Court Opinion

ID: 4341313
Source: CourtListenerOpinion
Date Created: 2018-11-14 17:01:21.696919+00
Date Added: 2024-06-11T10:10:13.269292
License: Public Domain

United States Court of Appeals
      for the Federal Circuit
                 ______________________

            In re: OATH HOLDINGS INC.,
               fka Yahoo Holdings, Inc.,
                        Petitioner
                 ______________________

                        2018-157
                 ______________________

    On Petition for Writ of Mandamus to the United
States District Court for the Eastern District of New York
in No. 1:16-cv-01557-ILG-SMG, Senior Judge Israel Leo
Glasser.
                 ______________________

   CHARLES KRAMER VERHOEVEN, Quinn Emanuel Ur-
quhart & Sullivan, LLP, San Francisco, CA, for petitioner
Oath Holdings Inc.       Also represented by MILES
DAVENPORT FREEMAN, Los Angeles, CA; PATRICK D.
CURRAN, JOHN THOMAS MCKEE, New York, NY.

    IAN B. CROSBY, Susman Godfrey LLP, Seattle, WA, for
respondent AlmondNet, Inc., Datonics, LLC, Intent IQ,
LLC. Also represented by LOUIS JAMES HOFFMAN, Hoff-
man Patent Firm, Scottsdale, AZ.
                ______________________

                     ON PETITION
                 ______________________
    Before DYK, REYNA, and TARANTO, Circuit Judges.
PER CURIAM.
2                                 IN RE: OATH HOLDINGS INC.

                        ORDER
     This is the second petition for a writ of mandamus
filed by Oath Holdings Inc. (formerly known as Yahoo
Holdings, Inc.) to challenge the district court’s conclusion
that Oath missed its opportunity to object to venue in the
Eastern District of New York for the patent case filed
against it. When Oath first sought mandamus, we denied
the request, stating that Oath should ask the district
court to reconsider its initial conclusion in light of In re
Micron Technology, Inc., 875 F.3d 1091 (Fed. Cir. 2017).
Oath made that request to the district court, but the court
reached the same conclusion it had reached earlier and
denied the request for dismissal or transfer. We now
grant mandamus and remand with the instruction that
the district court either dismiss or transfer the case.
                             I
    In March 2016, AlmondNet, Inc., Datonics, LLC, and
Intent IQ, LLC—the respondents in this court—sued
Oath in the United States District Court for the Eastern
District of New York, alleging patent infringement.
Certain facts relevant to venue are undisputed as this
matter has come to us: although Oath conducts business
in the State of New York, it is incorporated in Delaware,
and it does not have “a regular and established place of
business” in the Eastern District within the meaning of
the venue provision for patent cases, 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.”).
    In July 2016, Oath moved under Federal Rule of Civil
Procedure 12(b)(6) to dismiss the complaint for failure to
state a claim but did not include an objection to venue
under Rule 12(b)(3). Oath later withdrew its Rule 12
motion, and in January 2017, it filed an answer to re-
spondents’ complaint. In that answer, Oath both admit-
IN RE: OATH HOLDINGS INC                                    3

ted the complaint’s venue allegations and expressly
“reserve[d] the right to challenge venue based upon any
change in law, including the Supreme Court’s upcoming
decision in TC Heartland LLC v. Kraft Foods Group
Brands, LLC, No. 16-341.” Appx. 38. One month earlier,
the Supreme Court had granted certiorari in that case to
address the meaning of 28 U.S.C. § 1400(b).
    On May 22, 2017, the Supreme Court issued its
decision. TC Heartland LLC v. Kraft Foods Grp. Brands
LLC, 137 S. Ct. 1514 (2017). The Court held that, under
§ 1400(b), “a domestic corporation ‘resides’ only in its
State of incorporation for purposes of the patent venue
statute.” Id. at 1517. The Court rejected the holding of
this court’s longstanding precedent, VE Holding Corp. v.
Johnson Gas Appliance Co., that a domestic corporation
“resides,” for purposes of § 1400(b), in any judicial district
in which the defendant is subject to personal jurisdiction.
See 917 F.2d 1574, 1577–78 (Fed. Cir. 1990) (reading
§ 1400(b) to incorporate the definition of “resides” in the
1988 version of 28 U.S.C. § 1391(c)); see also In re TC
Heartland LLC, 821 F.3d 1338, 1341–43 (Fed. Cir. 2016)
(finding no basis in the 2011 amendments to § 1391 to
depart from our holding in VE Holding).
    On June 12, 2017, within 21 days of the Supreme
Court’s decision in TC Heartland, Oath filed a motion,
pursuant to Rule 12(b)(3), to dismiss for improper venue.
It argued that, given TC Heartland’s holding as to the
narrow meaning of “resides,” the requirements of
§ 1400(b) are not satisfied: Oath is not incorporated in
New York; and it undisputedly lacks a regular and estab-
lished place of business in the Eastern District. Respond-
ents opposed, but not by arguing that venue is proper in
this case. Rather, they argued that Oath had waived its
venue defense under Rule 12(g)(2) and 12(h)(1) because
that defense was “available” at the time that Oath filed
its July 2016 Rule 12 motion (before TC Heartland), yet
Oath had failed to present the defense in that motion.
4                                 IN RE: OATH HOLDINGS INC.

The district court agreed with respondents that Oath had
waived its venue defense and therefore denied Oath’s
venue motion. AlmondNet, Inc. v. Yahoo! Inc., No. 1:16-
cv-01557-ILG-SMG (E.D.N.Y. Sept. 1, 2017), ECF No. 82.
    In October 2017, Oath petitioned this court for a writ
of mandamus that would direct the district court to grant
the motion to dismiss. In November 2017, while that
petition was pending, this court held in Micron 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.” 875 F.3d at 1094. The court also ruled
that, under 28 U.S.C. § 1406(b) and district courts’ back-
ground case-management authority, venue rights might
nevertheless be found forfeited by delay in asserting them
in some circumstances. Micron, 875 F.3d at 1100–02.
This court then denied Oath’s petition for mandamus in
light of Micron, stating:
    We recently held that the Supreme Court’s deci-
    sion in TC Heartland effected a relevant change in
    the law and, more particularly, that failure to pre-
    sent the venue objection earlier did not come with-
    in the waiver rule of Federal Rule of Civil
    Procedure 12(g)(2) and (h)(1). In light of that de-
    cision, we deem it the proper course here for Ya-
    hoo to first move the district court for
    reconsideration of its order denying the motion to
    dismiss.
In re Yahoo Holdings Inc., 705 F. App’x 955, 956 (Fed.
Cir. 2017) (internal citation omitted).
    Oath promptly moved the district court for reconsid-
eration, and respondents filed a cross-motion to transfer
to either the Southern District of New York or the District
IN RE: OATH HOLDINGS INC                                  5

of Delaware if the Eastern District of New York was found
to be an improper venue for the case. More than eight
months later, the district court denied Oath’s motion.
Most of the court’s opinion explains why the court was
rejecting Oath’s “assertion that I was wrong in deciding
that TC Heartland did not change the law.” AlmondNet,
Inc. v. Yahoo! Inc., No. 1:16-CV-01557-ILG-SMG, 2018
WL 3998021, at *7 (E.D.N.Y. Aug. 21, 2018). The district
court essentially concluded that TC Heartland did not
change the law at the Supreme Court level because it
reaffirmed Fourco Glass Co. v. Transmirra Products
Corp., 353 U.S. 222 (1957). But the district court failed to
follow Micron, where we explained that TC Heartland
“changed the controlling law” at the circuit level. Micron,
975 F.3d at 1098–99. Indeed, the district court recognized
that its “reading of TC Heartland . . . is completely incon-
sistent with the two defining issues decided in Micron.”
2018 WL 3998021, at *5. At the end of the district court’s
opinion is a brief passage addressing forfeiture apart from
Rule 12(g)(2) and (h)(1)(A): “I incorporate by reference the
docket sheet for this case and rest in confident reliance
upon the rule of res ipsa loquitur.” Id. at *8. Having
denied Oath’s motion, the district court denied respond-
ents’ cross-motion to transfer as moot. Id.
    Oath now petitions for a writ of mandamus once
again, asking us to direct the district court to dismiss the
action. Respondents oppose, seeking to defend the district
court’s decision not to follow our ruling in Micron. They
contend, among other things, that Micron is not control-
ling because it arose out of a district court case from
within the First Circuit and the present case comes from
within the Second Circuit, which “applies a standard for
waiver different from that discussed in In re Micron.”
Resp. to Pet. For Writ of Mandamus 3. Respondents also
argue that, if we find mandamus appropriate, we should
6                                  IN RE: OATH HOLDINGS INC.

not require dismissal, but instead should include the
possibility of transfer in the alternative. 1
                             II
                             A
     The court may issue a writ of mandamus as “neces-
sary or appropriate in aid of [its] . . . jurisdiction[ ] and
agreeable to the usages and principles of law.” 28 U.S.C.
§ 1651(a). Mandamus relief is reserved for “exceptional
circumstances” under generally demanding standards,
Cheney v. U.S. Dist. Court for D.C., 542 U.S. 367, 380
(2004) (internal quotation marks and citations omitted),
and we have made clear that ordinarily it is not available
for rulings on motions under 28 U.S.C. § 1406(a), see In re
HTC Corp., 889 F.3d 1349, 1352–54 (Fed. Cir. 2018). But
“[m]andamus may be used in narrow circumstances where
doing so is important to ‘proper judicial administration.’”
Micron, 875 F.3d at 1095 (quoting La Buy v. Howes
Leather Co., 352 U.S. 249, 259–60 (1957)). Given our on-
point ruling in Micron, our order on Oath’s first manda-
mus petition based directly on Micron, and the district
court’s reasoning in nevertheless standing by its initial
conclusion, we think that this case involves a narrow and
exceptional circumstance in which mandamus is im-
portant for proper judicial administration.
    There is no dispute that venue in the Eastern District
of New York in this case is contrary to § 1400(b). The
only question is whether Oath waived or forfeited the
right to have the case dismissed on that basis by waiting
too long to invoke it. The district court answered yes to

    1   Oath requests that we order this case to be reas-
signed to a different judge within the Eastern District.
Given our conclusion that this case must be dismissed or
transferred outside the Eastern District, we deny Oath’s
reassignment request.
IN RE: OATH HOLDINGS INC                                   7

that question. The district court’s principal ground for
doing so, however, rests on its failure to follow our direct-
ly controlling Micron precedent addressing the issue of
waiver under Rule 12(g)(2) and (h)(1) as applied to TC
Heartland’s rejection of this court’s earlier, longstanding
VE Holding precedent.
    Respondents contend that Micron does not apply be-
cause it arose under First Circuit law, while this case
arises under Second Circuit law. But the result cannot
change here on that basis. Micron noted that it was not
deciding whether Federal Circuit law or relevant regional
circuit law governed the waiver issue. Micron, 875 F.3d
at 1097 n.3. We made clear, however, that the interpreta-
tion of § 1400(b), a patent-specific statute, including its
relation to § 1391, is a matter of Federal Circuit law, not
regional circuit law (subject, of course, to Supreme Court
law). Id. at 1098. And we have subsequently held that
the burden of persuasion on venue under § 1400(b) is a
matter of our law. In re ZTE (USA) Inc., 890 F.3d 1008,
1012–13 (Fed. Cir. 2018). We conclude that issues of
waiver or forfeiture of patent-venue rights under
§ 1400(b) and § 1406(a) are likewise governed by our law.
    In any event, the district court did not cite, and re-
spondents have not cited, any Second Circuit decision on
change of law, let alone a decision in the context of Rule
12(g)(2) and (h)(1), that finds no relevant change of law
where binding circuit precedent (on § 1400(b) here) is
overturned. To the contrary, the Second Circuit’s decision
in Gucci America, Inc. v. Li, 768 F.3d 122, 135–36 (2d Cir.
2014), which Micron cites, supports Oath, not respond-
ents: the Second Circuit in Gucci, like this court in Mi-
cron, found a waiver-excusing change of law when binding
circuit precedent was overturned. The Second Circuit’s
decision in Holzsager v. Valley Hospital, 646 F.2d 792,
794–96 (2d Cir. 1981), which Micron also cites, is to the
same effect, finding no Rule 12(h)(1) waiver where the
Supreme Court repudiated circuit precedent that gov-
8                                  IN RE: OATH HOLDINGS INC.

erned earlier in the case. The only authority that re-
spondents suggest is to the contrary is In re Vivendi, S.A.
Securities Litigation, 838 F.3d 223, 244 (2d Cir. 2016), but
respondents are incorrect: Vivendi did not involve any
overturning of binding circuit precedent that earlier
would have precluded a district court from accepting an
argument.
    For those reasons, Micron answers the entire question
of waiver under Rule 12(g)(2) and (h)(1) for purposes of
this case: there was no such waiver. In what is nearly the
only basis for the district court’s denial of Oath’s venue
motion, the district court clearly erred in not following the
Micron precedent giving that answer. That error war-
rants mandamus relief.
                             B
     The remaining question is whether there is an alter-
native ground to deny mandamus relief from the district
court’s rejection of Oath’s objection to venue. In Micron,
we noted the existence of a non-Rule 12 basis for a de-
fendant’s forfeiting the right to assert a venue objection
under § 1406, and we explained that discretion under
“[t]his authority must be exercised with caution” to avoid
impairment of, among other things, the congressionally
granted venue rights. 875 F.3d at 1101. We explained
that “exercise of the authority certainly may rest on sound
determinations of untimeliness or consent.” Id. We also
provided an example of “a scenario that presents at least
an obvious starting point for a claim of forfeiture” on a
non-Rule 12 ground: “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.” Id. at
1102. We further noted that “we have denied manda-
mus . . . in several cases involving venue objections based
on TC Heartland that were presented close to trial.” Id.
IN RE: OATH HOLDINGS INC                                 9

    The district court’s passing reference to a non-Rule 12
ground is not a basis for denying mandamus relief from
the order rejecting Oath’s venue motion. The district
court provided no analysis of why the circumstances of
this case made a finding of forfeiture under § 1406(b) a
sound exercise of discretion. Nor have respondents pre-
sented to us any argument that would warrant remand-
ing for further analysis. See In re BigCommerce, Inc., 890
F.3d 978, 982 (Fed. Cir. 2018) (granting mandamus and
finding it unnecessary to remand for consideration of
forfeiture when it was clear that no ground for finding
forfeiture existed).
    Respondents’ arguments establish no legitimate basis
for concluding that Oath forfeited its § 1406(a) right to
seek dismissal or transfer for lack of venue under
§ 1400(b). Respondents point to the fact that Oath admit-
ted to venue in its answer and Oath’s extensive participa-
tion before the Supreme Court decided TC Heartland.
But Oath cannot be faulted for waiting to present a venue
objection until after TC Heartland was decided, where the
case was in an early stage, the defense could not properly
have been adopted by the district court at the time, and
Oath’s answer expressly put respondents and the district
court on notice that Oath was watching TC Heartland to
see if the defense would become available. Respondents
also cannot reasonably argue that Oath failed to seasona-
bly raise its defense once available: Oath filed its motion
to dismiss within 21 days of the Court’s TC Heartland
decision. See BigCommerce, 890 F.3d at 982 (finding no
basis to remand in part because defendant filed its motion
within two weeks of the issuance of TC Heartland). Nor
do respondents identify any conduct post-TC Heartland
that would indicate in any way that Oath somehow con-
sented or submitted to venue.
    Respondents gain no further ground in pointing out
that Oath did not take the opportunity to seek transfer to
another venue under a different statutory provision, i.e.,
10                                IN RE: OATH HOLDINGS INC.

28 U.S.C. § 1404(a), before moving to dismiss for improper
venue. The statutory rights under §§ 1400(b) and 1406(a)
are independent of the convenience-based rights under
§ 1404(a). And Oath’s choices in this case involve nothing
close to the type of “wait-and-see” tactical behavior that
Micron suggested was a potential basis for forfeiture. 875
F.3d at 1102; see also In re FedEx Corp., No. 18-117 (Fed.
Cir. Jan. 23, 2018) (per curiam), ECF No. 26 (indicating
that it would not have been error for the district court to
find forfeiture if the defendant had purposely delayed
asserting its venue defense once available in hopes of
receiving a favorable decision on patent invalidity from
the Patent and Trademark Office that could lead to a
more advantageous litigation position in the district court
proceeding).
     Finally, respondents have not shown that the judicial
interest in economy could support a determination of
forfeiture of venue rights. As of June 2017, when Oath
filed its motion, or September 2017, when the district
court first ruled, the case was nowhere close to trial.
Even today, as far as we have been informed, the case has
not progressed past written discovery and claim construc-
tion briefing. The record simply does not indicate the
type of significant judicial investment that might, in some
circumstances, support a determination of forfeiture.
                            III
    We conclude that Oath has not waived or forfeited its
venue rights. Because it is undisputed that venue is
improper in the Eastern District of New York, the case
may not remain there. Under § 1406(a), the district court
now must either dismiss the case or transfer the case to a
“district or division in which it could have been brought.”
     Accordingly,
     IT IS ORDERED THAT:
IN RE: OATH HOLDINGS INC
                                                      11

    The petition for a writ of mandamus is granted, the
orders denying Oath’s motion to dismiss for improper
venue and motion for reconsideration are vacated, and the
case is remanded for the limited purpose of either dis-
missing the case or transferring it to a proper venue
outside the Eastern District of New York.

November 14, 2018               /s/ Peter R. Marksteiner
   Date                         Peter R. Marksteiner
                                Clerk of Court