BigCommerce objects court's decision in patent infringement case with Diem

By Zachary Lewis | Aug 14, 2017

TYLER – E-commerce software developer BigCommerce Inc. filed a written objection against a magistrate judge’s report in a patent infringement case after the judge recommended the denial of its motion to dismiss for improper venue stating the company had waived its venue defense.

BigCommerce’s motion to dismiss was precluded by the U.S. Supreme Court’s decision in TC Heartland LLC v. Kraft Foods Grp. Brands LLC, a landmark case setting new precedence in venue requirements for infringement suits. The decision was thought to secure the success of BigCommerce’s motion; however, the judge ruled against it as the case was in apparent flux at the time the motion was filed and a favorable outcome could not be predicted.  

Originally, plaintiff Diem LLC filed a complaint against BigCommerce to the Tyler Division of the Eastern District of Texas on March 27. Diem alleged the design of BigCommerce’s storefront manager constituted various instances of infringement on one of its patents.

In response, BigCommerce filed a motion for failure to state a claim of relief, which consequently resulted in Diem being ordered to amend their complaint within 14 days by the district court.

Diem complied with the court order and filed its amended complaint on May 26. Its filing came three days after the U.S. Supreme Court reached its decision in TC Heartland LLC v. Kraft Foods Grp. Brands LLC, a decision which requires patent owners to sue infringers in the states the alleged are incorporated in for future cases.

In light of the recent Supreme Court decision, BigCommerce filed a motion to dismiss for improper venue arguing “although it is incorporated in Texas, it is not incorporated in the Eastern District of Texas.” The court; however, rejected the motion arguing the company had waved its venue defense under Federal Rules of Civil Procedure 12(g)(2) and 12(h)(1).1

The court further argued that BigCommerce could not have predicted the outcome of its decision and make its case beforehand. The court then relied on the precedent set in the previous controlling law, VE Holding Corp. v. Johnson Gas Appliance Co., 917 F.2d 1574 (Fed. Cir. 1990).  

In its written objection, BigCommerce refutes the court’s judgment and stated the report had “clearly erred and was contrary to the law” in its ruling. As the Supreme Court ruling was unknown to it at the time of the motion’s filing, BigCommerce argued that the waiver should not apply under precedent set by Holzsager v. Valley Hosp., 646 F.2d 792, 796 (2d Cir. 1981). The case states a party cannot waive the ability to object to the venue was unknown to all parties and waiver of the defense does not apply in cases where the Supreme Court abrogates precedent setting laws.

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