In Re: Cray Inc.
871 F.3d 1355
| Fed. Cir. | 2017Background
- Raytheon sued Cray for patent infringement in the Eastern District of Texas; Cray is incorporated and principally located in Washington and seeks transfer to the Western District of Wisconsin.
- Cray has no office, lease, or owned property in the Eastern District of Texas; two employees (Harless and Testa) worked remotely from homes in that district at various times.
- Harless was a long‑time sales executive who generated significant sales, received expense reimbursements and administrative support from Cray, listed his home phone as an office number, and appeared on internal Cray materials as located in the district; Cray did not pay for or lease his home or store products there.
- The district court denied Cray’s motion to transfer under 28 U.S.C. § 1406(a), finding the employee activities analogous to In re Cordis and concluding Cray maintained a “regular and established place of business” in the Eastern District of Texas.
- Cray petitioned the Federal Circuit for mandamus, arguing the district court misapplied precedent and expanded § 1400(b) to include mere employee home offices or virtual presences.
Issues
| Issue | Plaintiff's Argument (Raytheon) | Defendant's Argument (Cray) | Held |
|---|---|---|---|
| Whether Cray had a “regular and established place of business” in the Eastern District of Texas under 28 U.S.C. § 1400(b) | Employee Harless’s home functioned as a Cray place of business: salary, reimbursements, admin support, listed location, customer contacts | Mere employee home office and reimbursements do not make the home a place of the defendant; Cray did not own/lease, store goods, advertise a local office, or control the residence | Cray did not have a regular and established place of business there; venue improper in E.D. Tex. |
| Whether Cordis controls and requires denial of mandamus | Cordis supports finding a place of business based on employee activities | Cordis is distinguishable; district court misread its scope and failed to apply § 1400(b)’s text | Cordis does not compel denial; district court misapplied Cordis and abused discretion |
| Whether a physical, geographic place is required or virtual presence suffices | Raytheon: business conducted remotely can establish a place | Cray: statute requires a physical place tied to defendant, not mere virtual activity | A physical, geographical place of business is required; virtual/only electronic presence insufficient |
| Whether transfer is appropriate under § 1406(a) if venue is improper | N/A (Raytheon preferred alternative transferee) | Cray sought transfer to W.D. Wis. | Mandamus granted: district court’s denial vacated and directed to transfer (specific transferee left to district court) |
Key Cases Cited
- In re Cordis Corp., 769 F.2d 733 (Fed. Cir. 1985) (treated facts where employer established local operations via employees and local services as relevant to venue analysis)
- TC Heartland LLC v. Kraft Foods Group Brands LLC, 137 S. Ct. 1514 (2017) (holding corporate residence for patent‑venue purposes is state of incorporation)
- Schnell v. Peter Eckrich & Sons, Inc., 365 U.S. 260 (1961) (historic explanation that patent venue statute restricts prior broader venue rules)
- Stonite Prods. Co. v. Melvin Lloyd Co., 315 U.S. 561 (1942) (describing § 1400(b) as the exclusive patent‑venue provision)
- Channel Master Corp. v. Univ. of Ill. Found., 382 F.2d 514 (7th Cir. 1967) (employee home base insufficient where no stock, displays, visitors, or secretarial/office resources)
- Am. Cyanamid Co. v. Nopco Chem. Co., 388 F.2d 818 (4th Cir. 1968) (employee’s use of home for some work is insufficient to establish employer’s place of business)