The Federal Circuit Limits Where Corporations “Reside”May 18, 2018

On May 15, 2018, the United States Court of Appeals for the Federal Circuit decided In Re: BigCommerce, holding that for the purposes of the patent-specific venue statute, 28 U.S.C. § 1400(b), a domestic corporation incorporated in a state with multiple judicial districts resides only in the particular judicial district within that state where it maintains a principle place of business, or failing that, the judicial district in which its registered office is located.

During the discovery phase of patent infringement suits by Diem LLC and Express Mobile, Inc. against BigCommerce, the Supreme Court issued its decision in TC Heartland LLC v. Kraft Foods Group Brands LLC reaffirming that a domestic corporation “resides” only in its state of incorporation under § 1400(b). BigCommerce then moved to dismiss or transfer its pending cases arguing that it only resides in the Western District of Texas. Both suits were filed in the Eastern District of Texas and BigCommerce has its registered office and headquarters in Austin, TX, which lies in the Western District.

In Diem’s case the district court found BigCommerce’s venue objection to be waived under Federal Rules of Civil Procedure 12(4) and regardless, venue is proper because a corporation resides in any judicial district of the state of incorporation for venue purposes. The district court in Express Mobile’s case denied the motion to transfer as “already considered and rejected” in the Diem order. BigCommerce petitioned for a Writ of Mandamus in both cases.

The Federal Circuit granted BigCommerce’s petitions and vacated the order denying the motion to dismiss in Diem’s case and the order denying the motion to transfer in Express Mobile’s case. The court found that a corporation does not reside in every judicial district within its state of incorporation. The conclusion was found to be supported by the plain language of the statute. The statute refers to a singular “judicial district” where the defendant resides, the plain reading of which speaks to one particular district in the state. Further, other statutes where Congress wished to expand the definition of where a corporation resides use the language “in any judicial district in which it is incorporated or licensed to do business.” The court found the lack of similar language indicative of Congress’s intent to limit residence to one district.

The Federal Circuit dismissed any argued policy reasons to change the meaning of the statute as squarely in the purview of Congress.