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Cray Scores Significant Patent Venue Win

September 22, 2017

Law360 reported that the U.S. Court of Appeals for the Federal Circuit granted supercomputer maker Cray’s petition for a writ of mandamus and ordered Judge Gilstrap of the U.S. District Court for the Eastern District of Texas to transfer the lawsuit against Cray to another court to be determined on remand.

Following the Supreme Court’s decision in TC Heartland v. Kraft Foods, Cray had filed a renewed motion to transfer based on improper venue. Judge Gilstrap denied Cray’s motion, finding that Cray maintained a regular and established place of business in the Eastern District of Texas based on the private residence of a single remote employee. In doing so, Judge Gilstrap developed a four-factor test for assessing whether a defendant has a regular and established place of business in the district, and this test was later adopted by numerous courts around the country.

Cray subsequently filed a petition for a writ of mandamus, which was granted by the Federal Circuit on September 21, 2017. The Federal Circuit struck down Judge Gilstrap’s four-factor test as being too far removed from the language of the patent venue statute, 28 U.S.C. § 1400(b). The Federal Circuit held that a regular and established place of business (1) must be a physical place in the district; (2) must be a regular and established place of business; and (3) must be the place of the defendant. The Federal Circuit found that the private residence of Cray’s single remote employee did not meet this standard.

This precedential opinion establishes the standard that will control most venue determinations in patent cases going forward and limits abusive forum shopping.

Cray is represented by Fenwick patent litigation partners David Tellekson, Bryan Kohm, and Melanie Mayer, and associates Jonathan McMichael, Yixin Zhang, Eman Sojoodi and Reilly Stoler.

The full article is available through the Law360 website (subscription required).

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