To challenge the Commonwealth Scientific and Industrial Research Organisation (CSIRO)'s patents for modified plant genetics to produce Omega-3 fatty acids, BASF commenced a declaratory judgment action in the Eastern District of Virginia.  When CSIRO answered an amended complaint, it added counterclaims for infringement of six patents other than those for which BASF brought suit. Those infringement counterclaims were also made against Cargill, Inc., who was BASF’s commercialization partner.

Cargill argued that it should not have been sued in the Eastern District of Virginia, because 28 U.S.C. § 1400(b), the patent-specific venue statute, states “[a]ny 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” and Cargill contended that it did not reside in the Eastern District of Virginia and performed no infringing acts there.

The Federal Circuit found venue was proper for the counterclaims against Cargill. It first looked to Home Depot U.S.A., Inc. v. Jackson, 139 S. Ct. 1743 (2019), where the Supreme Court determined that the provision “any civil action brought in a State court of which the district courts of the United States have original jurisdiction, may be removed by the defendant or the defendants, to the district court of the United States for the district and division embracing the place where such action is pending” did not give removal rights to third-party counterclaim defendants because, while they were “defendants” to the counterclaim, they were not defendants to the “civil action.” Because 28 U.S.C. § 1400(b)’s use of “civil action” and “defendant” was similar, the Federal Circuit ruled the protections of 1400(b) were not available to a third-party counterclaim defendant like Cargill.

The Federal Circuit backed up this result by finding that Cargill did commit infringing acts in the Eastern District of Virginia. It held that BASF’s infringing acts were attributable to Cargill as they were in furtherance of a goal of Cargill and BASF's partnership to obtain patent protection for their genetic modifications.

Entities engaged in joint ventures should be cautioned that when their ally files a declaratory judgement suit, there is a possibility that they could be sued for patent infringement in a district other than those available to the patentee under 28 U.S.C. § 1400(b).