EAST TEXAS – On Sept. 21, the U.S. Court of Appeals for the Federal Circuit found that Judge Rodney Gilstrap, Eastern District of Texas, abused his discretion by refusing to transfer a patent lawsuit.

The Eastern District is one of the top spots for patent litigation. Many companies, known commonly as patent trolls, set up shop in the area for the sole purposes of acquiring patents to sue tech companies.

In May, the U.S. Supreme Court unanimously found in favor of TC Heartland, a ruling aiming to keep patent suits confined in districts where the defendant is incorporated or has an established place of business.

However, since the ruling, Eastern District judges have continued to deny motions to transfer venue from defendant companies with no place of business within their jurisdiction.

The Federal Circuit opinion stems from an infringement action brought by Raytheon against Cray. Cray sought to transfer the litigation to the Western District of Wisconsin but was shut down by Gilstrap, court records show.

Because Cray has two employees that live within the Eastern District and work from home, Raytheon successfully argued venue was proper.

“The district court misinterpreted the scope and effect of our precedent in determining that Cray maintained ‘a regular and established place of business’ in the Eastern District of Texas,” the opinion states.

“Accordingly, the court’s decision refusing transfer … was an abuse of discretion. We therefore grant Cray’s petition for a writ of mandamus and direct transfer of the case.”

On appeal, Raytheon had argued that a residential home office is “no less permanent than any conventional store or office,” and that Cray customers were present in the district.

“The fact that ‘the defendant’s employee owns a home in which he carries on some of the work that he does for the defendant’ was insufficient to establish venue,” the opinion states.

“Similarly, the facts here do not show that Cray maintains a regular and established place of business in the Eastern District of Texas; they merely show that there exists within the district a physical location where an employee of the defendant carries on certain work for his employer.”

Case No. 2017-129

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Marshall Division of the Eastern District of Texas
100 East Houston Street
Marshall, TX - 75670

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