Federal Circuit Takes Up Venue Burden Issue

In a pending mandamus petition, the Federal Circuit signaled that it will address the issue of which party bears the burden of proof when venue is challenged in a patent infringement action. In re ZTE (USA), No. 2018-113 (Fed. Cir. Feb. 20, 2018).

In the underlying case, ZTE had been sued for patent infringement in the Eastern District of Texas. Judge Amos Mazzant adopted the magistrate judge's finding that ZTE's contract with a third party customer call service in the district satisfied the "regular and established place of business" prong of 28 U.S.C. 1400(b). ZTE petitioned for writ of mandamus to direct transfer out of the Eastern District of Texas in light of In re Cray, 871 F.3d 1455 (Fed. Cir. 2017).

In its petition, ZTE addressed the district court's acknowledgment that there is a split of authority on which party bears the burden of proving improper venue. Courts in the First, Second, Fourth, Seventh, and Ninth Circuits hold that the plaintiff bears the burden. See, e.g., Cordis Corp. v. Cardiac Pacemakers, 599 F.2d 1085, 1086 (1st Cir. 1979); Gulf Ins. Co. v. Glasbrenner, 417 F.3d 353 (2d Cir. 2005); Bartholomew v. Va. Chiropractors Ass'n, Inc., 612 F.2d 812, 816 (4th Cir. 1979); Grantham v. Cook Bros., Inc., 420 F.2d 1182, 1184 (7th Cir. 1969); Amba Mktg. Sys., Inc. v. Jobar Int'l, Inc., Piedmont Label Co. v. Sun Garden Packing Co., 598 F.2d 491, 496 (9th Cir. 1979).

Courts in the Third and Eighth Circuits place the burden on the defendant challenging venue. See, e.g., Myers v. Am. Dental Assoc., 695 F.2d 716, 724 (3d Cir. 1982); United States v. Orshek, 164 F.2d 741, 742 (8th Cir. 1947).

Recent decisions of the Eastern District of Texas and some other district courts also place the burden on the defendant in patent cases. See, e.g., Soverain IP, LLC v. Apple, Inc., No. 2:17-cv-207, 2017 U.S. Dist. LEXIS 140039 at *3 (E.D. Tex. July 25, 2017); Bristol-Myers Squibb Co. v. Mylan Pharm. Inc., 2017 WL 3980155, at *5 (D. Del. Sept. 11, 2017) (holding that burden is on party opposing venue).

In an order issued on February 20, 2018, the Federal Circuit directed the parties in In re ZTE, to provide supplemental briefing on the following issues:

(1) Does Federal Circuit or regional circuit law apply to the question of who bears the burden of proof on a challenge to venue under 28 U.S.C. § 1406 in a patent case?

(2) On this question, which party bears the burden of proof?

Traditionally, courts had looked to regional circuit law to identify which party bears the burden of proving improper infringement. In light of the Supreme Court's reaffirmance in TC Heartland that the venue provision in patent infringement is independent from the general venue provisions, it appears likely that the Federal Circuit will take up the issue unique to patent law, and present new controlling law on this question.