Federal Circuit Finds TC Heartland Changed Controlling Law, Can Be Applied Retroactively

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On Wednesday, November 15th, the Court of Appeals for the Federal Circuit handed down a precedential ruling in In re: Micron Technology, which affirms recent U.S. Supreme Court case law on proper venue in patent infringement cases in a way that further bolsters the prospects of infringing defendants at the district court level. In its decision, the Federal Circuit vacated and remanded an order coming from the District of Massachusetts, which previously held that Micron waived its right to file a motion to transfer venue in a patent suit filed by Harvard University.

Micron’s appeal to the Federal Circuit follows an order from Massachusetts District Judge William G. Young denying Micron’s motion to dismiss based on improper venue. Micron had argued that the Supreme Court’s May ruling in TC Heartland LLC v. Kraft Foods Group Brands, LLC constituted a change to case law that “ought to be given retroactive effect.” Harvard had originally asserted two patents against Micron in a suit first filed in June 2016. That August, Micron had filed a motion to dismiss the case for failure to state a claim, which the court granted. Harvard then filed a first amended complaint at the end of January 2017. Through the spring of 2017, Micron filed a couple of motions to stay the case pending inter partes review (IPR) proceedings at the Patent Trial and Appeal Board (PTAB). In early June, a few weeks after the TC Heartland decision, Micron then filed the motion to dismiss for improper venue.

“Venue is a personal privilege of the defendant that can be waived,” Judge Young’s order reads. However, Judge Young also noted that a defense cannot be waived if it was not available at the time of the earlier motion. Arguing against Micron’s motion to dismiss, Harvard contended that TC Heartland only affirmed a previous precedent set by SCOTUS and that the improper venue challenge was available to Micron back when it filed its first motion in August 2016. In looking at how other district courts applied the TC Heartland ruling in similar cases, Judge Young found that the majority of cases did not find that the Supreme Court’s decision in that case was intervening law and agreed with the reasoning behind those decisions more so than he agreed with cases which granted such motions to transfer after TC Heartland.

“Many district courts have faced similar situations since TC Heartland was decided, and the result has been widespread disagreement over the change-of-law question relevant to waiver under Rule 12(g)(2) and (h)(1)(A),” the Federal Circuit’s majority opinion reads. The Federal Circuit panel, consisting of Circuit Judges Richard Taranto, Raymond Chen and Todd Hughes, concluded that the TC Heartland decision “changed controlling law in the relevant sense” and thus the Supreme Court’s interpretation of the patent venue statute was not available to Micron at the time of its August 2016 motion to dismiss. The Federal Circuit found that the venue objection was not available to Micron at that time because “it would have been improper, given controlling precedent, for the district court to dismiss or to transfer for lack of venue.”

It might be satisfying to some to watch Harvard, which has in recent years stoked the flames of a misguided debate over “patent trolling,” suffer as a patent owner in the face of a Supreme Court standard that many, even in the halls of Congress, felt would limit the prospects of such “trolls” in U.S. district court. But what may be more important in this case is a continuing pattern at the Federal Circuit which has been deleterious to patent right enforcement. In September, the Federal Circuit shot down a four-factor test to determine proper venue which came from the Eastern District of Texas. In October, the Federal Circuit decided in favor of the Chicago Transit Authority when it found that a system for processing contactless payments in mass transit systems was not a patentable advance. The Federal Circuit has also proven to be friendly to appellants who’ve successfully challenged a patent at the PTAB, an Article I tribunal which renders defective 90 percent of patents challenged there, even when that patent wasn’t declared invalid in dozens of infringement suits filed at the district court level. Even when a patent escapes PTAB trials without losing claims, the Federal Circuit has vacated final decisions upholding claims on multiple occasions.


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3 comments so far.

  • [Avatar for Proof Reader]
    Proof Reader
    November 23, 2017 12:38 am

    My comment was tongue-in-cheek about Steve’s editorializing.

  • [Avatar for Gene Quinn]
    Gene Quinn
    November 21, 2017 12:18 pm

    Proof Reader-

    The edit you suggest changes the meaning of the sentence. While the prospects of non-infringing defendants have been bolstered, so too have the prospects of those that are infringing and now get to choose a favorable forum likely to protect their efficient infringement business model.

  • [Avatar for Proof Reader]
    Proof Reader
    November 21, 2017 11:24 am

    Typo in the first sentence. “bolsters the prospects of infringing defendants” should read, “bolsters the prospects of non-infringing defendants”