Uniloc-ing Defendants Into The Eastern District of Texas

Yesterday, Uniloc sued Google in the Eastern District of Texas.  Uniloc is a Luxembourg based company, not a Texas company.1  Google?  Also not a Texas company.  So, if neither of the companies involved are Texan, why are we still in the Eastern District of Texas?

History

Uniloc filed a set of lawsuits against Google based on a set of VoIP patents back in March in the Eastern District.  After TC Heartland, however, their original complaint would have been totally deficient—there simply wasn’t any information in it that would support venue being proper in the Eastern District.

In order to avoid having their case dismissed, Uniloc needed to refile their complaint, this time providing sufficient detail to show that Google qualified as an entity that meets 28 U.S.C. § 1400(b).

28 U.S.C. § 1400(b): Any civil action for patent infringement may be brought in the judicial district where the defendant resides, or where the defendant has committed acts of infringement and has a regular and established place of business.

TC Heartland decided that a corporate defendant (like Google) “resides” only in the state in which it is incorporated.  (That’s Delaware, for Google.)  So we know that the first part of 1400(b) isn’t met.2  This means Uniloc has to show that Google has [1] committed acts of infringement within the Eastern District of Texas and [2] has a regular and established place of business there.

[1] Acts of Infringement

Uniloc alleges acts of infringement based on “making, using, importing, offering for sale and/or selling one or more versions of the Hangouts app and associated system” as well as “actively inducing the using, offering for sale, selling, or importing the Hangouts app and associated system.”  The location where an act of infringement occurs depends on whether the claim is a system claim (in which case the test is where the “system as a whole” operates) or a method claim (in which case the location of the act of infringement is more complicated, with each step constituting a portion of the act of infringement.)  While there are some open issues with respect to the location of an act of infringement,3 the law on acts of infringement is more settled than how the law applies to Uniloc’s attempts to establish that Google has a “regular and established place of business” in the Eastern District of Texas.

[2] Regular and Established Place of Business

Uniloc devotes a lot of attention to facts that attempt to show that Google has a “regular and established place of business” in the Eastern District.  In fact, they spend a full two-thirds of their complaint on it.  (That’s twice as much as they spend explaining how Google allegedly infringes.)

And honestly?  Most of these facts are irrelevant nonsense, or else contradicted by existing law on this topic.  A “regular and established place of business” means “a permanent and continuous presence” within the district.  (In re Cordis).  If Uniloc’s arguments are accepted, then anyone with a commercial website has a “regular and established place of business” within the Eastern District of Texas.  And we can be pretty sure that that isn’t right, because in University of Illinois Foundation v. Channel Master, 28 U.S.C. § 1400(b) was interpreted in a similar situation.  In Channel Master, a company that sold products into a state but did not itself have a facility there (although it did have a salesman) didn’t have a “regular and established place of business.”  Essentially, promotion of sale or use of products in a location simply isn’t enough to be a regular and established place of business.

Uniloc also spends a significant amount of its complaint discussing Google’s activities in Austin and Dallas.  Austin and Dallas aren’t in the Eastern District.  Google’s activities in those places simply aren’t relevant to the “regular and established place of business” being in one district; activities in the Northern District of Texas don’t support venue in the Eastern District.

Uniloc even claims that Google operates its Street View service within the Eastern District of Texas simply because Street View drives around the Eastern District and has pictures of the Marshall courthouse.  But that’s another example where their argument doesn’t match up with the law.  28 U.S.C. § 1400(b) was already interpreted regarding a company that periodically and regularly entered a state to perform an activity but wasn’t permanently operating in the state.  In Phillips v. Baker, a company would periodically ship a railroad car into a location to perform ‘pre-cooling’, and would then leave.  They returned regularly, but always temporarily.  That wasn’t a “regular” place of business because it was temporary, not permanent and continuous.  

There are other examples of Uniloc’s arguments being flawed, but the real takeaway is this: the Eastern District isn’t dead just yet.

Trolls aren’t giving up on E.D. Texas

The TC Heartland decision is a starting point, but it’s not the end of the issues with patent venue.  The “regular and established place of business” requirement is fact-intensive and a troll can still try to keep a case where it’s filed; until we see how judges in the Eastern District rule on motions to dismiss or transfer, we won’t know how well this will work.  And until the standard for “regular and established place of business” is more developed, we won’t know for sure whether it’s broad enough to potentially subject anyone with a commercial website to being sued in Texas.

But there is one thing we know for sure already—trolls aren’t going to leave the Eastern District quietly.

  1. They incorporated in Luxembourg for tax reasons.  There are a number of trolls that have done so (for example, Core Wireless SARL, Uniloc Luxembourg, and ArrivalStar), primarily because Luxembourg offers favorable tax treatment for income derived from intellectual property.  Uniloc does have a subsidiary in the Eastern District of Texas, but the patents are owned by the Luxembourg company.
  2. Uniloc does allege that “resides” might be met (e.g., in paragraph 49 of their complaint in the -00465 case, one of three cases they refiled today), which isn’t quite sanctionable, but is a poor bit of lawyering.
  3. For example, there remains an open question of whether, given the holding in NTP v. RIM that a method with one step performed outside the U.S. was not subject to U.S. patent law, a method where the steps are performed in geographically distributed locations can ever have proper venue under the “acts of infringement” prong of 28 U.S.C. § 1400(b).

Joshua Landau

Joshua Landau is the Patent Counsel at the Computer & Communications Industry Association (CCIA), where he represents and advises the association regarding patent issues.  Mr. Landau joined CCIA from WilmerHale in 2017, where he represented clients in patent litigation, counseling, and prosecution, including trials in both district courts and before the PTAB.

Prior to his time at WilmerHale, Mr. Landau was a Legal Fellow on Senator Al Franken’s Judiciary staff, focusing on privacy and technology issues.  Mr. Landau received his J.D. from Georgetown University Law Center and his B.S.E.E. from the University of Michigan.  Before law school, he spent several years as an automotive engineer, during which time he co-invented technology leading to U.S. Patent No. 6,934,140.

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