HTC America, But Not Foreign Parent, Wins Patent Venue Move Bid

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By Peter Leung

Delaware isn’t the proper venue for a patent infringement lawsuit against HTC America Inc., but it’s OK to sue the company’s Taiwanese parent there because of the looser venue rules for foreign entities, the U.S. District Court for the District of Delaware said Dec. 18.

Judge Leonard P. Stark’s order suggests that fights over venue in patent infringement cases will continue, especially when the defendant is a large foreign company. In May, the U.S. Supreme Court ruled in TC Heartland LLC v. Kraft Foods Grp Brands LLC that patent defendants only reside where they are headquartered or incorporated, limiting the venues in which they may be sued. But since that rule only applies to domestic companies, the U.S. subsidiaries of foreign companies may not be able to take full advantage of TC Heartland.

Under TC Heartland, the District of Delaware isn’t the right venue for 3G Licensing SA’s patent infringement claims against HTC America, because HTC America doesn’t have a regular and established place of business in the state, the court said. However, the venue restrictions don’t apply to foreign corporations, such as the Taiwan-based HTC Corp., Stark said.

However, instead of dismissing the case against HTC America, Stark ordered 3G Licensing to decide whether it wanted to dismiss HTC America from the case, and gave HTC Corp. another chance to file a motion to transfer to another venue.

A Tale of Two Defendants

3G Licensing sued both HTC entities, alleging infringement of five patents relating to mobile communications technologies. One, U.S. Patent No. 6,212,662, relates to error checking in data transmissions, while another, Patent No. 6,856,818, relates to data storage on mobile devices. 3G Licensing holds many patents that formerly belong to European telecommunications giants Koninklijke KPN NV and Orange SA, both of which are also plaintiffs in the case.

Before TC Heartland, patent owners had considerable latitude as to where to sue defendants, since courts said they resided anywhere they did business, which for large companies like HTC means practically anywhere in the country.

After TC Heartland, patent owners relied on an alternative way to establish venue, turning on whether the defendant committed allegedly infringing acts in a particular district and whether it had a regular and established place of business there. There was no question that HTC America sold allegedly infringing products within Delaware, but there was also no real dispute that it didn’t have any physical facilities or employees there, Stark said.

However, HTC Corp., as a foreign corporation, can be sued in any court that has personal jurisdiction over it. The Delaware court has personal jurisdiction over HTC Corp., because it sold its allegedly infringing smartphones in the state, Stark said.

The Way Forward

The split decision raises unanswered questions about how to proceed. The HTC entities arguedthat the case against both defendants should be dismissed or transferred to the U.S. District Court for the Western District of Washington, where HTC America is incorporated. 3G Licensing asked the Delaware case against HTC Corp. to be allowed to continue, and said that it wouldn’t sue HTC America again until that action is complete.

Stark rejected both solutions for now, citing concerns about splitting the case into two lawsuits in different courts. He also pointed out that the Delaware court is handling ten other infringement lawsuits involving at least one patent being asserted against the HTC entities, so there may be efficiency reasons for keeping the case in Delaware.

Farnan LLP represented 3G Licensing. Shaw Keller LLP and Paul Hastings LLP represented the HTC entities.

The case is 3G Licensing, S.A. v. HTC Corp. , 2017 BL 451814, D. Del., No. 17-83-LPS-CJB, 12/18/17 .

To contact the reporter on this story: Peter Leung in Washington at pleung@bloomberglaw.com

To contact the editor responsible for this story: Mike Wilczek at mwilczek@bloomberglaw.com

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