.C. § 1391(c) provided a very broad definition for the term "resides" such that a defendant was deemed to “reside” in any venue where the defendant was subject to that court’s personal jurisdiction in the action at hand, which has resulted in a large number of plaintiffs filing patent litigation cases in the Eastern District of Texas.

The VENUE Act would function to override the holding in VE Holdings as the VENUE Act recites that:

(b) Notwithstanding subsections (b) and (c) of section 1391, any civil action for patent infringement or any action for a declaratory judgment that a patent is invalid or not infringed may be brought only in a judicial district—

(1) where the defendant has its principal place of business or is incorporated;

(2) where the defendant has committed an act of infringement of a patent in suit and has a regular and established physical facility that gives rise to the act of infringement;

(3) where the defendant has agreed or consented to be sued in the instant action;

(4) where an inventor named on the patent in suit conducted research or development that led to the application for the patent in suit;

(5) where a party has a regular and established physical facility that such party controls and operates, not primarily for the purpose of creating venue, and has—

(A) engaged in management of significant research and development of an invention claimed in a patent in suit prior to the effective filing date of the patent;

(B) manufactured a tangible product that is alleged to embody an invention claimed in a patent in suit; or

(C) implemented a manufacturing process for a tangible good in which the process is alleged to embody an invention claimed in a patent in suit; or

(6) in the case of a foreign defendant that does not meet the requirements of paragraph (1) or (2), in accordance with section 1391(c)(3).

(b) MANDAMUS RELIEF.  For the purpose of determining whether relief may issue under section 1651 of title 28, United States Code, a clearly and indisputably erroneous denial of a motion under section 1406(a) of such title to dismiss or transfer a case on the basis of section 1400(b) of such title shall be deemed to cause irremediable interim harm.

(c) TELEWORKERS.—The dwelling or residence of an employee or contractor of a defendant who works at such dwelling or residence shall not constitute a regular and established physical facility of the defendant for purposes of section 1400(b)(2) of title 28, United States Code, as added by subsection (a).

Thus, the VENUE Act would limit the plaintiff to filing a patent litigation case to a district where the defendant's principal place of business is; where the defendant has committed an act of infringement and has a regular and established physical facility that gives rise to the act of infringement; where an inventor named on the patent conducted research and development that led to the application for the patent; or where the parties have mutually agreed upon or consented to being sued.