Northern District of Texas Blog

In the wake of the Supreme Court’s TC Heartland decision (which significantly limited the venues where a plaintiff can file patent-infringement lawsuits), many defendants raised venue challenges for the first time after answering the plaintiff’s complaint. And many courts held that defendants in presently pending cases had waived an improper venue challenge by failing to file a motion to dismiss due to improper venue prior to filing their answers. Those courts held that the venue challenge was “available” to the defendants at the time (despite being squarely foreclosed by then-existing Federal Circuit precedent) such that the failure to challenge venue prior to answering resulted in waiver of the venue challenge under Federal Rule of Civil Procedure 12(h)(1)(A). Rule 12(h)(1)(A) provides for waiver when a defendant omits an available venue defense from an initial motion to dismiss or fails to file the venue challenge prior to answering the complaint.

In In re Micron (available here), the Federal Circuit held that those courts had incorrectly found waiver based on Rule 12:

We conclude that TC Heartland changed the controlling law in the relevant sense: at the time of the initial motion to dismiss, before the Court decided TC Heartland, the venue defense now raised by Micron (and others) based on TC Heartland’s interpretation of the venue statute was not “available,” thus making the waiver rule of Rule 12(g)(2) and (h)(1)(A) inapplicable.

The Court found that the improper venue defense, prior to TC Heartland, was not available because “until the Supreme Court decided TC Heartland . . . it would have been improper, given controlling precedent, for the district court to dismiss or to transfer for lack of venue. . . . Where controlling law precluded the district court, at the time of the motion, from adopting a defense or objection and on that basis granting the motion, it is natural to say, in this context, that the defense or objection was not ‘available’ to the movant.”

But the Federal Circuit nevertheless went on to find that a district court still has authority to find that a patent-infringement defendant has waived its improper venue defense:

But that waiver rule, we also conclude, is not the only basis on which a district court might reject a venue defense for non-merits reasons, such as by determining that the defense was not timely presented. A less bright-line, more discretionary framework applies even when Rule 12(g)(2) and hence Rule 12(h)(1)(A) does not.

Because the district court improperly found waiver under Rule 12, the Federal Circuit reversed and remanding for the district court to consider anew the defendant’s venue challenge. In doing so, the Federal Circuit set forth several considerations for district courts under this “discretionary framework”:

• “[N]othing in the Federal Rules of Civil Procedure would preclude a district court from applying other standards, such as those requiring timely and adequate preservation, to find a venue objection lost if, for example, it was not made until long after the statutory change took effect.”

• “Congress has provided express statutory confirmation of judicial authority to consider the timeliness and adequacy of a venue objection: 28 U.S.C. § 1406(b) provides that ‘[n]othing in this chapter shall impair the jurisdiction of a district court of any matter involving a party who does not interpose timely and sufficient objection to the venue.’”

• “Being a privilege, [venue] may be lost. It may be lost by failure to assert it seasonably, by formal submission in a cause, or by submission through conduct.”

• “We have not provided a precedential answer to the question whether the timeliness determination may take account of factors other than the sheer time from when the defense becomes available to when it is asserted, including factors such as how near is the trial, which may implicate efficiency or other interests of the judicial system and of other participants in the case. But we have denied mandamus, finding no clear abuse of discretion, in several cases involving venue objections based on TC Heartland that were presented close to trial. We also note a scenario that presents at least an obvious starting point for a claim of forfeiture, whether based on timeliness or consent or distinct grounds: a defendant’s tactical wait-and-see bypassing of an opportunity to declare a desire for a different forum, where the course of proceedings might well have been altered by such a declaration.”

At bottom, In re Micron is of limited import, because it only applies to those cases pending at the time of the TC Heartland decision where defendants did not lodge venue challenges pre-TC Heartland but had venue challenges available to them post-TC Heartland because of TC Heartland’s change in the law. Of course, for those cases filed post-TC Heartland, defendants sued in improper venue now have the venue challenge made available to them by TC Heartland, so those defendants will waive their venue challenge by failing to challenge venue prior to answering.