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June, 21st, 2022

By Stephen Ball, Kevin Musco

A claim of patent infringement must 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.” 28 U.S.C.  § 1400(b). There is a rich body of case law clarifying this section, but unanswered legal questions remain, especially with regards to employees who work from home. This begs the question: can employees who work from home constitute a “regular and established place of business” for venue purposes?

A recent case, Bel Power Solutions v. Monolithic Power Systems (“Bel Power”), 2022 WL 2161056 (W.D. Tex. Jun. 15, 2022), may provide a useful starting point. In Bel Power, defendant Monolithic was a Delaware corporation with multiple regional headquarters, none of which were in the lawsuit’s filing location, the Western District of Texas. Id. at *1. Monolithic moved to dismiss the suit for improper venue and alternatively moved to transfer the suit to a district where one of its headquarters was located. Id. Ultimately, the court denied both motions after making a fact-intensive inquiry into Monolithic’s involvement in the district. Id. at *10. See also In re Cray Inc., 871 F.3d 1355, 1360 (Fed. Cir. 2017) (introducing a three-part test for analyzing the “regular and established place of business”); RegenLab USA LLC v. Estar Technologies et al., 335 F. Supp.3d 526 (S.D.N.Y. 2018) (implementing the Cray test with facts similar to those in Bel Power).

As alleged, Monolithic had four employees present in the filing district to “serve end users or make sales.” Bel Power, at *1. At least two of these employees worked from home and resided in the district. Id. at 3. These employees were not hired directly into the district, but arrived “by some sort of internal transfer or volunteer[ed].” Id. at *2. Moreover, Monolithic had also solicited employees to work in the district, making several job postings over a twelve-year period. Id. The handful of Monolithic employees present were provided company-owned equipment and samples for a variety of purposes, including “internal testing and validation” and “deliver[y] to local customers.” Id. at *3. This equipment was industry-specific and was not “typically found in a generic home office.” Id.

That said, Monolithic was not involved in the management of its employees’ residences in the district. It did not “own, lease, or exercise any control” over their homes, nor did it “list their homes as its locations” or “provide administrative support to the homes.” Id. at *2.

In the end, the Bel Power court tipped the scales in favor of the plaintiff and the litigation was allowed to go forward in the Western District of Texas. To answer the original question posed in this article, the answer is apparently “yes,” though as with nearly all legal problems, the most accurate answer is “it depends.” In Bel Power, the court’s fact-intensive inquiry could have concluded that venue was improper, as the opinion only revealed a small number of potential factors. Moreover, the court noted that “no one factor in th[e] analysis is determinative.” Id. at *4 (citing RegenLab, 335 F. Supp.3d at 552). With work from home arrangements becoming more frequent, more cases—and novel legal arguments—are undoubtedly on the horizon. It is entirely possible that similar issues may someday lead to circuit splits and major precedent. But for now, Bel Power and Regeneron stand to inform firms that a suit can be properly brought where only a minute footprint is present.

 

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