Unreported / Non-Citable
Background
WeCrevention Inc. filed a patent infringement lawsuit against Dell Inc. and Dell Technologies, Inc. (collectively, “Dell”) in the Eastern District of Texas (E.D. Tex.). Dell, which is incorporated in Delaware and headquartered in the Western District of Texas (W.D. Tex.), responded by filing a motion to dismiss for improper venue or, alternatively, to transfer the case to the W.D. Tex.
The patent venue statute allows a suit to be brought where the defendant “resides” (i.e., its state of incorporation) or where it has committed acts of infringement and has a “regular and established place of business.” Since Dell is not incorporated in Texas, the dispute centered on whether Dell maintained a “regular and established place of business” within the E.D. Tex. at the time the lawsuit was filed.
WeCrevention presented three main arguments to support its choice of venue: (1) Dell’s use of a facility in Flower Mound, Texas; (2) the presence of hundreds of Dell employees who work from their homes within the district; and (3) the operations of Dell’s numerous business partners located in the district.
The Court’s Holding
The Court, under Judge Rodney Gilstrap, granted Dell’s motion and transferred the case to the Western District of Texas. The court systematically rejected all of WeCrevention’s arguments for establishing venue in the Eastern District. First, regarding the Flower Mound facility—which the same court had previously deemed Dell’s place of business in a different case—the court found that circumstances had materially changed. Dell had ceased all operations and moved out of the facility nine days *before* WeCrevention filed its complaint. The court emphasized that venue is assessed on the date of filing, and the empty warehouse no longer constituted Dell’s place of business.
Second, the court addressed WeCrevention’s argument that the homes of Dell’s 228 field employees and hundreds of other remote workers in the district established a place of business. Citing the Federal Circuit’s binding precedent in *In re Cray*, the court found this argument unpersuasive. It noted there was no evidence that Dell had any control over its employees’ homes, required them to live in the district, or held out their homes as Dell’s business locations. While acknowledging the tension between the pre-pandemic *Cray* decision and the rise of remote work, the court stated it was bound by the existing precedent.
Finally, the court dismissed the claim that the locations of Dell’s third-party business partners could be attributed to Dell. Under *Cray*, the location must be a “place of the defendant,” and WeCrevention failed to show that Dell owned, leased, or otherwise controlled its partners’ facilities. Because venue was improper in the E.D. Tex. and the case could have originally been brought in the W.D. Tex., the court found it in the interest of justice to transfer the action rather than dismiss it.
Key Takeaways
- Venue in a patent infringement case is determined based on the facts as they exist on the exact date the complaint is filed.
- A defendant can defeat venue by ceasing operations and vacating a physical location before a lawsuit is initiated, even if that location was previously considered a place of business.
- Under current Federal Circuit precedent (*In re Cray*), having a large remote workforce within a judicial district is not sufficient to establish a “regular and established place of business” for an employer.
- The physical locations of a company’s third-party partners or service providers do not count as the company’s place of business for venue purposes without evidence that the company exercises direct possession or control over those locations.
Why It Matters
This opinion reinforces the strict requirements for establishing venue in patent cases following the Supreme Court’s landmark *TC Heartland* decision, making it more difficult for plaintiffs to sue corporations in districts where they are not incorporated. It highlights a significant legal challenge in the modern economy: the conflict between pre-pandemic legal tests for a “place of business” and the current reality of widespread remote work.
By explicitly noting the difficulty of applying the *In re Cray* framework in a post-COVID world, Judge Gilstrap signals a potential area of friction in patent law. This ruling suggests that until the Federal Circuit or Congress re-evaluates what constitutes a “place of business” in the age of remote work, defendants with distributed workforces may have a powerful tool to avoid being sued for patent infringement in districts where they have a significant employee presence but no traditional offices.