Apple closes two Dallas stores in apparent bid to ward off patent trolls

The Dallas Morning News did a good article on this a couple years ago:



The more patent-friendly they become, the more patent cases they attract and the more they get to think of themselves as an important center for patent issues. Once a critical mass of patent lawyers set up shop in the district, I would imagine some of them became friends with the judges and gave them positive feedback on their pro-patent jurisprudence. Something broadly similar happened with the Federal Circuit, the nation's patent appeals court.

Local businesses started to rely on the revenue from out-of-town visitors. So it would be easy for judges to convince themselves that work that's bringing business to town is also good for the country.

The citizens of the Eastern District of Texas only have a say in their federal judiciary to the extent that they elect a president who names judicial nominees, and two senators who have 2% of the say in whether those judicial nominees are confirmed. And outside of, perhaps, a cost-of-living-adjustment, the judges in the Eastern District are paid out of the federal coffers and are completely insulated from the state of the economy within their district.

So outside of any value judgments, it's not clear to me who it is you are seeking to punish, and why you think businesses moving out of the district will effectively punish the appropriate people.

TC Heartland was about where a corporation resides for the purposes of 28 U.S.C. § 1400(b). It was not about the "regular and established business" within a District.

TC Heartland shows that Apple does not reside within the Eastern District of Texas. However, the question of whether Apple has a "regular or established business" within the Eastern District of Texas is a separate prong of analysis when determining venue under 28 U.S.C. § 1400(b).

The Federal Circuit determined the three requirements for showing when a company has a regular and established business presence within a District in In re Cray Inc ., 871 F.3d 1355 (Fed. Cir. 2017).

There are "three general requirements relevant to the inquiry: (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." In re Cray Inc ., 871 F.3d at 1360.

This was affirmed in In re Zte (Usa) Inc., 890 F.3d 1008 (Fed. Cir., 2018), which also determined that it is the burden of the Plaintiff in a patent infringement case to prove venue is proper if a Defendant objects to it.

In other words, internet purchases and regular deliveries into the Eastern District of Texas will not meet the In re Cray requirements to show Apple has a regular and established business presence within the District.

This is why Apple is shutting those stores down. Those stores would meet the requirements of In re Cray.



No. This is not a valid or likely well-received argument, at least at the Federal Circuit.

As stated in the In re ZTE case, "Section 1400(b), like its predecessor statutes, is intended to be restrictive of venue in patent cases compared with the broad general venue provision." In re Zte (Usa) Inc., 890 F.3d 1008, 1014 (Fed. Cir., 2018).

In other words, venue in patent cases is meant to be restrictive in nature, and using equitable claims such as "constructive withdrawal" will not likely be successful in federal courts, which by their very nature are restrictive courts of limited jurisdiction.

This does not mean the Eastern District of Texas may allow such an argument, but rather that it is very likely the Federal Circuit will strike it down if the Eastern District does allow such an argument.



No. Apple will only need to argue that it does not meet any of the three prongs required to show a regular and established business presence within the Eastern District of Texas under In re Cray. Closing these stores will help this argument tremendously. Further, all Apple needs to actually do is raise the objection to venue, and any Plaintiff would need to show Apple has a regular and established business presence, which Apple may rebut.

This is a tall order. Plaintiffs are more likely to seek a more readily available District with venue instead.

In short, this is not an action taken directly as a result of TC Heartland. However, TC Heartland did make it possible for companies such as Apple to avoid unfavorable venues by forcing the second prong of analysis—regular and established business presence—to be the basis of venue, which may lead to businesses not established offices or stores within the Eastern District.

The Dallas Morning News did a good article on this a couple years ago:



The more patent-friendly they become, the more patent cases they attract and the more they get to think of themselves as an important center for patent issues. Once a critical mass of patent lawyers set up shop in the district, I would imagine some of them became friends with the judges and gave them positive feedback on their pro-patent jurisprudence. Something broadly similar happened with the Federal Circuit, the nation's patent appeals court.

Local businesses started to rely on the revenue from out-of-town visitors. So it would be easy for judges to convince themselves that work that's bringing business to town is also good for the country.

The citizens of the Eastern District of Texas only have a say in their federal judiciary to the extent that they elect a president who names judicial nominees, and two senators who have 2% of the say in whether those judicial nominees are confirmed. And outside of, perhaps, a cost-of-living-adjustment, the judges in the Eastern District are paid out of the federal coffers and are completely insulated from the state of the economy within their district.

So outside of any value judgments, it's not clear to me who it is you are seeking to punish, and why you think businesses moving out of the district will effectively punish the appropriate people.

TC Heartland was about where a corporation resides for the purposes of 28 U.S.C. § 1400(b). It was not about the "regular and established business" within a District.

TC Heartland shows that Apple does not reside within the Eastern District of Texas. However, the question of whether Apple has a "regular or established business" within the Eastern District of Texas is a separate prong of analysis when determining venue under 28 U.S.C. § 1400(b).

The Federal Circuit determined the three requirements for showing when a company has a regular and established business presence within a District in In re Cray Inc ., 871 F.3d 1355 (Fed. Cir. 2017).

There are "three general requirements relevant to the inquiry: (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." In re Cray Inc ., 871 F.3d at 1360.

This was affirmed in In re Zte (Usa) Inc., 890 F.3d 1008 (Fed. Cir., 2018), which also determined that it is the burden of the Plaintiff in a patent infringement case to prove venue is proper if a Defendant objects to it.

In other words, internet purchases and regular deliveries into the Eastern District of Texas will not meet the In re Cray requirements to show Apple has a regular and established business presence within the District.

This is why Apple is shutting those stores down. Those stores would meet the requirements of In re Cray.



No. This is not a valid or likely well-received argument, at least at the Federal Circuit.

As stated in the In re ZTE case, "Section 1400(b), like its predecessor statutes, is intended to be restrictive of venue in patent cases compared with the broad general venue provision." In re Zte (Usa) Inc., 890 F.3d 1008, 1014 (Fed. Cir., 2018).

In other words, venue in patent cases is meant to be restrictive in nature, and using equitable claims such as "constructive withdrawal" will not likely be successful in federal courts, which by their very nature are restrictive courts of limited jurisdiction.

This does not mean the Eastern District of Texas may allow such an argument, but rather that it is very likely the Federal Circuit will strike it down if the Eastern District does allow such an argument.



No. Apple will only need to argue that it does not meet any of the three prongs required to show a regular and established business presence within the Eastern District of Texas under In re Cray. Closing these stores will help this argument tremendously. Further, all Apple needs to actually do is raise the objection to venue, and any Plaintiff would need to show Apple has a regular and established business presence, which Apple may rebut.

This is a tall order. Plaintiffs are more likely to seek a more readily available District with venue instead.

In short, this is not an action taken directly as a result of TC Heartland. However, TC Heartland did make it possible for companies such as Apple to avoid unfavorable venues by forcing the second prong of analysis—regular and established business presence—to be the basis of venue, which may lead to businesses not established offices or stores within the Eastern District.