Court Opinion

ID: 4364686
Source: CourtListenerOpinion
Date Created: 2019-02-05 16:01:47.609524+00
Date Added: 2024-06-11T14:23:35.125810
License: Public Domain

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
             ______________________

    NEAL KUMAR KATYAL, Hogan Lovells US LLP, Wash-
ington, DC, filed a combined petition for panel rehearing
and rehearing en banc for petitioner. Also represented by
COLLEEN SINZDAK; THOMAS SCHMIDT, New York, NY.

    MASSIMO CICCARELLI, Thompson & Knight LLP, Dal-
las, TX, filed a response to the petition for respondent
SEVEN Networks, LLC. Also represented by NATALIE
COOLEY, JAMES MICHAEL HEINLEN, BRUCE STEVEN SOSTEK.
                 ______________________
2

     Before PROST, Chief Judge, NEWMAN, LOURIE, DYK,
    MOORE, O’MALLEY, REYNA, WALLACH, TARANTO, CHEN,
            HUGHES, and STOLL, Circuit Judges.
    REYNA, Circuit Judge, with whom NEWMAN and LOURIE,
      Circuit Judges, join, dissents from the denial of the
                petition for rehearing en banc.
PER CURIAM.
                          ORDER
        Petitioner Google LLC filed a combined 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 pe-
tition, and thereafter the petition for rehearing and re-
sponse were referred to the circuit judges who are in
regular active service. A poll was requested, taken, and
failed.
      Upon consideration thereof,
      IT IS ORDERED THAT:
      The petition for panel rehearing is denied.
      The petition for rehearing en banc is denied.

                                    FOR THE COURT

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.
                  ______________________

REYNA, Circuit Judge, with whom NEWMAN and LOURIE,
Circuit Judges, join, dissenting from the denial of the peti-
tion for rehearing en banc.
    The court elects not to decide en banc the question of
whether servers or similar equipment in third-party facili-
ties 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 does
not rise to a level that warrants mandamus review. I dis-
sent because the court’s decision causes two adverse re-
sults. First, the court sidesteps the precise purpose of
mandamus relief, thereby weakening our Writ of Manda-
mus jurisprudence. Second, we leave unanswered a critical
issue that increasingly affects venue in legal actions involv-
ing 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 or
IN RE: GOOGLE LLC                                          3

is not one of those vague principles which, in the interests
of some overriding policy, is to be given a liberal construc-
tion.” 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 ap-
proves taking up on mandamus important issues such as
the issue in this case. For example, we may decide issues
important to “proper judicial administration” on manda-
mus. La Buy v. Howes Leather Co., 352 U.S. 249, 259–60
(1957). Mandamus may also be appropriate “to further su-
pervisory 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 on mandamus. Schlagen-
hauf v. Holder, 379 U.S. 104, 110 (1964); Cray, 871 F.3d at
1358–59. Mandamus may be warranted where the peti-
tioner 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, where there is an unsettled,
basic, and undecided legal question at issue, the right to
issuance of the writ cannot be clear and indisputable. See
id. at 1358–59.
     Mandamus review is part of our bedrock supervisory
duty as an appellate court to ensure proper judicial admin-
istration. In re Cement Antitrust Litig., 688 F.2d 1297,
1304 (9th Cir. 1982). Given the nature of our exclusive sub-
ject-matter jurisdiction over federal questions involving
patent law, this court in particular has a vital supervisory
and instructional duty to further the goals of uniformity
and predictability that are “the cornerstones of a well-func-
tioning patent system” and part of the reason for this
court’s very existence. See Timothy B. Dyk, Federal Circuit
Jurisdiction: Looking Back and Thinking Forward, 67 AM.
U. L. REV. 971, 977 (2018).
   With this court’s supervisory and instructional duties
and goals in mind, we have taken up issues on mandamus
4                                           IN RE: GOOGLE LLC

since TC Heartland to ensure § 1400(b) is not given an ex-
pansive 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 many 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 lan-
guage of the statute. See id. at 1359–60.
    As we saw in Cray, there is again growing uncertainty
among district courts and litigants as to the requirements
of § 1400(b) when conducting business virtually through
servers and similar equipment in the district. Prior to this
case, another district court in the Eastern District wrestled
with the same issue involving 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. Syman-
tec Corp., another district court, in the Northern District of
Texas, faced the identical legal issue in a case with a dif-
ferent 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 con-
cluded that they did not. No. 3:18-CV-1554, Dkt. No. 44, at
*4–6 (N.D. Tex. Dec. 21, 2018). The district court, citing
our denial of mandamus in this case, acknowledged the dis-
agreement among its neighboring courts in the Eastern
District of Texas and highlighted this court’s silence on the
issue: “[t]he Federal Circuit has not yet determined
whether the presence of a company’s servers in a data cen-
ter operated by a third party establishes a regular and
IN RE: GOOGLE LLC                                          5

established place of business for purposes of venue.” Id. As
to the majority’s rationale for finding that mandamus was
inappropriate in this case, the district court in CUPP ob-
served that there would be “far reaching consequences” of
concluding that venue was proper, which would “distort the
scope of the statute.” Id. at *6 (quoting Personal Audio,
280 F. Supp. 3d at 934). I agree with this assessment be-
cause it recognizes the tension between the statute and the
realities of the continued change in the nature of the mar-
ketplace and how goods and services are traded.
     Other courts have wrestled with cases involving simi-
lar 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-in-
ternet 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 owning
and controlling equipment in customer facilities consti-
tuted a regular and established place of business). Routers
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 com-
panies that, while conducting business, transmit data over
a wide variety of equipment. See, e.g., Personal Audio, 280
F. Supp. 3d at 934 (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 technology
company that, like Google, conducts business over the in-
ternet. Amici comprising similarly situated technology
companies who provide internet infrastructure and ser-
vices filed briefs in support of the mandamus petition and
expressed concern over the impact of this issue on their
6                                           IN RE: GOOGLE LLC

business—evidence of this case’s importance and broad im-
plications. 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 petition for manda-
mus. 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 com-
menting on the merits on the basis that “Petitioners have
failed to show why they cannot raise their arguments . . .
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 Net-
works, LLC v. Google LLC, 315 F. Supp. 3d 933, 951 (E.D.
Tex. 2018).
    I agree that possession and control over a place are im-
portant factors when considering the merits. This, of

    1  DOCKET      NAVIGATOR,      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 in-
clude whether the defendant 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 resemble 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.”).
     The 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. For
many companies, the reasoning of the district court’s hold-
ing could essentially reestablish nationwide venue, in con-
flict 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 extent does the defendant have to be “present”
in the district to be “engaging in business”? See Peerless
Network, 2018 WL 1478047, at *4 (“[W]hatever ‘engaging
in business’ is, a ‘place of business’ is the location where
some person performs that verb.”) Is owning, renting, or
leasing real property required 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 is
8                                           IN RE: GOOGLE LLC

no principled reason to wait for these questions to “perco-
late” further among district courts.
     By the time we eventually decide these questions, it is
possible that dozens of cases will proceed through motion
practice, discovery, claim construction, or trial before po-
tentially 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) (New-
man, J., dissenting) (noting that missing “an opportunity
for this court to determine whether the district court’s de-
cision was in compliance with the venue requirements re-
vived by TC Heartland may have harsh consequences” and
collecting cases). Given our established practice of taking
up other important and undecided issues of judicial admin-
istration 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 could have provided guidance on here. I am confi-
dent 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 resources will have been
needlessly wasted by the time we do.