TC Heartland LLC v. Kraft Food Group Brands LLC has created more questions about venue than it answered (although it obviously answered a very important one), and one significant new question is, what constitutes a “regular and established place of business” under 28 U.S.C. § 1400(b). Chief Judge Stark recently attempted to answer that question in his September 11, 2007 decisions in Boston Scientific Corp. v. Cook Group Inc. and Bristol-Myers Squibb Co. v. Mylan Pharmaceuticals Inc. Only days later, the Federal Circuit issued its decision in In re Cray, restricting the meaning of “regular and established place of business.” This post briefly analyzes the state of Judge Stark’s concept of “regular and established place of business” in the wake of In re Cray.
In Boston Scientific Corp., Judge Stark, among other things, described the application of “regular and established place of business” as a “fact-intensive inquiry focused on whether the defendant does its business in this District through a permanent and continuous presence here.” He explained that a formal office or store is not required to meet this test, but a physical presence is needed. He then identified factors that would not, at least alone, rise to the level of a permanent and continuous presence. They are: (1) doing business in Delaware or being registered to do business in Delaware; (2) maintaining a website accessible in Delaware for online sales; (3) shipping goods to unaffiliated individuals or third-party entities in Delaware; (4) making sales in Delaware; (5) employing a sales representative who occasionally works in Delaware; and (6) previously employing a sales representative who lived in Delaware, but had no responsibility of sales in Delaware. See Boston Scientific Corp. v. Cook Group Inc.
In his other venue decision of the same date, Bristol-Myers Squibb Co., Judge Stark considered connections between the defendant and Delaware in deciding that he could not conclude without further information that the defendant did not have a regular and established place of business in Delaware. Those factors include: (1) the defendant is part of a family of more than 50 companies, of which more than 40 reside in Delaware; (2) the defendant does business and makes sales in Delaware; (3) the defendant is in the business of provoking patent infringement lawsuits as part of the process of bringing its products to market; (4) the defendant has appeared in more the 100 patent infringement cases in Delaware in the last ten years; (5) the cases are not “run-of-the-mill” litigation and may or may not be of material significance to defendant’s overall business; (6) the defendant has obtained the right to do business in Delaware including for pharmaceutical manufacturing, distribution and sales; (7) the defendant is licensed as a “Pharmacy-Wholesale” and “Distributor/Manufacturer CSR,” allowing it to distribute and manufacture controlled substances within Delaware; and (8) the defendant targets some Delaware physicians.