# United States **Court of Appeals**  **for the Federal Circuit**

______________________ IN RE: GOOGLE LLC, Petitioner

______________________

2018

- 152

______________________
On Petition for Writ of Mandamus to the United States District Court for the Eastern District of Texas in No. 2:17

-
cv

- 00442

- JRG, Judge J. Rodney Gilstrap.

______________________
ON PETITION FOR PANEL REHEARING AND REHEARING EN BANC

______________________

N EAL K UMAR K ATYAL , Hogan Lovells US LLP, Washington, DC, filed a combined petition for panel rehearing and rehearing en banc for petitioner. Also represented by C OLLEEN S INZDAK ; T HOMAS S CHMIDT , New York, NY.

M ASSIMO C ICCARELLI , Thompson & Knight LLP, Dallas, TX, filed a response to the petition for respondent SEVEN Networks, LLC. Also represented by N ATALIE C OOLEY , J AMES M ICHAEL H EINLEN , B RUCE S TEVEN S OSTEK

.

______________________2

Before P ROST , Chief Judge

, N EWMAN , L OURIE , D YK , M OORE , O’M ALLEY , R EYNA , W ALLACH , T ARANTO , C HEN , H UGHES , and S TOLL , Circuit Judges

. R EYNA , Circuit Judge

, with whom N EWMAN and L OURIE , Circuit Judges , join, dissents from the denial of the petition for rehearing en banc

. P ER C URIAM

. O R D E R
Petitioner Google LLC filed a combine d petition for panel rehearing or rehearing en banc. A response to the petition was invited by the court and filed by respondent SEVEN Networks, LLC. The petition for rehearing was first referred to the panel that decided the mandamus petition , and there after the petition for rehearing and response were referred to the circuit judges who are in regular active service. A poll was requested, taken, and failed.
Upon consideration thereof,

I T I S O RDERED T HAT : The petition for panel rehearing is denied.
The petition for rehearing en banc is denied.

F OR THE C OURT

February 5, 2019 /s/ Peter R. Marksteiner Date Peter R. Marksteiner Clerk of Court

# United States **Court of Appeals**  **for the Federal Circuit**

______________________

In re : GOOGLE LLC, Petitioner

______________________

2018

- 152

______________________
On Petition for Writ of Mandamus to the United States District Court for the Eastern District of Texas in No. 2:17

-
cv

- 00442

- JRG, Judge J. Rodney Gilstrap.

______________________

R EYNA , Circuit Judge

, with whom N EWMAN and L OURIE , Circuit Judges , join, dissenting from the denial of the petition for rehearing en banc

. The court elects not to decide en banc the question of whether servers or similar equipment in third

- party facilities are a regular and established place of business

, such that venue is proper under 35 U.S.C § 1400(b). The court bases its decision on grounds that the issue it presents doesnot rise to a level that warrants mandamus review. I dissent because the court’s decision causes two adverse results. First, the court sidesteps the precise purpose ofmandamus relief, thereby weakening our Writ of Mandamus jurisprudence. Second, we leave unanswered a critical issue that increasingly affect s venue in legal actions involving e- commerce.
The question poised before the court is whether Google’s servers (shown below in the black box ), which have no physical interaction with Google employees orIN RE : GOOGLE LLC 3

is not one of those vague principles which, in the interestsof some overriding policy, is to be given a liberal construction.” Cray Inc. , 871 F.3d at 1361 (quoting Schnell v. Peter Eckrich & Sons, Inc. , 365 U.S. 260 (1961))

. Supreme Court and Federal Circuit jurisprudence approves taking up on mandamus important issues such as the issue in this case. For example, w e may decide issuesimportant to “proper judicial administration” on mandamus. La Buy v. Howes Leather Co., 352 U.S. 249, 259

– 60 (1957). Mandamus may also be appropriate “to further supervisory or instructional goals where issues are unsettled and important.” In re Queen’s Univ. at Kingston , 820 F.3d 1287, 1291 (Fed. Cir. 2016). We may also review “basic [and] undecided” legal questions o n mandamus

. Schlagenhauf v. Holder , 379 U.S. 104, 110 (1964) ; Cray , 871 F.3d at 1358

– 59

. Mandamus may be warranted where the petitioner shows, among other things, that she has a “clear and indisputable” right to its issuance. Cray , 871 F.3d at 1358

. But as was the case in Cray , w here there is an unsettled, basic

, and undecided legal question at issue, the right to issuance of the writ cannot be clear and indisputa ble

. See i d. at 1358

– 59.

M andamus review is part of our bedrock supervisory duty as an appellate court to ensure proper judicial administration. In re Cement Antitrust Litig. , 688 F.2d 1297, 1304 (9th Cir. 1982). Given the nature of our exclusive subject

- matter jurisdiction over federal questions involving patent law, t his court in particular ha s a vital supervisory and instructional duty to further the goals of uniformity and predictability that are “the cornerstones of a well

- functioning patent system” and part of the reason for this court’s very existence. See Timoth y B. Dyk, Federal Circuit Jurisdiction: Looking Back and Thinking Forward

, 67 A M

. U. L. R EV . 971, 977 (2018).

With this court’ s supervisory and instructional dut ies and goals in mind

, we have taken up issues on mandamusIN RE : GOOGLE LLC 4

since TC Heartland to ensure § 1400(b) is not given an expansive construction

. E.g.

, In re BigCommerce, Inc. , 890 F.3d 978, 982 (Fed. Cir. 2018); Cray , 871 F.3d at 1359

– 60. In Cray

, we took mandamus action to correct the district court’s impermissibly expansive construction of § 1400(b) that would have otherwise held that an employee working from home in the district was sufficient to be a “regular and established place of business” of the defendant for proper

venue

. Cray , 871 F.3d at 1361

– 62. We noted that even though man y businesses have moved from a brick

- and

mortar model to an increasingly virtual one , in the wake of TC Heartland, the focus remains on the unchanged language of the statute. See id. at 1359

– 60.

As we saw in Cray , there is again growing uncertainty

amon g district courts and litigants as to the requirements of § 1400(b) when conducting business virtually through

se r vers and similar equipment in the district

. Prior to this

case, another district court in the Eastern District wrestled with the same issue i nvolving the same defendant yet reached a different and contrary conclusion. See Personal Audio, LLC v. Google, Inc. , 280 F. Supp. 3d 922, 934 (E.D. Tex. 2017) (rejecting the argument that Google servers in local ISP facilities constituted a regular and established place of business). In CUPP Cybersecurity, LLC v. Symantec Corp. , a nother district court
, in the Northern District of Texas, faced the identical legal issue in a case with a different defendant

— “whether the presence of [defendant’s] servers at a data center owned by a third party constitutes a regular and established place of business”

— and concluded that they d id not. No. 3:18

- CV

- 1554, Dkt. No. 44, at *4– 6 (N.D. Tex. Dec. 21, 2018). The district court, citingour denial of mandamus in this case, acknowledged the disagreement among its neighboring courts in the Eastern District of Texas and highlighted this c ourt’s silence on the issue: “ [t] he Federal Circuit has not yet determinedwhether the presence of a company’s servers in a data center operated by a third party establishes a regular andIN RE : GOOGLE LLC 5

established place of business for purposes of venue.” Id

. As to th e majority’s rationale for finding that mandamus was inappropriate in this case, the district court in CUPP observed that there would be “far reaching consequences” of concluding that venue was proper, which would “distort the scope of the statute.” Id. a t * 6 (quoting Personal Audio

, 280 F. Supp. 3d at 934). I agree with this assessment because it recognizes the tension between the statute and therealities of the continued change in the nature of the marketplace and how goods and services are traded.

O th er courts have wrestled with cases involving similar equipment installed in facilities of third parties. See

, e.g. , Peerless Network, Inc. v. Blitz Telecom Consulting

, LLC , No. 17

- CV

- 1725, 2018 WL 1478047, at *3

– 4 (S.D.N.Y. Mar. 26, 2018) (rejecting the argument that voice -over- internet protocol routers installed in a third

- party’s facility constituted a regular and established place of business); Automated Packaging Sys., Inc. v. Free

- Flow Packaging Int’l, Inc. , No. 5:14

- CV

- 2022, 2018 WL 400326, at *9 (N.D. Ohio Jan. 12, 2018) (rejecting the argument that owningand controlling equipment in customer facilities constituted a regular and established place of business). Route rs play similar roles to servers in that they handle electronic communication, and it takes little imagination to see how the district court’s holding in this case could impact companies that, while conducting business, transmit data over a wide variety of equipment. See, e.g.

, Personal Audio , 280 F. Supp. 3d at 93 4 ( questioning whether cell phone towers could be a regular and established place of business for wireless phone service providers if Google’s servers were to qualify ).
The same legal issues are relevant to every technologycompany that, like Google, conducts business over the internet. Amici comprising similarly situated technologycompanies who provide internet infrastructure and services filed briefs in support of the mandamus petition and

exp ressed concern over the impact of this issue on theirIN RE : GOOGLE LLC 6

business

— evidence of this case’s importance and broad implications. The bar apparently already views the denial of the petition at the panel stage as a signal that it is safe to file more cases against Google and similar defendants in the same district. At the time of filing of the petition for rehearing, Google had been sued thirteen more times in the same district under the same venue theory since October 29, 2018, the date that we denied the petitio n for mandamus. Pet. for Reh’g 2

– 3. That number now stands at thirty

- four

. 1 I count that as trending

. Although the majority denied mandamus on grounds that extraordinary relief was not warranted, it succumbed to the temptation to comment on the merits. Cf.

, e.g. , In re Verinata Health, Inc. , No. 2017

- 109, 2017 WL 1422489, at*2 (Fed. Cir. Mar. 9, 2017) (denying petition without commenting on the merits on the basis that “Petitioners have failed to show why they cannot raise their argumen ts

. . . with an appeal from the district court’s final judgment or why that alternative would be inadequate in this case”). The majority noted that the district court focused on “many specific details” of Google’s contracts with the ISPs and its “strong control” of the servers, and justified the denial of mandamus, at least in part, on those details. The district
court itself noted that merely a virtual space or electronic communication is insufficient , but found that the “place” was “a physical server occupying a physical space” over which Google exercised “exclusive control.” Seven Networks, LLC v. Google LLC , 315 F. Supp. 3d 933, 951 (E.D. Tex. 2018)

. I agree that possession and control over a place are important factors when considering the merits

. This, of

1 D OCKET N AVIGATOR , https://compass.docket navigator.com (last visited, February 1 , 2019 ) (running search for Party: Google; Court: Texas Eastern District; and Case Filing Date: On or after 2018

- 10

- 29)IN RE : GOOGLE LLC 7

course, counts among the factors that the court should have addressed en banc. That said, exclusive ownership and control over the servers may be insufficient under Cray. See Cray , 871 F.3d at 1363 (“Relevant considerations include whether the d efendant owns or leases the place , or exercises other attributes of possession or control over the place .” (emphases added)). It is undisputed that no Google employee has ever visited the places where the servers are installed

. Nor do those facilities re semble one of the many Google offices in other venues that would satisfy § 1400(b) under a straightforward application of the statute. See id. at 1364 (“A further consideration for this requirement might be the nature and activity of the alleged place of business of the defendant in the district in comparison with that of other places of business of the defendant in other venues.”).

T he district court’s holding in this case can be read as another, possibly even more expansive construction of § 1400(b) than the district court’s holding in Cray . F or many companies, th e reasoning of the district court’s holding could essentially reestablish nationwide venue

, in conflict with TC Heartland

, by standing for the proposition that owning and controlling computer hardware involved in some aspect of company business (e.g., transmitting data) alone is sufficient

. To what exten t does the defendant have to be “ present ” in the district to be “engaging in business” ? See Peerless N etwork , 2018 WL 1478047, at *4 (“[W] hat ever ‘ engaging in business ’ is, a ‘ place of busi ness’ is the location where some person performs that verb. ”) Is owning, renting, or leasing real property require d to establish a “place”? Is a piece of equipment a “ place ”? Is a shelf where equipment is installed a “place” where business is conducted? Would we have held differently if the employer in Cray exercised “exclusive control” over the equipment in the employee’s home office? These questions are before us now. There isIN RE : GOOGLE LLC 8

no principled reason to wait for these questions to “percolate” further among district courts.
By the time we eventually decide these question s, it is possible that dozens of cases will proceed through motionpractice, discovery, claim construction, or trial before potentially getting thrown out by a reversal of a ruling on a motion to dismiss for improper venue

. See In re Sea Ray Boats, Inc. , 695 F. App’x 543, 544 (Fed. Cir. 2017) (Newman, J., dissenting) (no ting that missing “an opportunityfor this court to determine whether the district court’s decision was in compliance with the venue requirements revived by TC Heartland may have harsh consequences” and collecting cases). Given our established practice of takingup other important and undecided issues of judicial administration on mandamus in the wake of TC Heartland , I see no justification for us to sit idly by while uncertainty builds and litigants and courts expend their resources on issues that we coul d have provided guidance on here

. I am confident that my colleagues will eventually appreciate the widespread implications of the issue before us in this case. The question is not if we will take this issue up

, but when, and how many judicial and party r esources will have been needlessly wasted by the time we do.