SCOTUS Messed with Texas: Supreme Court Limits Venue in Patent Cases
Yesterday, the U.S. Supreme Court re-defined the scope of venue in patent cases in TC Heartland LLC v. Kraft Foods Group Brands LLC, 581 U.S. ___ (2017). Under the Supreme Court’s ruling, venue in patent cases will now be limited to the judicial district in a state: (1) where a domestic corporate defendant is incorporated; or (2) where a defendant commits an act of infringement and has a “regular and established place of business.”
We last reported on the TC Heartland case when the U.S. Court of Appeals for the Federal Circuit issued an Order denying TC Heartland LLC’s petition for a writ of mandamus. There, the Federal Circuit reaffirmed that its decision in VE Holding Corp. v. Johnson Gas Appliance Co., 917 F.2d 1574 (Fed. Cir. 1990) remained good law, reiterating that venue for patent infringement actions was proper wherever the defendant is subject to personal jurisdiction. The Federal Circuit went on to explain that an amendment to the general venue statute, § 1391(c), in 1988 redefined the term “resides” in the patent-specific venue statute, § 1400(b), thereby broadening the applicability of the definition of corporate residence. Under its reading of the statute, venue was proper in a patent infringement case in any district in which the alleged infringer was subject to personal jurisdiction.
In yesterday’s opinion, the Court started its analysis by reviewing the history of the relevant statutes, which the Court explained provides “important context for the issue in this case.” Beginning with the legislation enacted in 1789, the Court summarized each Congressional amendment and Supreme Court decision concerning venue through the Federal Courts Jurisdiction and Venue Clarification Act of 2011. Based on these enactments and decisions, the Court concluded that Congress never changed the meaning of the patent-specific venue statute, § 1400(b), when it amended the general venue statute, § 1391. The Supreme Court found that although Congress made several amendments to § 1391, the current version of the statute does not contain any indication that Congress intended to alter the meaning of § 1400(b). Accordingly, venue in patent cases is limited to judicial districts: (1) where a U.S. corporate defendant is incorporated; or (2) where the defendant commits an alleged act of infringement and has a “regular and established place of business.”
Under the Supreme Court’s interpretation of § 1400(b), courts will likely be faced with motions to dismiss or to transfer pending patent infringement cases based upon allegations of lack of, or improper, venue. The Supreme Court did not address the retroactive effect of its decision, leaving open questions associated with the transfer or dismissal of cases filed before its ruling in TC Heartland. Such questions include whether defendants may have waived any such venue-related arguments in reliance upon the Federal Circuit’s decision in VE Holding Corp..
In light of the Supreme Court’s decision, patent owners should fully consider and assess where venue is proper prior to initiating a patent infringement lawsuit. Indeed, there is a high likelihood that fewer patent infringement cases will be filed in the U.S. District Court for the Eastern District of Texas, a hotbed for patent litigation, as it may now be more difficult to satisfy § 1400(b). Further, there is a reasonable likelihood that significantly more patent infringement cases will now be filed in the U.S. District Court for the District of Delaware, as Delaware is a popular state for companies to incorporate and, under TC Heartland, a domestic corporate defendant “resides” in its state of incorporation. Further, patent owners may also increasingly seek to establish venue where a defendant allegedly commits an act of infringement and has a “regular and established place of business.”
This document provides a general summary and is for information/educational purposes only. It is not intended to be comprehensive, nor does it constitute legal advice. Specific legal advice should always be sought before taking or refraining from taking any action.