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BRADEN SHIELDING SYS. v. SHIELDING DYNAMICS OF TEX

July 8, 1992

BRADEN SHIELDING SYSTEMS, a Unit of Jason Incorporated, a Delaware corporation, Plaintiff,
v.
SHIELDING DYNAMICS OF TEXAS, a Texas corporation, Defendant.



The opinion of the court was delivered by: MARVIN E. ASPEN

 MARVIN E. ASPEN, District Judge:

 Plaintiff Braden Shielding Systems ("Braden Shielding") makes shielding systems for magnetic resonance imaging devices ("MRIs"). An MRI is a highly sophisticated diagnostic instrument with which doctors can map a patient's tissues without surgery. Because the device uses magnetic fields, shielding is necessary to contain the fields and to prevent outside interference from distorting the image produced. Braden Shielding asserts that it holds the patent for its method of shielding MRIs.

 In its complaint, Braden Shielding claims that defendant Shielding Dynamics, Inc. ("Shielding Dynamics"), sued as Shielding Dynamics of Texas, has infringed its patent by constructing an on-site shielding system for an MRI in Chicago ("Chicago Loop MRI").

 I.

 Shielding Dynamics has moved to dismiss Braden Shielding's patent infringement action pursuant to Federal Rule of Civil Procedure 12(b) on the grounds that venue is improper and that the complaint fails to state a claim upon which relief can be granted. The motion is denied.

 Venue in patent infringement actions is controlled in the main by 28 U.S.C. § 1400(b) (1988), which provides that "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. Shielding Dynamics clearly has no "regular and established place of business" in the Northern District of Illinois, a point that is not contested by Braden Shielding. The question, therefore, is whether, for § 1400(b) purposes, Shielding Dynamics "resides" in the Northern District of Illinois.

 Not surprisingly, "resides" turns out to be a term of art in the venue game. Shielding Dynamics argues that it resides in Texas, where it is incorporated, correctly citing Fourco Glass Co. v. Transmirra Products Corp., 353 U.S. 222, 77 S. Ct. 787, 1 L. Ed. 2d 786 (1957), as authority for this construction. It further argues that § 1400(b) controls venue in patent infringement cases exclusive of the general venue provision for federal civil actions, 28 U.S.C. § 1391(c) (1988). As amended in 1988, § 1391(c) states: "For purposes of venue under this chapter, a defendant that is a corporation shall be deemed to reside in any judicial district in which it is subject to personal jurisdiction at the time the action is commenced. . . ." (emphasis added). Read next to § 1400(b)--because that section is part of chapter 87 of title 28, too, § 1391(c) expands the definition of resides. To escape this breadth, Shielding Dynamics points to Fourco, in which the Supreme Court held that § 1400(b) alone governs venue in patent infringement actions. Fourco, 353 U.S. at 229, 77 S. Ct. at 791. Shielding Dynamics cites Dual Manufacturing & Engineering, Inc. v. Burris Industries, Inc., 531 F.2d 1382 (7th Cir. 1976), and Joslyn Manufacturing Co. v. Amerace Corp., 729 F. Supp. 1219 (N.D. Ill. 1990), as supporting the same rule.

 II.

 A.

 The Court of Appeals for the Federal Circuit hears appeals in patent cases from all judicial districts. Its rulings bind our patent decisions just as surely as do decisions from the Seventh Circuit generally. In VE Holding Corp. v. Johnson Gas Appliance Co., 917 F.2d 1574 (Fed. Cir. 1990), cert. denied, 111 S. Ct. 1315, 113 L. Ed. 2d 248 (1991), the court found that amended § 1391(c) "redefines the meaning of the term 'resides' in" § 1400(b) for corporate defendants. Id. at 1578. Shielding Dynamics seems to argue only that insofar as VE Holding contradicts Fourco, Fourco should control until directly overruled by the Supreme Court; indeed, it cites Joslyn as support for this proposition. To the extent that Fourco and VE Holding conflict, we must favor VE Holding because it, and not Fourco, construes the amended § 1391(c). The prior version of that statute, construed in Fourco, is no longer in force. We note also that Joslyn was decided before the ruling from the Federal Circuit in VE Holding.1

 Moreover, the apparent conflict between Fourco and VE Holding stems only from their final holdings, not from their respective analyses. Both cases resolved friction between the general venue provision, § 1391(c), and the provision specific to patent infringement cases, § 1400(b). Fourco favored the exclusivity of the specific provision; VE Holding, construing a revamped § 1391(c), favors reading the two sections together. Fourco asked whether Congress, in its 1948 revision and renumbering of the venue provisions, meant to change the way the earlier patent venue provisions had been interpreted. *fn2" The Court examined the Readers' Notes and the speeches of key Congressmen and found that "changes of language" were not intended to change the law as it then stood, namely that § 1400(b) should govern venue in patent infringement cases exclusive of the general venue provision in § 1391(c).

 The court in VE Holding used the same analytic framework for its decision. The law as it stood before the 1988 revision was interpreted by Fourco. The amendments to § 1391 required the court in VE Holding to decide whether Congress sought to change the established substance of § 1400(b) by requiring the specific patent venue provision to be read in conjunction with the general venue provision. The court emphasized two things: (1) the statutory language added in 1988 to § 1391(c), "for purposes of venue under this chapter, referred clearly to §§ 1391-1412 (and, necessarily, § 1400(b)), and thus amounted to the "exact and classic language of incorporation" that was missing in the 1948 version of § 1391(c) construed in Fourco; and (2) the drafters of the amendment were well aware of the issue of incorporation and so the obvious meaning of the words they chose should be respected. Id. at 1579, 1582; see also Century Wrecker Corp. v. Vulcan Equip. Co., 733 F. Supp. 1170, 1173 (E.D. Tenn. 1989) (granting motion to add an American sister corporation of a Canadian corporation as a defendant to an infringement action because, according to § 1400(b), as ...


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