Richards Layton & Finger
 

Chief Judge Stark Grants Defendants' Motion to Transfer Venue Following TC Heartland

October 12, 2017

In Boston Scientific Corporation and Boston Scientific SciMed, Inc. v. Cook Group Incorporated and Cook Medical LLC, C.A. No. 15-980-LPS-CJB, Chief Judge Stark granted the defendants’ motion to transfer venue, holding that the defendants did not have a regular and established place of business in Delaware.

Plaintiffs Boston Scientific Corporation and Boston SciMed, Inc. initiated this patent infringement action in October 2015 against defendants Cook Group Incorporated (“CGI”) and Cook Medical LLC. CGI is an Indiana corporation and Cook Medical is an Indiana limited liability company, both of which have their principal place of business in Bloomington, Indiana. Following the Supreme Court’s decision in TC Heartland, the defendants filed a venue motion seeking dismissal or, in the alternative, transfer of the action to the Southern District of Indiana. The defendants argued that venue was improper under either prong of 28 U.S.C. § 1400(b).

The Court began its analysis by determining that Third Circuit law, rather than Federal Circuit law, should be used to determine which party bears the burden of proof on a venue challenge because it is a procedural, non-patent issue. The Court concluded that the burden was on the defendants to prove improper venue. Second, the Court analyzed whether the defendants had waived their opportunity to challenge venue. The Court held that the TC Heartland decision constituted an intervening change in the law by a superior court—therefore, an exception to the general rule of waiver was created. After concluding that an exception applied, Judge Stark considered whether the defendants’ actions nonetheless should bar them from prevailing on an improper venue motion. Ultimately, Judge Stark held that the defendants should be permitted to press their venue challenge.

Finally, Judge Stark turned to the merits of the defendants’ argument. Judge Stark analyzed Federal Circuit precedent to interpret what constitutes a “regular and established place of business” under the second prong of Section 1400(b), and held that venue is proper under the second prong if the defendants have a “permanent and continuous presence” in the district and that this determination should be “factually driven and dependent on the circumstances of the case.” The Court identified several factors that, in and of themselves, are insufficient to establish a regular and established place of business, or a permanent and continuous presence. These factors include: (i) simply doing business or being registered to do business; (ii) having sufficient “minimum contacts” within a district for purposes of satisfying personal jurisdiction; and (iii) maintaining a website that allows consumers to purchase goods within the district. After analyzing these factors, Judge Stark granted the defendants’ motion.

Key Point: This decision followed an omnibus oral argument on TC Heartland issues and set forth a test that the Court intends to apply going forward. However, it was issued prior to the Federal Circuit’s decision in Cray, so it remains to be seen whether the Court will modify its analysis going forward.