Patent Litigation’s Uncertain Intersection Between Venue and Alternative Service of Process

It is no secret, in patent litigation, some venues are seen as “plaintiff friendly”.  Plaintiffs have tried a litany of approaches to establish venue in those popular districts—with varying success—and alternative service of process is a recent method.

It is critical for chief IP officers at multinational corporations who are defending US patent litigation to be mindful of how US patent holders might utilise alternative service rules to reach a favoured venue. Staying keenly aware of the interplay between service and venue will enable international litigants to make better strategic decisions in their defence.

The Hague Convention explicitly contemplates a nation’s ability to make its own laws and to enforce service of process on corporations headquartered in that nation. So, before permitting alternative service on foreign defendants, courts continue to require, usually, that plaintiffs attempt service of process through traditional channels. That has not stopped some plaintiffs from trying to use alternative service of process and little-to-no effort through the Hague Convention, to get favorable venue decisions.

How might alternative service of process and desirable venue decisions relate? The interconnection would look something like this:

1. a plaintiff seeks alternative service of process without attempting service through traditional methods (eg Hague Convention service) to more easily bring foreign corporations into a preferred venue; and
2. once a foreign corporation is deemed to be properly served in those preferred venues, venue as to the foreign corporation will likely be found proper.

How plaintiffs use service to benefit venue

A common hypothetical scenario for patent litigants illustrates the potential use of alternative service of process to place litigation into a favoured venue.

A foreign corporation, through a domestic subsidiary, distributes its goods in the stream of commerce in the United States. A patent-owning plaintiff asserts infringement against the parent corporation that manufactures the goods imported into the United States, but not the subsidiary. Because the foreign parent corporation is subject to venue anywhere that it is subject to personal jurisdiction, venue may be proper wherever the defendant’s contacts with the district satisfy the state’s long-arm statute and federal due process, according to Brunette Machine Works.

So, establishing venue in a plaintiff-friendly district becomes more likely when the parent foreign corporation is party to the suit. By contrast, venue against a domestic subsidiary is proper only where the subsidiary resides or has a principal place of business, restricting proper venues for the patent plaintiff, according to TC Heartland. This could mean that a “popular” patent venue is proper only against the foreign parent.

But the parent corporation must be served with the complaint to satisfy service of process. For foreign parents, this often means service through the Hague Convention, which can prove costly and cumbersome – depending on the nation where the foreign parent is headquartered – that makes a plaintiff more likely to seek some form of alternative service such as through the subsidiary.

The Western District of Texas in 2020 in Wilco Marsh Buggies & Draglines, Inc v EIK Engineering has rebuffed these types of attempts to accomplish alternative service on a foreign parent corporation through its subsidiaries while insufficiently establishing the subsidiary is an authorised agent or alter ego of the foreign corporation. Under that very typical situation, if service on the foreign parent has not been completed, the foreign parent could not be found to be brought properly into the suit, making any issue relating to venue premature.

Courts speak on importance of service

The Western District of Texas in 2020 in Terrestrial Comms v NEC Corp has reminded plaintiffs that “principles of comity encourage the court to insist, as a matter of discretion, that a plaintiff attempt to follow foreign law in its efforts to secure service of process upon a defendant”.

The same court in 2022 in Kortek Industries v Chengdu Meross Technology Co ruled that when a foreign entity is in a country that is subject to the Hague Convention, this has meant that plaintiffs are continually reminded that, in order to be granted alternative service, they must first attempt service through the Hague Convention. Therefore, attempts at alternative service prior to attempts made through the Hague Convention would be inappropriate.

The US District Court for the Eastern District of Texas, a historically favoured venue by plaintiffs, has ruled in Blitzsafe Texas v Eincar Tech that “compliance with the Hague Convention is mandatory when the requested method of serving process is effectuated within the territory of the foreign signatory”.

The Western District of Texas, another favoured venue, has ruled in STC.UNM v TP-Link Tech Co that “a method of service of process must also comport with constitutional notions of due process”.

The US Court of Appeals for the Fifth Circuit ruled in Viahart v GangPeng that service of process “on a foreign defendant is therefore proper when it is a court ordered method that is not prohibited by international agreement and is reasonably calculated, under the circumstances, to notify the defendant of the case and afford them an opportunity to present objections”.

But that has not stopped plaintiffs from seeking alternative service by serving the parent corporation through various methods, such as by mail or email to the subsidiary or through contact with the subsidiary’s officers or employees, as happened in Blackbird Tech v Trivago in the Eastern District of Texas in 2021.

Yet courts remain sceptical of plaintiffs who have made little or no effort to accomplish service through the Hague Convention. We saw this in Guangzhou Jinli Electronic Technology Co v Shenzhen Damuzhi Health Information Consulting Co in 2022 in the Western District of Texas.

Strategic decisions on service and venue

Aggressive plaintiffs will continue to attempt to manufacture ways to reach popular venues for patent litigation, and they will also continue to attempt service on foreign defendants through alternative methods. In the case of foreign corporate defendants, however, virtually all courts require plaintiffs to, at minimum, attempt at least some formal service of process before a foreign defendant can be brought into litigation.

Litigants should be mindful of how alternative service routes and venue determinations interact to benefit patent plaintiffs and defendants. With this awareness, patent litigants can make strategic decisions about formal service of process.