Judge Rodney Gilstrap, U.S. District Court for the Eastern District of Texas/photo by Diego Radzinschi, National Law Journal

 

The Eastern District of Texas is back in business.

The U.S. Court of Appeals for the Federal Circuit on Monday rejected a big tech industry push to overrule a venue ruling that subjects Google to patent infringement suits in the district.

In re Google comes over the dissent of a Federal Circuit judge who said Gilstrap is disregarding clear directions from the Federal Circuit. Judge Jimmie Reyna said Gilstrap’s decision will have “far-reaching implications” for Google and other companies that conduct their business over the internet.

Gilstrap ruled earlier this summer that servers Google leases at internet service providers (ISPs) in the Eastern District of Texas constitute a “regular and established place of business” under the patent venue statute. Hogan Lovells partner Neal Katyal led Google’s charge for mandamus review at the Federal Circuit, with amicus support from Intel, Netflix, Salesforce, HP and others.

They argued that a place of business must be owned or leased by the defendant and “fixed permanently” to qualify as a “regular and established place of business. Gilstrap, they said, was in effect overruling the U.S. Supreme Court’s TC Heartland decision that has forced patent holders to sue more often where defendants are headquartered.

They got no sympathy from Federal Circuit Judges Timothy Dyk and Richard Taranto. Google’s contracts with the ISPs establish “strong Google control over the servers and their physical location,” they noted in a nonprecedential, per curiam order.

While Gilstrap may not be right, they suggested, he wasn’t so clearly wrong as to warrant mandamus review before trial. And the issue hasn’t divided district judges all over the country, as was the case when the court agreed to take up the Micron venue case on mandamus last fall.

Dyk and Taranto said Google will have every right to raise the issue following trial. Although the Federal Circuit has taken up venue issues pretrial in exceptional circumstances, “we do not find such circumstances in this case,” they wrote.

The win goes to a Thompson & Knight team that represented patent owner Seven Networks LLC. Partners Max Ciccarelli, Bruce Sostek and J. Michael Heinlen and associate Natalie Cooley were on the briefs.

Reyna said leaving Gilstrap’s decision in place will cause confusion. “For example, is every individual cell phone tower a ‘regular and established place of business’ for a cellular service provider?” he wrote. “And is a home office that contains at least a computer a ‘regular and established place of business’ simply because an employer provides the computer and controls its operation and placement?

“Leaving this issue to percolate longer in the courts as the majority suggests,” Reyna concluded, “will only result in wasted judicial and litigant resources as they continue to wrestle in uncertainty.”