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In re Google LLC

Patent Venue Requires That Defendant Have Agent in the Judicial District

In re Google LLC, __ F.3d __, 2020 WL ____ (Fed. Cir. Feb. 13, 2020) (DYK, Wallach (concurring), Taranto) (E.D. Tex.: Gilstrap) (4 of 5 stars)

Fed Cir grants petition for mandamus writ and orders the district court to dismiss or transfer the case. The opinion describes how mandamus has become necessary to resolve a venue issue as to whether a defendant’s contracts with internet service providers (ISPs) within a judicial district are sufficient to support venue under 28 U.S.C. § 1400(b). The opinion analyzes the three factor inquiry in Cray, 871 F.3d 1355 (Fed. Cir. 2017), for ascertaining whether a defendant has a regular and established place of business in the district. As to Cray‘s first factor (“a physical place in the district”), the factor is not limited to real property. The opinion describes how the servers in this case, or a hypothetical “table at a flea market,” may satisfy this factor insofar as they evidence a defendant “possess[ing] or controlling . . . [some] physical, geographical location.” Op. at 10 (quoting in part Cray).

Cray’s second factor (“a regular and established place of business”), however, “generally requires an employee or agent of the defendant to be conducting business at that place.” Op. at 10. The opinion reaches this conclusion by analyzing the service statute for patent cases (§ 1694), by describing how it is linked with the venue provision, and by reasoning that the assumption is that a “regular and established place of business” will exist only where there is some agent of the defendant. AIA § 18(c), which amended the venue statute for covered business method patents to confirm that an ATM is not a regular and established place of business, is not contrary because “it makes no mention of an employment or agent requirement[.]” Op. at 12–13.

It was undisputed that no Google employees were in the judicial district. Analyzing the record, the opinion concludes that the ISPs were not acting as Google’s agents either, applying the agency concepts in the Third Restatement of Agency. That the ISPs had various maintenance obligations was insufficient to make them Google’s agents. Thus the Eastern District of Texas was an improper venue, and the district court is directed to dismiss or transfer.

The opinion concludes by noting, “we do not hold today that a ‘regular and established place of business’ will always require the presence of a human agent, that is, whether a machine could be an ‘agent.’” Op. at 17.

Concurrence: Judge Wallach writes to “raise questions about Google’s business model.” Concur. at 1. It expresses frustration about Google’s explanation for its activities in the judicial district and wonders “whether Google’s end users become agents in furtherance of its business by virtue of voluntarily or involuntarily sharing information generated on Google’s servers.” Id. at 2.

KEYWORDS: VENUE; MANDAMUS; SERVICE; AGENT