Case: 17-129

Document: 2-1

Page: 1

Filed: 07/17/2017

No. 2017-______
UNITED STATES COURT OF APPEALS
FOR THE FEDERAL CIRCUIT
IN RE CRAY INC.,
Petitioner.
On Petition for Writ of Mandamus to the
United States District Court for the Eastern District of Texas
No. 2:15-CV-1554
Hon. Rodney Gilstrap, United States District Judge
PETITION FOR WRIT OF MANDAMUS

David K. Tellekson
Melanie L. Mayer
FENWICK & WEST LLP
1191 Second Avenue, 10th Floor
Seattle, WA 98101
(206) 389-4510

Bryan A. Kohm
FENWICK & WEST LLP
555 California Street, 12th Floor
San Francisco, CA 94104
(415) 875-2300

Counsel for Petitioner Cray Inc.

 Case: 17-129

Document: 2-1

Page: 2

Filed: 07/17/2017

CERTIFICATE OF INTEREST
Counsel for Petitioner Cray Inc. certifies the following:
1.

The full name of every party or amicus represented by me is:
Cray Inc.

2.

The name of the real party in interest (if the party named in the caption is not
the real party in interest) represented by me is:
N/A

3.

All parent corporations and any publicly held companies that own 10 percent
or more of the stock of the party or amicus curiae represented by me are:
None.

4.

The names of all law firms and the partners or associates that appeared for
the party or amicus now represented by me in the trial court or agency or are
expected to appear in this court (and who have not or will not enter an
appearance in this case) are:
Law Firm

Partners and Associates

Fenwick & West LLP

Jonathan T. McMichael, Eman Sojoodi, Reilly T.
Stoler, Yixin Zhang, Virginia K. DeMarchi

Siebman, Burg,
Phillips & Smith LLP

Michael C. Smith

July 14, 2017

Respectfully submitted,

/s/David K. Tellekson
David K. Tellekson
Counsel for Petitioner Cray Inc.

i

 Case: 17-129

Document: 2-1

Page: 3

Filed: 07/17/2017

TABLE OF CONTENTS
Page
STATEMENT OF RELIEF SOUGHT ...................................................................... 1
ISSUES PRESENTED...............................................................................................1
STATEMENT OF JURISDICTION..........................................................................1
INTRODUCTION .....................................................................................................1
FACTS NECESSARY TO UNDERSTAND THE ISSUE PRESENTED ............... 4
REASONS FOR GRANTING THE WRIT............................................................... 9
I.
A WRIT IS NECESSARY TO ADDRESS AN UNSETTLED
AND IMPORTANT AREA OF VENUE LAW AND AVOID A
WASTE OF JUDICIAL RESOURCES AT THE DISTRICT
COURTS AND THIS COURT. ......................................................................9
II.
THE DISTRICT COURT ERRED BY HOLDING §1400(B)
DOES NOT REQUIRE A PHYSICAL PRESENCE WITHIN THE
DISTRICT. ....................................................................................................13
III. CORDIS DOES NOT SUPPORT THE DISTRICT COURT’S
DETERMINATION THAT VENUE IS PROPER IN THIS CASE.............17
IV. THE COURT SHOULD VACATE THE DISTRICT COURT’S
ADVISORY GUIDANCE PROPOSING A FOUR-PART TEST FOR
A “REGULAR AND ESTABLISHED PLACE OF BUSINESS.” ..............22
V.
THE COURT SHOULD DIRECT THE DISTRICT COURT TO
TRANSFER TO THE WESTERN DISTRICT OF WISCONSIN. ..............24
CONCLUSION ........................................................................................................25

ii

 Case: 17-129

Document: 2-1

Page: 4

Filed: 07/17/2017

TABLE OF AUTHORITIES
Page(s)
CASES
American Cyanamid Co. v. Nopco Chemical Co.,
388 F.2d 818, 820 (4th Cir. 1968) ..........................................................14, 15, 24
Boy Scouts of Am. v. Dale,
530 U.S. 640 (2000) ............................................................................................21
Brunette Machine Works, Ltd. v. Kockum Industries, Inc.,
406 U.S. 706, 713 n.13 (1972)............................................................................19
Brunswick Corp. v. Suzuki Motor Co.,
575 F. Supp. 1412 (E.D. Wis. 1983) ..................................................................16
Clearasite Headwear, Inc. v. Paramount Cap Mfg. Co.,
204 F.Supp. 4 (S.D.N.Y. 1962) ..........................................................................15
Gould v. Cornelius Co.,
258 F.Supp. 701 (N.D. Okla. 1966)....................................................................15
Grantham v. Challenge-Cook Bros., Inc.,
420 F.2d 1182 (7th Cir. 1969) ............................................................................14
Highmark Inc. v. Allcare Health Mgmt. Sys., Inc.,
134 S. Ct. 1744 (2014) ........................................................................................21
In re BP Lubricants USA Inc.,
637 F.3d 1307 (Fed. Cir. 2011) ..........................................................................12
In re Cordis Corp.,
769 F.2d 733 (Fed. Cir. 1985) .....................................................................passim
In re EMC Corp.,
677 F.3d 1351 (Fed. Cir. 2012) ............................................................................9
In re Link_A_Media Devices Inc.,
662 F.3d 1221 (Fed. Cir. 2011) ............................................................................ 1

iii

 Case: 17-129

Document: 2-1

Page: 5

Filed: 07/17/2017

In re Mark Indus.,
751 F.2d 1219 (Fed. Cir. 1984) ............................................................................ 9
In re MSTG, Inc.,
675 F.3d 1337 (Fed. Cir. 2012) ............................................................................ 9
In re Nintendo of Am., Inc.,
756 F.3d 1363 (Fed. Cir. 2014) ............................................................................ 9
In re Queen’s Univ. at Kingston,
820 F.3d 1287 (Fed. Cir. 2016) ............................................................................ 9
In re Spalding Sports Worldwide, Inc.,
203 F.3d 800 (Fed. Cir. 2000) .............................................................................. 9
In re Toyota Motor Corp.,
747 F.3d 1338 (Fed. Cir. 2014) ............................................................................ 9
In re Volkswagen of Am., Inc.,
545 F.3d 304 (5th Cir. 2008) ..............................................................................24
Instrumentation Specialties Co. v. Waters Assocs., Inc.,
No. 76 C 4340, 1977 WL 22810 (N.D. Ill. Oct. 12, 1977).................................16
Kay v. J.F.D. Mfg. Co.,
261 F.2d 95 (5th Cir. 1958) ................................................................................15
Knapp-Monarch Co. v. Casco Prods. Corp.,
342 F.2d 622 (7th Cir. 1965) ..............................................................................15
Lex Tex Ltd. v. Aileen, Inc.,
326 F.Supp. 485 (S.D. Fla. 1971) .......................................................................15
MAGICorp. v. Kinetic Presentations, Inc.,
718 F.Supp. 334 (D.N.J. 1989) ...........................................................................15
McKnight, Inc. v. United Indus. Corp.,
No. 16-cv-2534, Dkt. No. 40 (W.D. Tenn. Jul. 7, 2017) ....................................11
Nat’l Right to Work Legal Def. v. Richey,
510 F.2d 1239 (D.C. Cir. 1975) ..........................................................................12

iv

 Case: 17-129

Document: 2-1

Page: 6

Filed: 07/17/2017

Olberding v. Ill. Cent. R. Co.,
346 U.S. 338 (1953) ............................................................................................12
Railex Corp. v. White Mach. Co.,
243 F.Supp. 381 (E.D.N.Y. 1965) ......................................................................15
Schlagenhauf v. Holder,
379 U.S. 104 (1964) ............................................................................................12
Schnell v. Peter Eckrich & Sons, Inc.,
365 U.S. 260 (1961) ................................................................................13, 21, 22
Shelter-Lite, Inc. v. Reeves Bros., Inc.,
356 F. Supp. 189 (N.D. Ohio 1973) ...................................................................16
TC Heartland LLC v. Kraft Foods Grp. Brands LLC,
137 S. Ct. 1514 (2017) ............................................................................2, 3, 7, 11
Univ. of Ill. Found. v. Channel Master Corp.,
382 F.2d 514 (7th Cir. 1967) ..................................................................13, 14, 18
VE Holding Corp. v. Johnson Gas Appliance Co.,
917 F.2d 1574 (Fed. Cir. 1990) ......................................................................7, 10
W.S. Tyler Co. v. Ludlow-Saylor Wire Co.,
236 U.S. 723 (1915) ......................................................................................13, 21
STATUTES
28 U.S.C. § 1400(b) ..........................................................................................passim
28 U.S.C. § 1404(a) .................................................................................................24
28 U.S.C. § 1406(a) .............................................................................................1, 24
28 U.S.C. § 1651 ........................................................................................................1

v

 Case: 17-129

Document: 2-1

Page: 7

Filed: 07/17/2017

STATEMENT OF RELIEF SOUGHT
Petitioner Cray Inc. seeks an order reversing the denial of Cray’s motion to
transfer venue and directing the district court to transfer this case to the Western
District of Wisconsin. See 28 U.S.C. § 1406(a).
ISSUES PRESENTED
1.

Did the district court err in holding that a “regular and established

place of business” under 28 U.S.C. § 1400(b) need not be a physical presence in
the district, but rather an ill-defined “presence”?
2.

Did the district court err in determining that the residence of a single

work-from-home employee, who is present in the district for personal convenience,
constitutes a “regular and established place of business” of his employer?
STATEMENT OF JURISDICTION
This Court has jurisdiction to grant mandamus relief under the All Writs
Act, 28 U.S.C. § 1651. See, e.g., In re Link_A_Media Devices Inc., 662 F.3d 1221
(Fed. Cir. 2011) (granting petition for writ of mandamus and ordering transfer of
venue).
INTRODUCTION
Cray has no facilities in the Eastern District of Texas, sells no products in
that district, and has no customers there. Cray’s only connections to the district are
the private residence of a Cray employee and its reimbursement of that employee

1

 Case: 17-129

Document: 2-1

Page: 8

Filed: 07/17/2017

when he used personal belongings for business. Such connections do not
constitute a “regular and established place of business” under the statute or any
controlling case law. Nevertheless, in an attempt to adapt the venue statute to a
purported “modern era” in which it is “much less burdensome” for a defendant to
face a lawsuit wherever it engages in “economic activity,” the district court held
that this private residence was enough for venue to lie.
Venue in patent cases is governed by 28 U.S.C. § 1400(b), which provides:
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.
Under this Court’s precedent, venue was for many years decided under the first
part of the statute, i.e., whether a defendant resides in a district. District courts
rarely needed to decide what constitutes a “regular and established place of
business.” That changed dramatically in the wake of the Supreme Court’s decision
in TC Heartland, which held that “a domestic corporation ‘resides’ only in its State
of incorporation for purposes of the patent venue statute.” TC Heartland LLC v.
Kraft Foods Grp. Brands LLC, 137 S. Ct. 1514, 1517 (2017). Because patent
litigation defendants are frequently sued outside their state of incorporation, TC
Heartland created an immediate need in hundreds of cases to determine whether
those defendants maintain a regular and established place of business supporting
venue.
2

 Case: 17-129

Document: 2-1

Page: 9

Filed: 07/17/2017

The district court’s opinion in this case underscores the need for mandamus
relief to address this important issue now. In its first substantive venue opinion
after TC Heartland, the district court purported to give its own guidance on this
subject, including a four-part test to guide future cases. In doing so it made at least
two errors that affect the outcome in this case and will affect a rapidly growing
number of others:
• First, this Court’s decision in In re Cordis Corp., 769 F.2d 733 (Fed. Cir.
1985) held that a “regular and established place of business” need not be a
formal office or store. Consistent with other Circuits, however, Cordis still
looked to the defendant’s physical connections to the district and evaluated
the business activities conducted there. The district court concluded that a
physical presence in the district is not required.
• Second, the district court counted out-of-district activities and conflated the
personal connections of Cray’s employee with those of Cray to hold that
Cray has a “regular and established place of business” in a district in which
it has no facilities, sales, product, or customers.
This case is set to begin the first of three separate trials in an improper venue, with
jury selection set to start on August 31, 2017. The Court should grant mandamus
to direct the district court to grant Cray’s motion to transfer and clarify this
unsettled area of the law for this and future cases.

3

 Case: 17-129

Document: 2-1

Page: 10

Filed: 07/17/2017

FACTS NECESSARY TO UNDERSTAND THE ISSUE PRESENTED
Cray is a worldwide leader in advanced supercomputing, with over 40 years
of experience developing computing, big data storage, and analytic solutions for a
wide range of needs. Cray is a Washington corporation with its principal place of
business in Seattle, Washington. Appx364-65 ¶ 3. It also has manufacturing and
distribution facilities in Bloomington, Minnesota; Chippewa Falls, Wisconsin;
Austin, Texas; Houston, Texas; Pleasanton, California; and San Jose, California.
Appx364-65 ¶ 3; Appx419-20. Cray does not maintain any offices in the Eastern
District of Texas. Appx369-70 ¶¶ 3, 5. Nor has it sold, delivered, or stored any
product in that district during the relevant time period. Appx365 ¶ 4; Appx374-75
¶¶ 3-5.
At the time Raytheon filed its complaint in 2015, Cray employed one
individual who lived in the district, Douglas Harless. Harless worked from his
home in Athens, Texas from 2012-2016.1 Appx369-70 ¶¶ 3, 5. Harless is a long
time resident of Athens: he lived there before he began work for Cray and

1

Cray formerly employed another salesperson with a private residence in the
district during 2010 and 2011, more than four years before Raytheon filed suit.
Appx455-56 ¶¶ 3-8. This employee also had no roles or responsibilities that
involved the accused products. Appx455 ¶¶ 3-4. In a footnote, the district court
criticized Cray’s document production with respect to this employee. Appx59 n.1.
The Court did not base any portion of its ruling on this footnote, however, and
Cray provided a detailed explanation that the district court did not address.
Appx425; Appx431-32 ¶¶ 3-6.

4

 Case: 17-129

Document: 2-1

Page: 11

Filed: 07/17/2017

continued to do so after his employment ended. Appx365 ¶ 6; Appx370 ¶ 5. He
has maintained a personal telephone number with the (903) area code assigned to
Northeastern Texas since 2007. Appx431 ¶ 2. While Cray permitted Harless to
work from his home, it played no part in selecting its location. Appx365 ¶ 6.
Harless worked in sales for Cray, with responsibility for customers in the oil
and gas industry. Appx369 ¶ 3. He had no customers in the Eastern District of
Texas, and there is no evidence that Harless used his home to host customers, or
met with them elsewhere in the district. See Appx369-70 ¶¶ 3, 5. Harless’
customers were located in Houston and on the East Coast. Appx369 ¶ 3. Nor was
it even possible for Harless to make sales or offers for sale of supercomputers from
his private residence. Instead, any potential customer would provide specifications
to a pricing and configuration team in Cray’s Minnesota office. Appx374-75 ¶ 3.
That team generates the sales proposal sent to the customer. Appx374-75 ¶ 3.
Each proposal lists a Cray corporate office address, such as Minnesota or Seattle.
Appx375 ¶ 4. Harless also had no ability to design, assemble, or deliver a
supercomputer. Cray designs and assembles each system at its facilities in
Wisconsin. Appx375 ¶ 4; Appx365-66 ¶ 7. It ships completed systems directly to
the purchaser. Appx375 ¶ 4; Appx370-71 ¶ 6.
As an employee, Harless received reimbursement for his cell phone, internet
fees, and business travel costs. Appx370 ¶ 4; Appx375 ¶ 5. But Cray did not pay

5

 Case: 17-129

Document: 2-1

Page: 12

Filed: 07/17/2017

for any portion of his home or contribute to its maintenance costs. Appx370 ¶ 5.
Nor did it purchase a company car for Harless or make any car payments.
Appx370 ¶ 4. Harless received administrative support from Cray’s corporate
offices outside the district. Appx370 ¶ 5.
In 2015, Cray sold one accused XC40 system to the Texas Advanced
Computing Center (“TACC”), which it delivered to TACC at its Austin, Texas
address. Appx365 ¶¶ 4-5; Appx374-75 ¶¶ 3-5; Appx356. Austin is not in the
Eastern District of Texas. After delivery, Cray did not operate the system or
control what users have access to it. Appx365 ¶ 5. Cray also did not provide any
hardware for users in the Eastern District of Texas to access the system in Austin.
Appx365 ¶ 5.
Procedural History
Raytheon Company sued Cray on September 25, 2015, accusing it of
infringing U.S. Patent Nos. 7,475,274, 8,190,714, 8,335,909, and 9,037,833, which
relate to hardware and software used in high performance computing systems.
Appx208-18. To support venue, Raytheon alleged that Cray had design and
manufacturing facilities in Texas, had sales and marketing employees in the
district, and had sold and offered to sell its products in the district, including to
TACC. Appx209-10 ¶¶ 6-7.

6

 Case: 17-129

Document: 2-1

Page: 13

Filed: 07/17/2017

On November 25, 2015, Cray sought to dismiss the case for improper venue
because § 1400(b) is “the sole and exclusive provision controlling venue in patent
infringement actions,” and because “‘residency’ for purposes of § 1400(b)
‘mean[s] the state of incorporation only.’” Appx219-41 (citing Fourco Glass Co.
v. Transmirra Prods. Corp., 353 U.S. 222, 226, 229 (1957)). Magistrate Judge
Payne held an evidentiary hearing, after which he recommended denial of Cray’s
motion based on this Court’s holding in VE Holding Corp. v. Johnson Gas
Appliance Co., 917 F.2d 1574, 1583 (Fed. Cir. 1990). Appx256; Appx257;
Appx258-94; Appx295-307. The district court adopted the recommendation over
Cray’s objections on September 23, 2016. Appx308-18; Appx319-320.
After the Supreme Court’s decision in TC Heartland, Cray promptly filed a
second venue motion, this time requesting transfer to the Western District of
Wisconsin. Appx335-49. The district court denied the motion on June 29, 2017.
Appx58-84. First, it concluded that Cordis stood for the proposition that a physical
presence in the district was not necessary for a corporation to have a “regular and
established place of business” there. Appx72-73. Then, after expressly declining
to decide which party bore the burden on the motion, it analogized the facts to
those in Cordis. Appx74-75. Although Cordis employed multiple sales
representatives who visited and sold to customers in the district, held themselves
out to the public as having an office in the district, and stored product there, the

7

 Case: 17-129

Document: 2-1

Page: 14

Filed: 07/17/2017

district court concluded that Harless’ home and sales activities outside the district
were sufficiently close to those facts to support venue. Appx75.
The district court then articulated a new four-factor test to assess the
existence of a “regular and established place of business” in future cases, in light of
what it termed “the modern era.” Appx76-83. The district court’s new test
examines: (1) the defendant’s physical presence in the district (which the court
holds is not necessarily required); (2) the defendant’s representations to the public
regarding its places of business; (3) the benefits received by the defendant in the
district; and (4) the defendant’s targeted interactions with the district. Appx79-83.
Although this test purports to reflect governing law regarding venue, the district
court declined to apply it to Cray in this case. Appx84 n.13. The district court
was, however, “satisfied that had it done so, the result would remain the same.”
Appx84 n.13.
The district court has set this matter for three separate trials—two jury trials
and a bench trial—the first of which is set to begin on August 31, 2017. Appx55,
Appx467.

8

 Case: 17-129

Document: 2-1

Page: 15

Filed: 07/17/2017

REASONS FOR GRANTING THE WRIT
I.

A WRIT IS NECESSARY TO ADDRESS AN UNSETTLED AND
IMPORTANT AREA OF VENUE LAW AND AVOID A WASTE OF
JUDICIAL RESOURCES AT THE DISTRICT COURTS AND THIS
COURT.
A writ of mandamus is appropriate “in exceptional circumstances to correct

a clear abuse of discretion or usurpation of judicial power by the trial court.” In re
Mark Indus., 751 F.2d 1219, 1222 (Fed. Cir. 1984) (internal quotation marks
omitted). Such circumstances arise where a writ will “further [its] supervisory or
instructional goals” regarding “issues [that] are unsettled and important.” In re
Queen’s Univ. at Kingston, 820 F.3d 1287, 1291 (Fed. Cir. 2016). This Court
regularly finds mandamus appropriate where there is substantial uncertainty or
confusion in the district courts. See id. at 1292; see also, In re MSTG, Inc., 675
F.3d 1337, 1341 (Fed. Cir. 2012) (accepting petition to resolve “substantial
uncertainty and confusion in the district courts”); In re Spalding Sports Worldwide,
Inc., 203 F.3d 800, 804 (Fed. Cir. 2000) (accepting petition to address “important
issue of first impression” that would benefit from “immediate resolution”). It has
also often found questions of venue sufficiently important for mandamus
review. See In re Nintendo of Am., Inc., 756 F.3d 1363, 1364-65 (Fed. Cir. 2014)
(vacating denial of defendant’s motion to transfer as an abuse of discretion); see
also In re Toyota Motor Corp., 747 F.3d 1338 (Fed. Cir. 2014); In re EMC Corp.,
677 F.3d 1351 (Fed. Cir. 2012).
9

 Case: 17-129

Document: 2-1

Page: 16

Filed: 07/17/2017

Venue in patent cases is governed by 28 U.S.C. § 1400(b), which provides:
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.
Since this Court’s decision 27 years ago in VE Holding, venue in patent cases has
been overwhelmingly decided under the first part of this statute, i.e., whether a
defendant “resides” in a district. District courts therefore rarely addressed the
second part, whether a defendant “has committed acts of infringement and has a
regular and established place of business” in the district.
What constitutes a regular and established place of business remains
particularly unsettled because of conflicting regional circuit case law and district
court decisions prior to 1990. The district court in this case itself noted the
frustration of other courts that the “‘jumbled’ and ‘irreconcilable’” case law
provided “nothing even remotely approximating a uniform approach […] to the
problem of whether the activities of an employee (or employees) operating out of a
home office constitute a ‘regular and established place of business.’” Appx76
(quoting Lace v. Lace, No. 89-cv-0414, 1989 WL 103364, at *2 (N.D. Ill. Aug. 28,
1989) (Appx475-78)). It further noted “numerous cases, each of which seems to
employ a different analysis as to whether a regular and established place of
business exists in a particular case.” Appx76.

10

 Case: 17-129

Document: 2-1

Page: 17

Filed: 07/17/2017

If left to stand, the district court’s reasoning in this case will soon influence
the analysis of venue in hundreds of pending and soon-to-be-filed cases in the
Eastern District of Texas and elsewhere. See Appx483-85 (E.D. Tex Sets Out
Regular and Established Place of Business Test for Patent Venue, PRACTICAL LAW
LEGAL UPDATE (July 5, 2017)); McKnight, Inc. v. United Indus. Corp., No. 16-cv2534, Dkt. No. 40 at 3 (W.D. Tenn. Jul. 7, 2017) (Appx479-82) (ordering
supplemental briefing in light of the district court’s order in this case). Over onethird of patent cases are filed in the Eastern District of Texas. 2 See Appx486-88
(Lex Machina’s Fourth Annual Patent Litigation Year in Review Report Shows 22
Percent Decline in Patent Filings in 2016, LEX MACHINA (Mar. 2, 2017),
https://lexmachina.com/media/press/report-shows-22-percent-decline-in-patentfilings-in-2016/). In 2016 alone, 1,662 such cases were filed in that district, 1,119
of which were brought before the district judge in this action. Appx486-87. Only
a fraction of patent litigation defendants in the Eastern District of Texas are
incorporated in Texas. Therefore, in most cases, whether a defendant maintains a

2

These filings have decreased somewhat following TC Heartland. However, in
the five weeks after that decision, 61 patent cases were filed in the Eastern District
of Texas, representing 14 percent of all new patent infringement complaints. See
Appx490-94 (TC Heartland Is Already Remaking The Patent Litigation Map,
available at https://www.law360.com/articles/940341/tc-heartland-is-alreadyremaking-the-patent-litigation-map).
11

 Case: 17-129

Document: 2-1

Page: 18

Filed: 07/17/2017

regular and established place of business in the district will be the primary issue
that determines whether venue is proper.
Without a writ, this Court would likely not decide the issue presented here
until February 2019. See Appx489 (United States Court of Appeals for the Federal
Circuit, Median Disposition Time for Cases Terminated After Hearing or
Submission, available at http://www.cafc.uscourts.gov/thecourt/statistics). The
risk of allowing an incorrect legal test to percolate in the district courts until then is
significant. First, there will be significant repetition of this issue prior to the
Court’s review. See Nat’l Right to Work Legal Def. v. Richey, 510 F.2d 1239,
1244 (D.C. Cir. 1975). This threatens the orderly administration of justice, as the
Court’s deferred ruling will require numerous new trials. See Olberding v. Ill.
Cent. R. Co., 346 U.S. 338, 340-42 (1953) (reversing after jury trial due to
improper venue). Second, this repetition will lead to a flood of appeals, further
congesting this Court’s docket. The district courts need guidance now “to avoid
piecemeal litigation and to settle [this] new and important problem[].” See
Schlagenhauf v. Holder, 379 U.S. 104, 111 (1964); see also In re BP Lubricants
USA Inc., 637 F.3d 1307, 1313 (Fed. Cir. 2011).

12

 Case: 17-129

II.

Document: 2-1

Page: 19

Filed: 07/17/2017

THE DISTRICT COURT ERRED BY HOLDING SECTION 1400(B)
DOES NOT REQUIRE A PHYSICAL PRESENCE WITHIN THE
DISTRICT.
“The requirement of venue is specific and unambiguous; it is not one of

those vague principles which, in the interest of some overriding policy, is to be
given a ‘liberal’ construction.” Schnell v. Peter Eckrich & Sons, Inc., 365 U.S.
260, 264 (1961) (citing Olberding, 346 U.S. at 340).
The last guidance from the Supreme Court on the issue in this case came in
W.S. Tyler Co. v. Ludlow-Saylor Wire Co., 236 U.S. 723 (1915), which held that a
satellite office paid for by the company and occupied by an employee, is not a
“regular and established place of business.” W.S. Tyler, 236 U.S. at 725. The
Circuit Courts have come to similar conclusions when considering employee home
offices. In Channel-Master, the Seventh Circuit considered an employee who used
his home office as a “base” for promoting products in the district:
He regularly prepares reports at his home and transmits them to his
employer’s home office. He receives and initiates telephone calls at
his home, the address and telephone number of which are listed on his
employer’s business card, and [the employer] reimburses him for car
expenses, postage and telephone calls.
Univ. of Ill. Found. v. Channel Master Corp., 382 F.2d 514, 515 (7th Cir. 1967)
(“Channel-Master”). Despite this activity, the court held the home was not a
regular and established place of business. Id. at 516. The employee conducted no
product demonstrations, received no business visitors, maintained no inventory,

13

 Case: 17-129

Document: 2-1

Page: 20

Filed: 07/17/2017

had no business phone listed in the local directory, and did not advertise his
home’s connection to the employer. Id. On those facts, the court could not “by
any stretch of the imagination” characterize the entire home as a regular and
established place of business. Id.; see also Grantham v. Challenge-Cook Bros.,
Inc., 420 F.2d 1182, 1185 (7th Cir. 1969) (no regular and established place of
business where the employee lived and worked in the district, but “was free to live
where he chose so far as [defendant] was concerned”).
In American Cyanamid Co. v. Nopco Chemical Co., the Fourth Circuit
affirmed that venue did not lie where a defendant’s employee happened to live in a
district where his corporate employer was sued. 388 F.2d 818, 820 (4th Cir. 1968).
The employee was a sales manager who resided in the district, was provided with a
company automobile, kept brochures and invoices regarding the defendant’s
products in his home, and engaged in communications from his home office. Id. at
819-20. Although salesmen had visited his home office, none of his superiors had
ever done so. Id. at 820. Further, his home had no indication “that [defendant’s]
business is conducted there or that a company representative is inside.” Id. The
local phone book and the employee’s business card did not reference the home
office. Id. Under these facts, the Fourth Circuit held that “[t]he statute clearly
requires that venue be laid where ‘the defendant has a regular and established place
of business,’ not where the defendant’s employee owns a home in which he carries

14

 Case: 17-129

Document: 2-1

Page: 21

Filed: 07/17/2017

on some of the work that he does for the defendant.” Id. (emphasis added). Thus,
venue was improper.3
This Court last addressed the issue in In re Cordis Corp. There, two Cordis
employees sold pacemakers in the district, based in home offices. Cordis, 769
F.2d at 735. They kept inventory in their homes that they provided to physician
and hospital customers. Id. They also consulted during operations and provided
other support to those in-district customers. Id. The Federal Circuit held that the
lack of a formal Cordis office in the district did not preclude venue:
[I]n determining whether a corporate defendant has a regular and
established place of business in a district, the appropriate inquiry is
whether the corporate defendant does its business in that district
through a permanent and continuous presence there and not as Cordis
argues, whether it has a fixed physical presence in the sense of a
formal office or store.
Id. at 737.

3

Numerous other decisions are consistent. E.g., Knapp-Monarch Co. v. Casco
Prods. Corp., 342 F.2d 622, 625-26 (7th Cir. 1965) (no venue where employee
rented office with company name on building and in phone directory); Kay v.
J.F.D. Mfg. Co., 261 F.2d 95, 97 (5th Cir. 1958); MAGICorp. v. Kinetic
Presentations, Inc., 718 F.Supp. 334, 341 (D.N.J. 1989) (“The law is clear that
‘[a]n office that serves only as for solicitation of orders without more is not a
regular and established place of business.’”); Lex Tex Ltd. v. Aileen, Inc., 326
F.Supp. 485, 487 (S.D. Fla. 1971); Gould v. Cornelius Co., 258 F.Supp. 701, 704
(N.D. Okla. 1966); Railex Corp. v. White Mach. Co., 243 F.Supp. 381, 384-86
(E.D.N.Y. 1965); Clearasite Headwear, Inc. v. Paramount Cap Mfg. Co., 204
F.Supp. 4, 5-6 (S.D.N.Y. 1962).
15

 Case: 17-129

Document: 2-1

Page: 22

Filed: 07/17/2017

Based on this language, the district court held that a “regular and established
place of business” can exist without a physical location in the district. Appx79-80.
But the holding of Cordis is not so expansive. The quoted portion of the opinion
states only that the physical presence need not be a “formal office or store.”
Cordis, 769 F.2d at 737. Cordis had, in effect, replaced traditional places of
business with locations in the district that served the same purpose: the address of
the secretarial service, the residences of its employees used to store product, and
the offices of its customers. On these facts, the Court declined to issue a writ
directing that Cordis lacked a “regular and established place of business” in the
district. Id. The district court’s expansive interpretation “in light of changing
technology” and “adapt[ing] [it] to apply in the modern era” takes the “place of
business” requirement of the statute and replaces it with only an ill-defined
requirement of “presence” in the district.4 Appx78-79. The language of § 1400(b)

4

The other cases relied on by the district court reflect a minority viewpoint. The
Shelter-Lite court created a test similar to the district court here, but only after
noting it was unaware of “any reported decision in which . . . the activities of a
salesman operating from his residence have been held sufficient to create a regular
and established place of business within the meaning of 28 U.S.C. § 1400(b).”
Shelter-Lite, Inc. v. Reeves Bros., Inc., 356 F. Supp. 189, 191-92 (N.D. Ohio
1973). The remaining cases simply adopt this holding. See Brunswick Corp. v.
Suzuki Motor Co., 575 F. Supp. 1412, 1424 (E.D. Wis. 1983) (recognizing rigorous
application of § 1400(b), but nevertheless following Shelter-Lite); Instrumentation
Specialties Co. v. Waters Assocs., Inc., No. 76-cv-4340, 1977 WL 22810, at *6
(N.D. Ill. Oct. 12, 1977) (Appx468-74) (same).
16

 Case: 17-129

Document: 2-1

Page: 23

Filed: 07/17/2017

and the Supreme Court’s directive that it not be liberally construed preclude such
an approach.
III.

CORDIS DOES NOT SUPPORT THE DISTRICT COURT’S
DETERMINATION THAT VENUE IS PROPER IN THIS CASE.
Correctly understood, Cordis also does not support the district court’s

determination that venue is proper as to Cray. The facts supporting the conclusion
in Cordis simply are not present here:
Cordis Fact
Secretarial service located in the
district answered calls as “Cordis
Corporation” and provided
administrative support.

Cray Fact
N/A.

Business cards listed phone number of
secretarial service office in the district
and telephone directory listed Cordis’
address within the district.

N/A. No listing of Cray in telephone
directory. No address within the
district appears on the list of corporate
addresses on Cray’s website. Only
telephone number connected to the
district is personal phone number of
employee.

Sales representatives with authority to
sell and deliver the accused product
directly to a customer in the district

N/A. Employee had no ability to sell
or offer to sell to customers.

Literature, documents, and the product
itself were stored by employees in the
district.

N/A. Product literature stored online.

Customers located in the district.

N/A.

Employees provided support and
consultation services to customers in
the district

N/A.

17

 Case: 17-129

Document: 2-1

Page: 24

Filed: 07/17/2017

Cordis provided employees with
company-owned cars for work within
the district.

N/A.

Two employees lived in the district.

One employee owns a personal
residence in the district.

Employees were salaried.

Employee was salaried.

The Court’s reasoning in Cordis shows that these distinctions are material.
It distinguished Channel-Master on the basis that: (1) the Cordis employees
maintained a stock of its products in the district, while the Channel-Master
employee kept no stock or samples; and (2) the Cordis employees provided support
and consultation services in the district, while the Channel-Master employee
conducted promotional seminars in the district, but not with respect to the accused
product. Cordis, 769 F.2d at 737. Here, Cray’s employee maintained no product
stock and provided no services in the district at all. Cray’s facts do not match
those of Cordis, but instead align more closely with those of cases distinguished by
the Cordis court. Id. (distinguishing, e.g., Channel-Master).
The facts on which the district court did rely show why its analysis cannot
stand. It called out the facts that: (1) a salaried employee, Harless, chose to live in
the district; (2) an internal Cray presentation shows his home on a map; (3) Cray
reimbursed business expenses; (4) Harless had administrative support located in
Minnesota; (5) Harless communicated with customers and solicited sales outside
18

 Case: 17-129

Document: 2-1

Page: 25

Filed: 07/17/2017

the district using his name and personal telephone; and (6) Harless directed
customers outside the district to access Cray marketing materials online. Appx7475.
At most, these facts indicate that Harless was present in the district while
working on behalf of Cray, not that Cray had an established place of business
there. “Doing business” in a district is not the same as having a regular and
established place of business: those are two distinct concepts for purposes of
venue. The Supreme Court made this clear in Brunette Machine Works, Ltd. v.
Kockum Industries, Inc.:
Venue in a federal-question case was at that time proper
only where the defendant was an inhabitant, 24 Stat. 552
(1887), as corrected, 25 Stat. 434 (1888). Thus, the new
statute gave patent claimants an advantage by authorizing
as an additional venue alternative any district where the
defendant maintained a regular place of business, and
committed acts of infringement. Ironically, changes in the
general venue law have left the patent venue statute far
behind. Since 1948, the general venue law has
authorized suit against a corporate defendant not only
where he maintains a “regular and established place of
business,” as in § 1400 (b), but also where he is “doing
business.” 62 Stat. 935, now § 1391 (c). And since 1966,
the general venue law has authorized suit where “the claim
arose,” see n. 8, supra.
406 U.S. 706, 713 n.13 (1972) (emphasis added).
Under Cordis, the appropriate inquiry is whether “the corporate defendant
does its business in that district through a permanent and continuous presence.”

19

 Case: 17-129

Document: 2-1

Page: 26

Filed: 07/17/2017

See Cordis, 769 F.2d at 737 (emphasis added). None of the facts relied on by the
district court meet this standard. First, Cray posts materials on its website (e.g.,
Appx495-502 (http://www.cray.com/sites/default/files/Cray-XC-SeriesBrochure.pdf)). But online materials are accessible from anywhere in the world
with an internet connection. Second, administrative support staff at Cray’s office
in Minnesota is not evidence of business in the district. Cf. Appx74.
Third, the internal Cray presentation illustrating Cray’s sales territories also
fails to show business in the district conducted through Harless’ home:

Color Copy of Appx406. The territories are multi-state territories, and Texas is a
part of a territory comprising Oklahoma, Louisiana and Arkansas to which Harless
is not even assigned. See Appx369-70 ¶¶ 3, 5; Appx406. The “Athens” box
simply shows the location where Harless lives. Appx406. It does not, as the

20

 Case: 17-129

Document: 2-1

Page: 27

Filed: 07/17/2017

district court concludes, identify the town of Athens, Texas as a sales target for
Cray supercomputers. Appx74. It is also an internal presentation: no record
evidence supports the conclusion that Cray adopted Harless’ home as its office or
represented to the public that it was Cray’s place of business. The district court’s
unsupported conclusion otherwise was erroneous. See Highmark Inc. v. Allcare
Health Mgmt. Sys., Inc., 134 S. Ct. 1744, 1748 n.2 (2014) (“A district court would
necessarily abuse its discretion if it based its ruling … on a clearly erroneous
assessment of the evidence.”).
The district court’s analysis also runs contrary to the plain language of
§ 1400(b). A “place of business” is a place, not a non-physical “presence.” See
Schnell, 365 U.S. at 264; Boy Scouts of Am. v. Dale, 530 U.S. 640, 657 (2000). In
considering the “regular and established place of business” prong of the
predecessor to § 1400(b), the Supreme Court concluded that the evidence failed to
show “a regular and established place of business at 30 Church street within the
intendment of the statute.” W.S. Tyler, 236 U.S. at 725. The Court focused not on
whether an employee conducted business in the district, which it did, but rather on
whether the office was a regular and established place of business of the company. 5
Id. at 724-25.

5

The district court sought to distinguish W.S. Tyler on the ground that the
employee in that case worked for two companies, which shared the office.
Appx75. But here, Cray pays for no office, not even a shared one. Appx364-65
21

 Case: 17-129

Document: 2-1

Page: 28

Filed: 07/17/2017

Finally, the district court’s expansive interpretation cannot be justified
because of the “modern era.” Appx76, Appx78-79 (“[M]odern transportation and
communication have made it much less burdensome for a party to defend itself in a
state where he engages in economic activity.”) (quoting McGee v. Int’l Life Ins.
Co., 355 U.S. 220, 223 (1957)). The words of the statute are unchanged. If
anything, modern communication makes it easier for employees like Harless to
live where the corporate employer has no “regular and established place of
business.” It does not justify construing any employee home office as a “regular
and established place of business,” contrary to the Supreme Court’s directive that
venue not be given a “‘liberal’ construction.” Schnell, 365 U.S. at 264.
IV.

THE COURT SHOULD VACATE THE DISTRICT COURT’S
ADVISORY GUIDANCE PROPOSING A FOUR-PART TEST FOR A
“REGULAR AND ESTABLISHED PLACE OF BUSINESS.”
The district court expressly declined to apply its new venue test in this case,

explaining that its advisory guidance was only “[f]or the benefit of . . . litigants and
their counsel.” This Court should reject that test for the primary reason, discussed
above, that it concludes no physical presence in the district is necessary to find a
regular and established place of business there. If the Court were to adopt the

¶ 3. Nor did it pay for Harless’ home. Appx370 ¶ 5. Nor did Cray use the home
to distribute or store product, or to hold meetings. Appx370-71 ¶¶ 5-6.
22

 Case: 17-129

Document: 2-1

Page: 29

Filed: 07/17/2017

district court’s proposal, however, the four factors support a determination that
venue in this case is improper:
• Physical Presence. Cray had no “presence” in the district aside from
Harless’ private residence. It has no formal office, inventory, or
property there. Cf. Appx80; Appx370-71 ¶¶ 5-6.
• Defendant’s Representations to the Public. Cray does not represent
to the public that it has an office or other place of business in the
district, and there is no basis in the record to conclude otherwise.
Cray’s addresses are listed on its website, and do not include any in
the district. The presentation, discussed above, showing Harless’
location on a territory map, was an internal presentation not circulated
to the public.
• Benefits Received from the District. Cray did not receive a “benefit”
from Harless’ home. All of Harless’ customers were located outside
the district; any benefits Cray received from his work were therefore
not from business in the district. Cf. Cordis, 769 F.2d at 736.
• Targeted Interactions with the District. Cray has no such
interactions, as Harless traveled to customers located exclusively
outside the district to solicit sales and support customers.

23

 Case: 17-129

Document: 2-1

Page: 30

Filed: 07/17/2017

As other courts have recognized, “[t]he statute clearly requires that venue be laid
where ‘the defendant has a regular and established place of business,’ not where
the defendant’s employee owns a home in which he carries on some of the work
that he does for the defendant.” Am. Cyanamid, 388 F.2d at 820. None of the four
factors identified by the district court supports its conclusion that Cray has a
regular and established place of business in the Eastern District of Texas.
V.

THE COURT SHOULD DIRECT THE DISTRICT COURT TO
TRANSFER TO THE WESTERN DISTRICT OF WISCONSIN.
Where venue is improper, the action must “be in the interest of justice,

transfer[red to a district] in which it could have been brought.” 28 U.S.C.
§ 1406(a); see also In re Volkswagen of Am., Inc., 545 F.3d 304, 312 (5th Cir.
2008). Here, the Western District of Wisconsin has personal jurisdiction over Cray
because Cray maintains facilities there, and venue is proper because the products
alleged to infringe are made at those facilities.6 See Appx365-66 ¶ 7; 28 U.S.C.
§ 1400(b). Given that this case has been pending for two years and discovery has

6

The § 1404(a) convenience factors also favor the Western District of Wisconsin.
Several of Cray’s witnesses are located in the district, or in nearby Minnesota. See
Appx322-24. The first-named inventor of two asserted patents, a key non-party
witness regarding prior art and Cray’s defenses, resides there, and cannot travel
long distances. Appx353 ¶¶ 3-4, Appx358; see also Appx346-49, Appx426-27.
There are also no serious concerns regarding conflict of laws, familiarity with
governing law, or court congestion.
24

 Case: 17-129

Document: 2-1

Page: 31

Filed: 07/17/2017

completed, the interests of justice also dictate that the Court should transfer rather
than dismiss the case outright and require it to be re-litigated from scratch.
CONCLUSION
For the foregoing reasons, this Court should grant this petition for writ of
mandamus, reversing the district court’s denial of Cray’s motion to transfer venue
and directing the district court to transfer this case to the Western District of
Wisconsin.

25

 Case: 17-129

Document: 2-1

Dated: July 14, 2017

Page: 32

Filed: 07/17/2017

Respectfully submitted,

By:/s/David K. Tellekson
David K. Tellekson
Bryan A. Kohm
bkohm@fenwick.com
FENWICK & WEST LLP
555 California Street, 12th Floor
San Francisco, CA 94104
Telephone: 415-875-2300
Facsimile: 415-281-1350

David K. Tellekson
dtellekson@fenwick.com
Melanie L. Mayer
mmayer@fenwick.com
FENWICK & WEST LLP
1191 Second Avenue, 10th Floor
Seattle, WA 98101
Telephone: 206-389-4510
Facsimile: 206-389-4511

Counsel for Petitioner CRAY INC.

26

 Case: 17-129

Document: 2-1

Page: 33

Filed: 07/17/2017

CERTIFICATE OF SERVICE
I hereby certify that on July 14, 2017, I electronically transmitted this
PETITION FOR WRIT OF MANDAMUS. I further certify that the following
counsel of record for Respondent are being served with a copy of this as follows:
William E. Davis, III
Edward Chin
THE DAVIS FIRM P.C.
213 N. Fredonia Street, Ste. 230
Longview TX 75601
Counsel for Respondent
Thomas J. Filarski
Daniel S. Stringfield
Robert F. Kappers
Matthew M. Zuziak
STEPTOE & JOHNSON LLP
115 South LaSalle St., Ste. 3100
Chicago, IL 60603
Counsel for Respondent
Sanjeet K. Dutta
STEPTOE & JOHNSON LLP
1891 Page Mill Road, Ste. 200
Palo Alto, CA 94304
Counsel for Respondent
Stephanie L. Roberts
STEPTOE & JOHNSON LLP
1330 Connecticut Avenue, NW
Washington, DC 20036
Counsel for Respondent

[ ] By United States Mail
[ ] By Legal Messenger
[ ] By Electronic CM/ECF
[ ] By Overnight Express Mail
[ ] By Facsimile
[X] By Email
bdavis@bdavisfirm.com
echin@bdavisfirm.com
[ ] By United States Mail
[ ] By Legal Messenger
[ ] By Electronic CM/ECF
[ ] By Overnight Express Mail
[ ] By Facsimile
[X] By Email
tfilarski@steptoe.com
dstringfield@steptoe.com
rkappers@steptoe.com
mzuziak@steptoe.com
[ ] By United States Mail
[ ] By Legal Messenger
[ ] By Electronic CM/ECF
[ ] By Overnight Express Mail
[ ] By Facsimile
[X] By Email
sdutta@steptoe.com
[ ] By United States Mail
[ ] By Legal Messenger
[ ] By Electronic CM/ECF
[ ] By Overnight Express Mail
[ ] By Facsimile
[X] By Email
sroberts@steptoe.com

 Case: 17-129

Document: 2-1

Robert Greenfeld
STEPTOE & JOHNSON LLP
1114 Avenue of the Americas
New York, NY 10036
Counsel for Respondent

Page: 34

Filed: 07/17/2017

[ ] By United States Mail
[ ] By Legal Messenger
[ ] By Electronic CM/ECF
[ ] By Overnight Express Mail
[ ] By Facsimile
[X] By Email
rgreenfeld@steptoe.com

I further certify that this Petition for Writ of Mandamus is being served via
FedEx delivery to the courtroom deputy to:
The Honorable Rodney Gilstrap
Sam B. Hall, Jr. Federal Building and United States Courthouse
100 East Houston Street
Marshall, TX 75670
Dated: July 14, 2017

By:/s/David K. Tellekson
David K. Tellekson
FENWICK & WEST LLP
Counsel for Petitioner CRAY INC.

 Case: 17-129

Document: 2-1

Page: 35

Filed: 07/17/2017

CERTIFICATE OF COMPLIANCE WITH RULE 21(d)(1)
This brief complies with the type-volume limitation of Federal Rule of
Appellate Procedure 21(d)(1). The brief contains 5715 words, excluding the parts
of the brief exempted by Federal Rule of Appellate Procedure 32(a)(7)(B)(iii) and
Federal Circuit Rule 32(b).
This brief complies with requirements of Federal Rule of Appellate
Procedure 32(c)(2). This brief has been prepared in a proportionally spaced
typeface using Microsoft Office Word Version 2013 in 14-point Times New
Roman.
Dated: July 14, 2017

Respectfully submitted,

By:/s/David K. Tellekson
David K. Tellekson
Bryan A. Kohm
bkohm@fenwick.com
FENWICK & WEST LLP
555 California Street, 12th Floor
San Francisco, CA 94104
Telephone:415-875-2300

Counsel for Petitioner CRAY INC.

David K. Tellekson
dtellekson@fenwick.com
Melanie L. Mayer
mmayer@fenwick.com
FENWICK & WEST LLP
1191 Second Avenue, 10th Floor
Seattle, WA 98101
Telephone: 206-389-4510