United States: Google Gets Out Of Texas In Its First Post-TC Heartland Transfer

Last Updated: January 4 2018
Article by RPX Corporation

A patent infringement suit brought against Google by Personal Audio, LLC has been transferred from the Eastern District of Texas (1:15-cv-00350) to the District of Delaware (1:17-cv-01751) due to improper venue. This appears to be the first time that a court has transferred a case against Google for that reason since the US Supreme Court issued its May 22 opinion in TC Heartland, which held that the narrower patent venue statute (28 USC Section 1400(b)), not the general venue statute (28 USC Section 1391), governs in infringement suits. In addition to the issue of venue propriety itself, the court also ruled on two other, threshold issues related to venue that had not been previously addressed by TC Heartland or subsequent cases: that the burden of proof for venue challenges falls on the plaintiff, under prior precedent for the patent venue statute; and that venue in patent suits should be analyzed based on facts and circumstances existing at the time a suit is filed, in light of the text of the statute.

The court began its analysis, issued in a December 1 order, by quoting the Federal Circuit's holding from In re Cray, which established three general requirements for assessing whether a defendant has a "regular and established place of business" in a district: "(1) there must be a physical place in the district; (2) it must be a regular and established place of business; and (3) it must be the place of the defendant". Judge Clark then noted that neither Cray nor TC Heartland had provided guidance on two threshold issues for determining proper venue under Section 1400(b): which party has the burden of proof, and "the date or time at which the defendant must have had a regular and established place of business".

The court addressed the first of those issues by reviewing prior case law, noting that while there had not been a Federal Circuit opinion on the burden of proof for improper venue challenges brought by corporate defendants under 1400(b), circuit court opinions from before the Federal Circuit was formed "are considered persuasive". Judge Clark then highlighted the Seventh Circuit's 1969 holding in Grantham v. Challenge-Cook Brothers, in which the court "put the burden on Plaintiff to establish proper venue" and "emphasized that the patent venue statute 'should not be liberally construed in favor of venue'". The court had "located no compelling authority suggesting that it should ignore the reasoning of Grantham" and deemed it "persuasive", noting that the case had been cited with approval in Cray. Judge Clark then observed that while the Federal Circuit has never explicitly addressed the issue of burden of proof under 1400(b), it appeared to place the burden on the plaintiff in its ruling from In re Cordis, the only case before Crayin which the court had addressed the propriety of venue under the "regular and established place of business" prong. Given the lack of Federal Circuit cases placing that burden on the movant/defendant, Judge Clark concluded that under TC Heartland, "and guided by the earlier decisions on burden of proof in such cases", the burden of proof here fell on Personal Audio.

Next, in its analysis of the time when the propriety of venue should be assessed, the court looked to the text of the patent venue statute itself. Here, Judge Clark noted that the statute uses the present tense in language stating that venue is proper where the defendant "resides" and where it "has a regular and established place of business" (emphasis in original). Judge Clark further observed that "Congress did not tie venue to any jurisdiction in which a cause of action had accrued". Applying what it deemed strict statutory construction, the court then held that "venue under § 1400(b) should be analyzed based on the facts and circumstance [sic] that exist on the date suit is filed". By so ruling, the court rejected Personal Audio's argument that the "accrual standard" applied, holding that the two cases cited by the NPE were inapposite. The first of these, the district court case Raytheon v. Cray, had been overturned by the Federal Circuit's ruling in Cray. Meanwhile, Judge Clark characterized the holding in the second case, Welch Scientific v. Human Engineering Institute—in which the Federal Circuit held that venue is proper when the defendant has a "regular and established cause of action at the time . . . the alleged infringement occurred", and when "the suit was filed a reasonable time thereafter"—as essentially grounded in equity rather than statutory interpretation, declining to revisit the case as to the latter issue.

Having thus resolved those threshold issues, the court turned to the issue of whether venue was proper against Google. The court dispensed with the first prong of Section 1400(b) in one sentence, holding that Google does not reside in the Eastern District of Texas because it is a Delaware corporation. As to the second prong, Judge Clark held that under a plain reading of Section 1400(b), Personal Audio had to show that Google had a "regular and established place of business" as of September 15, 2015, the lawsuit's filing date. To that end, Judge Clark recounted the timeline of Google's use of an office in Frisco, located within the Eastern District. He then held that by the preponderance of the evidence presented, Google had sufficiently shown that the office was its "regular and established place of business" under the patent venue statute "between November 2011 and December 2013". As a result, the court held, Personal Audio had not met its burden to show that Google had a "regular and established place of business" there as of the lawsuit's filing date. The NPE had also failed to show that venue was proper under Welch Scientific due to Google's use of the space between December 2013 and August 2015, during which time the defendant removed its business from that office space and subleased it to an unrelated company, Quest Resource Management, with the court finding that the space was "more likely a regular and established place of business for Quest rather than Google".

The court also rejected Personal Audio's argument that the presence of certain servers in the Eastern District of Texas (Google Edge Nodes or Google Global Cache; collectively, "GGCs") means that Google has a "regular and established place of business" there. For this portion of its analysis, the court cited a passage from Cray establishing that the statute requires "a place, i.e., a building or part of a building set apart for any purpose or quarters of any kind from which business is conducted. The statute thus cannot be read to refer merely to a virtual space or to electronic communications from one person to another" (emphasis added). While positing that servers could loosely be defined as a "place" under the statute, "or perhaps as the 'location' of 'the cloud'", Judge Clark held that [t]hey are not a building or physical quarters of any kind". He further noted that the server rooms themselves, "if any", are not Google property, having previously recounted that Google had shown that local Internet service providers determine the location of GGCs without its input. As a result, Judge Clark concluded that "GGC servers are not 'places' under the meaning of the statute and therefore cannot establish a regular and established place of business" in the Eastern District.

Judge Clark then rejected Personal Audio's assertion that the activities of certain Google employees that had worked in the Eastern District established that Google had a "regular and established place of business" there, holding that these arguments do "not pass muster under the requirements set out by the Federal Circuit in Cray". (That last sentence nominally rejects "Google's argument about individual Google employees", but it is apparent from the court's subsequent analysis that it was Personal Audio's argument that Judge Clark was rejecting, not Google's.) Here, Judge Clark broke down the evidence according to the factors from Cray, noting that "[n]one of the employees took a tax deduction for using part of a home as an office"; that "[t]here is no evidence that these employees' employment was conditioned on their holding product inventory, marketing materials, or any other kind of product literature"; and that "[t]here is similarly no evidence that Google holds out the employees' homes as its place of business, through marketing materials or on the website for example", with the locations of those homes "not even publicly known". As a result, Judge Clark held, Personal Audio had not shown venue to be proper through those employees' work for Google.

Finally, Judge Clark opted to transfer the case rather than dismiss it due to improper venue as Google had requested. While noting that Personal Audio had not actually requested transfer in the alternative, Judge Clark cited the advanced nature of the case and found that the plaintiff will likely "be unfairly prejudiced by having to re-file and relinquish three years of potential damages pursuant to Section 286 of the Patent Act, which limits damages to those incurred during the six years before the date on which suit is filed". Given the absence of briefing as to a proper transferee venue, Judge Clark held that venue would be proper in the District of Delaware, Google's state of incorporation, and transferred the case there in "the interests of justice".

In another order also issued on December 1, Judge Clark denied Personal Audio's motion for sanctions against Google related to its conduct during the venue discovery process. The NPE argued in that motion that sanctions were warranted because Google had allegedly failed to produce certain documents and produced unprepared corporate representatives for Rule 30(b)(6) depositions. As to document production, Judge Clark held that Google had either made sufficient disclosures, that the documents not produced were irrelevant, or that their production would not have influenced the court's ruling on venue. Judge Clark rejected Personal Audio's argument as to the Rule 30(b)(6) depositions, holding that Google had complied with the court's discovery guidelines by preparing its witnesses for the permitted topics subject to discovery.

At issue in the transferred lawsuit are devices that include the Google Play Music application, with the two asserted patents (6,199,076; 7,509,178) generally related to audio player devices. For more information on the litigation between Personal Audio and Google, including Google's September 2017 declaratory judgment action against the NPE, the Patent Trial and Appeal Board's decision to cancel claims from both patents in inter partes reviews filed by Google, and the history of the asserted patents—including a dispute over ownership related to one of the inventors' contentious divorce—see "Google Files DJ Action Against Personal Audio in California as It Seeks Dismissal in Texas" (September 2017).

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

In association with
Related Video
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:
  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.
  • Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.
    If you do not want us to provide your name and email address you may opt out by clicking here
    If you do not wish to receive any future announcements of products and services offered by Mondaq you may opt out by clicking here

    Terms & Conditions and Privacy Statement

    Mondaq.com (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

    Use of www.mondaq.com

    You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about Mondaq.com’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.


    Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

    The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.


    Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

    • To allow you to personalize the Mondaq websites you are visiting.
    • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
    • To produce demographic feedback for our information providers who provide information free for your use.

    Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

    Information Collection and Use

    We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

    We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to unsubscribe@mondaq.com with “no disclosure” in the subject heading

    Mondaq News Alerts

    In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.


    A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

    Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

    Log Files

    We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.


    This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

    Surveys & Contests

    From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.


    If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.


    From time to time Mondaq may send you emails promoting Mondaq services including new services. You may opt out of receiving such emails by clicking below.

    *** If you do not wish to receive any future announcements of services offered by Mondaq you may opt out by clicking here .


    This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to webmaster@mondaq.com.

    Correcting/Updating Personal Information

    If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to EditorialAdvisor@mondaq.com.

    Notification of Changes

    If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

    How to contact Mondaq

    You can contact us with comments or queries at enquiries@mondaq.com.

    If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at problems@mondaq.com and we will use commercially reasonable efforts to determine and correct the problem promptly.

    By clicking Register you state you have read and agree to our Terms and Conditions