Supreme Court Clarifies Rules on Patent Venue

Will this be the end of forum shopping in patent infringement litigation?

On May 22, 2017, the U.S. Supreme Court handed down its unanimous and much-anticipated decision in the patent infringement case of TC Heartland v. Kraft Foods Group Brands LLC. The Supreme Court hears intellectual property cases fairly infrequently, meaning that when an IP case is decided, the legal community takes notice.

This case is particularly relevant for attorneys trying to determine the appropriate venue (that is, where exactly to file suit) for a patent-related litigation. In considering where proper venue lies for a patent infringement lawsuit brought against a domestic corporation, the Court held that a domestic corporation that is a defendant in a patent infringement “resides” only in the state in which it is incorporated.

Background and Facts of the TC Heartland Case

Generally, this case concerns the venue for patent litigation. Venue is the appropriate physical location where litigation should be brought. For example, in most civil litigation, venue is appropriate in the county or district with a substantial nexus to the facts of the case. When suing a business, venue is also proper where that defendant is incorporated.

In patent law, however, the situation is a bit more complex. The U.S. Court of Appeals for the Federal Circuit--the federal court that is charged with hearing most patent appeals--has previously said in V.E. Holding Corp. v. Johnson Gas Appliance Co., 917 F.2d 1574 (Fed. Cir. 1990) that a domestic corporation’s “residence” for purposes of venue could include any districts where the corporation is subject to personal jurisdiction.

As one might imagine, this is a fairly lenient standard. It allows plaintiffs to choose the venue in which they are most comfortable. For example, many plaintiffs choose the Eastern District of Texas, which some legal experts describe as “plaintiff friendly” in patent cases because of its particular expertise and reputation for bringing matters to trial with alacrity.

Against this backdrop, Kraft Foods sued TC Heartland in the District of Delaware. TC Heartland, however, is incorporated and headquartered in Indiana. Preferring to litigate on its home turf, TC Heartland filed a motion to transfer the case to the Southern District of Indiana. But applying the Federal Circuit’s rule, the Delaware federal court sided with Kraft, keeping the case in Delaware. The Federal Circuit affirmed, applying its long-standing rule based on personal jurisdiction.

The U.S. Supreme Court agreed to hear the case to resolve the question of where proper venue lies when suing a domestic corporation for patent infringement.

The Supreme Court’s Analysis

The Supreme Court’s 8-0 decision, authored by Justice Clarence Thomas, focused on the statutory language, which resolved the apparent conflict between 28 U.S.C § 1391(c) (the general venue statute) and 28 U.S.C. § 1400(b) (the patent-specific venue statute).

The patent venue statute, 28 U.S.C. §1400(b), 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.”

The Court interpreted the statute and surrounding case law and held that the general venue statute cannot change the meaning of the patent venue statute. Under TC Heartland, “‘reside[nce]’ in §1400(b) refers only to the State of incorporation;” a more narrow reading of venue than previously given by the Federal Circuit.

How TC Heartland Case Impacts Future Litigation

It is difficult to predict the long-term effects of TC Heartland on future patent litigation. Broadly speaking, it seems safe to assume that patent litigation could spread to a greater number of district courts across the United States, and away from the Eastern District of Texas, which had previously developed a de facto specialty. Now that patentees cannot claim venue anywhere that a corporation might exist for purposes of personal jurisdiction, forum shopping may be curtailed.

Effective date: May 22, 2017