When does Remote Work Become an “Established Place of Business?”

by Dennis Crouch

In re Monolithic Power Systems, Inc. (Fed. Cir. 2022) (MonolithicEnBancPetition)

Back in 2021, Bel Power sued Monolithic for patent infringement in Waco Texas. 21-cv-00655.  Monolithic did not want to be a defendant before Judge Albright and so moved to dismiss/transfer:

1. to dismiss/transfer the case for improper venue, 28 U.S.C. 1400(b), and alternatively
2. to transfer the case on convenience grounds. 28 USC 1404(a).

Judge Albright denied both motions and Monolithic immediately petitioned the Federal Circuit for a writ of mandamus.  In September 2022, that petition was denied with a 2-1 decision. Judges Chen and Stark joined together in a per curiam majority opinion and Judge Lourie wrote in dissent.  Dennis Crouch, Remote Work and Patent Venue, Patently-O (Sept 30, 2022).

Now Monolithic has asked the Federal Circuit to reconsider its case en banc., focusing on the interpretation of 28 U.S.C. § 1400(b)’s requirement of a “regular and established place of business” in today’s remote-work and global-shipping world.  Here, Monolithic has several employees who work in the district for the purpose of serving customers in the district.  This includes both sales and engineering. And, at least according to Judge Abright this is not a ‘work-wherever-you-want’ situation. Rather, Monolithic wants some boots on the ground in Austin and other WDTX. locations to serve their clients in those locations.  In that regard, Judge Albright concluded that Monolithic maintains a continuous physical presence within the district by replacing the local employees that leave/move.  There is an expectation that those folks will keep MPS stored property in WDTX as well, both for sales and service.  In its en banc petition, Monolithic cites a long line of cases going back 100+ years that employee homes don’t count.

Proper venue is rarely a big deal these days in Federal Litigation.  Congress amended the venue statutes so that, in most cases, venue rises and falls with personal jurisdiction.   But, patent law is different.  In the late 1800s Congress created a special venue statute for patent cases that has stuck despite changes in the general law.  A US corporate defendant can be sued either:

1. In the state of incorporation; or
2. In a district where the defendant (a) “has committed acts of infringement” and (b) “has a regular and established place of business.”

28 U.S.C. 1400(b).  When a lawsuit is filed based upon improper venue, the district court will need to either dismiss the action or transfer the case to a district having proper venue.  Here, Monolithic argues that venue is improper because it lacks “a regular and established place of business” within the Western District of Texas. Meanwhile, the case is proceeding before Judge Albright. Claim construction is complete and discovery is ongoing. Trial is set for May 12, 2023.

One thing I’ll note is that in 2020, Monolithic filed two different patent infringement lawsuits in Waco as plaintiff.  22-cv-00320; 20-cv-00876.  But, there is no “good for the gander” principle for proper venue.  The statute has no clause indicating that suing a third party does not generally serve as an admission of proper venue.  (I believe it should serve as an admission that venue is likely convenient under 1404(a)).  What it does do, however, is make Monolithic an unsympathetic mandamus petitioner.

Patents at issue: U.S. Patent Nos. 6,936,999, 6,949,916, 7,000,125, 7,049,798, 7,080,265, and 7,456,617.  The primary accused product is a power management bus (MPM3695) used on integrated circuits.

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Both parties have a team of lawyers, but it appears that Bell Power is primarily represented by Brian Sodikoff’s team at Katten Muchin.  Morrison & Foerster’s Deanne Maynard is representing Monolithic at the Federal Circuit.  MoFo is also at the district court, along with attorneys from Perkins Coie.