Venue
Jurisdiction
Patent Infringement
Place of Business:
- Real Property Ownership
- Leasehold Interest
- Possession
- Control
- Local Caches for Data
- Internet Service Providers (ISPs)’
Datacenter
- Rack Space Occupied
by the GGC Servers
- Physical
Presence of an Employee or Other Agent
of the Defendant
- Agency Relationship
- Right
of Interim Control
- Maintaining Equipment
-
Production, Storage,
Transport, and Exchange of Goods
or Services
Writ of Mandamus
Writ – All Writs Act
Contract Drafting
On Petition for Writ of Mandamus to
the United States District Court for the Eastern District of Texas in Nos.
2:18-cv-00462-JRG, 2:18-cv-00463-JRG
Google LLC (“Google”) petitions for a writ of mandamus
ordering the United States District Court for the Eastern District of Texas to
dismiss the case for lack of venue. See Super Interconnect Techs. LLC v.
Google LLC, No. 2:18- CV-00463-JRG, 2019 U.S. Dist. LEXIS 132005 (E.D. Tex.
Aug. 7, 2019). We hold that mandamus is warranted and order that the case
either be dismissed or transferred.
Super Interconnect Technologies LLC (“SIT”) sued Google for
patent infringement in the Eastern District of Texas. Under the patent venue
statute, 28 U.S.C. § 1400(b), “any civil action for patent infringement may be
brought in the judicial district where the defendant resides, or
where the defendant has committed acts of infringement and has a regular and
established place of business.” SIT filed its suit after the Supreme Court’s decision
in TC Heartland LLC v. Kraft Foods Group Brands LLC, 137 S. Ct. 1514,
1517 (2017), which held that “a domestic corporation ‘resides’ only in its
State of incorporation for purposes of the patent venue statute,” and this
court’s decision in In re Cray, Inc., 871 F.3d 1355, 1360 (Fed. Cir.
2017), which held that a “regular and established place of business” under the
patent venue statute must be: (1) “a physical place in the district”; (2)
“regular and established”; and (3) “the place of the defendant.”
(…) SIT’s
allegation of venue was based on the presence of several Google Global Cache
(“GGC”) servers, which function as local caches for Google’s data.
The GGC servers are not hosted within datacenters owned by
Google. Instead, Google contracts with internet service providers (ISPs) within
the district to host Google’s GGC servers within the ISP’s
datacenter. When a user requests Google’s content, the ISP attempts to route
the user’s request to a GGC server within its own network (within the district)
before routing the request to Google’s central data storage servers (outside
the district). The GGC servers cache only a small portion of content that is
popular with nearby users but can serve that content at lower latency—which
translates to shorter wait times— than Google’s central server infrastructure.
This performance benefit is in part due to the physical proximity of the GGC
servers to the ISP’s users. This arrangement allows Google to save on bandwidth
costs and improve user experience on its various platforms.
At the time of the complaint, Google had entered into
contracts with two ISPs to host GGC servers owned by Google in the Eastern
District of Texas: Cable One Inc. (“Cable One”) and Suddenlink Communications
(“Suddenlink”). The contracts provided that the ISPs would host Google’s GGC
servers in their data centers. Specifically, the GGC servers are installed in
the ISP’s server racks, which are cabinets that accept standard server components.
Each contract states that the ISP must provide “rack space, power, network
interfaces, and IP addresses,” for the GGC servers, and provide “network access
between the GGC servers and the ISP’s network subscribers.” Supplemental
Record, Dkt. 31, Ex. A, at 1; id., Ex. B, at 1. The contracts permit the
ISPs to select the rack space for the GGC servers, but they tightly restrict
the ISPs’ ability to relocate the servers without Google’s permission once a
location is selected. Id., Ex. A, at 2; id., Ex. B at 2. The
contracts also strictly limit any unauthorized access to the space used by
Google’s servers. Id., Ex. A, at 6–7; id., Ex. B, at 5. The
contracts state that the ISPs are required to provide “installation services,”
i.e., installing the GGC servers in the server racks. Id., Ex. A, at 1; id.,
Ex. B at 1. While the contracts forbid the ISPs to “access, use, or dispose of”
the GGC servers without Google’s permission, id., Ex. A, at 2; id.,
Ex. B at 2, they also require the ISPs to provide “remote assistance services,”
which “involve basic maintenance activities” performed on the GGC servers by
the ISP’s onsite technician, if requested by Google, id., Ex. A, at 1,
6; id., Ex. B, at 1, 5. It is undisputed that no Google employee
performed installation of, performed maintenance on, or physically accessed any
of the GGC servers hosted by Cable One or Suddenlink.
Google moved to dismiss the complaint for improper venue
under 28 U.S.C. § 1406(a) and Federal Rule of Civil Procedure 12(b)(3). The
district court denied Google’s motion (…) found that the
GGC servers qualified as Google’s “regular and established place of business”.
Google now petitions for a writ for mandamus directing the
district court to dismiss the case for lack of venue under § 1400(b). Acushnet
and 17 other companies filed an amicus brief in support of Google’s petition.
This court heard oral argument on December 13, 2019.
This court “may issue all writs necessary or appropriate in
aid of its jurisdiction and agreeable to the usages and principles of law”
under the All Writs Act. 28 U.S.C. § 1651(a). The Supreme Court has held that
three conditions must be met before a writ may issue: (1) the petitioner “must
have no other adequate means to attain . . . relief,” (2) the petitioner must
show that the right to mandamus is “clear and indisputable,” and (3) the court
must be “satisfied that the writ is appropriate under the circumstances.” Cheney
v. U.S. Dist. Court for D.C., 542 U.S. 367, 380 (2004) (first alteration in
original).
(…) This
court has not addressed this fundamental and recurring issue of patent law. We
thus conclude that mandamus is an available remedy.
Under Cray, there are three general requirements to
establishing that the defendant has a regular and established place of
business: “(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.” 871 F.3d at 1360.
The first question is whether the rack space occupied by the
GGC servers constitutes a “place” under § 1400(b) as interpreted in Cray.
As the court in Cray emphasized, “the first requirement [under §
1400(b)] is that there ‘must be a physical place in the district.’” 871 F.3d at
1362. A “place” merely needs to be a “physical, geographical location in the
district from which the business of the defendant is carried out.” Id.
Google’s petition suggests that a court’s inquiry into
whether the defendant has a physical “place of business” should focus on
whether the defendant has real property ownership or a leasehold interest in
real property. We hold that a “place” need not have such attributes. In Cray,
we rejected the notion that a “virtual space” or “electronic communications
from one person to another” could constitute a regular and established place of
business. 871 F.3d at 1362. Here, the GGC servers are physically located in the
district in a fixed, geographic location. Indeed, Cray itself recognized
that a “place of business” is not restricted to real property that the
defendant must “own or lease,” and that the statute could be satisfied by any
physical place that the defendant could “possess or control.” Id. at
1363 (discussing the third Cray factor). (…) see also In re Cordis Corp., 769 F.2d 733, 735, 737 (Fed. Cir. 1985) (suggesting that
defendant’s employees’ homes, which were used to store the defendant’s “literature,
documents and products,” could constitute a “regular and established place of
business”).
(…) We
agree, however, with Google’s alternative argument that under the second Cray
factor, a “place of business” generally requires an employee or agent of
the defendant to be conducting business at that place. This is apparent from
the service statute for patent cases, now codified at 28 U.S.C. § 1694.
We conclude that a “regular and established place of
business” requires the regular, physical presence of an employee or other agent
of the defendant conducting the defendant’s business at the alleged “place of
business.”
The question then is whether Google had an employee or agent
with a regular, physical presence at its “place of business” and whether that
employee or agent was conducting Google’s business. The record is clear that
there is no Google employee conducting business in the Eastern District of
Texas. However, there is nonetheless the question of whether the ISPs are
acting as Google’s agent.
An agency relationship is a “fiduciary relationship that
arises when one person (a ‘principal’) manifests assent to another person (an
‘agent’) that the agent shall act on the principal’s behalf and subject to the
principal’s control, and the agent manifests assent or otherwise consents to
act.” Restatement (Third) of Agency § 1.01. The essential elements of agency
are (1) the principal’s “right to direct or control” the agent’s actions, (2)
“the manifestation of consent by the principal to the agent that the agent
shall act on his behalf,” and (3) the “consent by the agent to act.” Meyer
v. Holley, 537 U.S. 280, 286 (2003).
Google contracted with two ISPs, Cable One and Suddenlink,
to host its GGC servers. The contracts stated that, for each ISP, Google would
provide the ISP with GGC server equipment, which the ISP would install and host
in server racks within its datacenter. The contracts contemplated
that the ISP would perform three functions.
First, the ISP provides the GGC servers with network access,
i.e., a connection to the ISP’s customers, as well as the public Internet. The
ISP provides Google with a service, and Google has no right of interim control
over the ISP’s provision of network access beyond requiring that the ISP maintain
network access to the GGC servers and allow the GGC servers to use certain
ports for inbound and outbound network traffic. In this respect, the ISPs are
not agents of Google. See Restatement (Third) of Agency § 1.01 cmt. f(1)
(“The power to give interim instructions distinguishes principals in agency
relationships from those who contract to receive services provided by persons
who are not agents.”).
Second, the ISP performs installation of the GGC servers.
The contracts with the ISPs stated that the ISP was responsible for the
installation of the GGC servers, including “coordination with logistics and
shipping personnel; inventory of equipment received; unpacking equipment; assembling
equipment based on information and instructions provided by Google; . . . connecting
equipment to power strip(s) and Ethernet cable(s); and powering up equipment
& executing installation scripts configuring IP address information.”
Supplemental Record, Ex. A at 6; id., Ex. B at 5. Although these provisions
may be suggestive of an agency relationship, we do not consider the ISPs
performing these installation functions to be conducting Google’s business
within the meaning of the statute. The installation activity does not
constitute the conduct of a “regular and established” business, since it is a
one-time event for each server.
Third, the contracts provide that “Google may from time to
time request that the ISP perform certain services” involving “basic
maintenance activities” with respect to the GGC servers. Id., Ex. A at
6; id., Ex. B at 5. The contracts provided examples of these activities:
Physical
switching of a toggle switch; power cycling equipment . . . ; remote visual
observations and/or verbal reports to Google on its specific collocation [sic]
cabinet(s) for environment status, display lights, or terminal display
information; labeling and dress-up of cabling within cabinet; tightening
screws, cable ties, or securing cabling to mechanical connections, plugs;
replacing existing plug-in only hardware such as circuit cards with spares or
upgrades.
Id., Ex. A at 6; id.,
Ex. B at 5. The ISP’s conduct as to these activities is permitted “only with
specific and direct step-by-step instructions from Google.” Id., Ex. A
at 6; id., Ex. B at 5. The ISP is also prohibited from “accessing, using,
or disposing of the GGC servers, in whole or in part” without Google’s prior
written consent. Id., Ex. A at 2; see also Ex. B at 2.
Although the maintenance provision, like the provision on
installation, may be suggestive of an agency relationship, SIT has not
established that the ISPs performing the specified maintenance functions are
conducting Google’s business within the meaning of the statute. The better
reading of the statute is that the maintenance activities cannot, standing
alone, be considered the conduct of Google’s business.
Maintaining equipment is meaningfully different from—as only
ancillary to—the actual producing, storing, and furnishing to customers of what
the business offers. In 1897, Congress focused on the latter sorts of
activities as the conduct of business. See 29 Cong. Rec. 1900 (1897)
(statement of Rep. Lacey) (discussing venue in the context of agents performing
traditional business functions, such as manufacturing, sales, or direct
customer services); id. at 1902 (discussing similarities to a law
conferring “jurisdiction” to sue agents of an insurance company). There is no
suggestion in the legislative history that maintenance functions that existed
at the time, such as the maintenance of railways or telegraph lines,
constituted “conducting the defendant’s business” within the meaning of the
statute. See id. at 1900–02.
(…) Clear
intent of Congress in enacting the statute to restrict venue to where the
defendant resides or is conducting business at a regular and established place
of business, with agents there regularly conducting that business, lead us to
our conclusion. The venue statute should be read to exclude agents’ activities,
such as maintenance, that are merely connected to, but do not themselves
constitute, the defendant’s conduct of business in the sense of production,
storage, transport, and exchange of goods or services.
We conclude that the Eastern District of Texas was not a
proper venue because Google lacked a “regular and established place of
business” within the district since it has no employee or agent regularly
conducting its business at its alleged “place of business” within the district.
To be clear, we do not hold today that a “regular and
established place of business” will always require the regular presence of a
human agent, that is, whether a machine could be an “agent.” Such a theory
would require recognition that service could be made on a machine pursuant to
28 U.S.C. § 1694. Nor do we decide what might be inferred in this respect from
Congress’ amendment to the venue statute in the AIA concerning automated teller
machines. See AIA § 18(c).
(U.S. Court of Appeals for the Federal Circuit,
February 13, 2020, In Re: Google LLC, Docket No. 19-126, Circuit Judge Dyk)
