By: Wisu Sul<\/p>\n
On May 22, 2017, the U.S. Supreme Court reversed decades of patent venue law in TC Heartland LLC v. Kraft Foods Group Brands LLC<\/em>,[1]<\/a> holding that a corporation \u201cresides\u201d only in its state of incorporation for purposes of determining proper venue under 28 U.S.C. \u00a7 1400(b).[2]<\/a> Patentees are not able to choose a federal court that has favorable rules and procedures.<\/p>\n In TC Heartland LLC<\/em>, Kraft Foods Group Brands LLC the patentee, sued TC Heartland LLC for infringing its patents on \u201cliquid water enhancers\u201d in the District of Delaware, but TC Heartland asked the court to move the case to Indiana.[3]<\/a> TC Heartland shipped the alleged infringing products to Delaware, but was incorporated and headquartered in Indiana.[4]<\/a> The District Court held that the venue was proper, and the Federal Circuit affirmed the District Court\u2019s ruling.[5]<\/a><\/p>\n The Supreme Court reversed the Federal Circuit\u2019s ruling.[6]<\/a> The Supreme Court held that a \u201cdomestic corporation \u2018resides\u2019 only in its State of incorporation for purposes of the patent venue statute.\u201d[7]<\/a> Thus, venue is only proper for patent cases in (a) a defendant\u2019s State of incorporation or (b) where the defendant has committed acts of infringement and has a regular and established place of business.[8]<\/a><\/p>\n Under the patent venue statute, 28 U.S.C. \u00a7 1400(b), \u201c[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.\u201d[9]<\/a> The US Code also contains a broader venue statute, 28 U.S.C. \u00a7 1391, which states \u201c[e]xcept as otherwise provided by law\u201d and \u201c[f]or all venue purposes,\u201d a corporation \u201cshall be deemed to reside, if a defendant, in any judicial district in which such defendant is subject to the court’s personal jurisdiction with respect to the civil action in question.\u201d[10]<\/a><\/p>\n Prior to TC Heartland LLC<\/em>, there were two important cases about patent venues, and the general venue statute, 28 U.S.C. \u00a7 1391, was amended twice.[11]<\/a><\/p>\n In Fourco Glass Co.<\/em>, the Supreme Court held that \u00a7 1400(b) was the sole and exclusive venue provision in patent infringement actions.[12]<\/a> The Court noted that \u00a7 1400(b) is not to be supplemented by the provisions of \u00a7 1391(c).[13]<\/a> The Court interpreted the term \u201cresides\u201d in \u00a7 1400(b) to only the state in which a corporation is incorporated.[14]<\/a><\/p>\n In 1988, Congress amended the general venue statute, 28 U.S.C. \u00a7 1391, to include the phrase \u201c[f]or purposes of venue under this chapter.\u201d[15]<\/a><\/p>\n In VE Holding Corp.<\/em>, the Federal Circuit held that venue over a patent infringement defendant has been proper in any district where the defendant is subject to personal jurisdiction.[16]<\/a> The Federal Circuit interpreted the phrase \u201c[f]or purposes of venue under this chapter\u201d as indicating that \u00a7 1391(c) clearly applies to \u00a7 1400(b).[17]<\/a> The Federal Circuit redefined the meaning of the term \u201cresides,\u201d interpreting the phrase \u201cthe judicial district where the defendant resides\u201d in \u00a7 1400(b) as \u201cany district where there would be personal jurisdiction over the corporate defendant.\u201d[18]<\/a><\/p>\n In 2011, Congress amended the phrase \u201c[f]or purposes of venue under this chapter\u201d in \u00a7 1391 to \u201c[f]or all venue purposes,\u201d and added a new subsection (a) stating that the section \u201cshall govern the venue of all civil actions,\u201d and \u201c[e]xcept as otherwise provided by law.\u201d[19]<\/a><\/p>\n The holding of VE Holding Corp<\/em>. allowed patentees a choice of the forum. VE Holding Corp.<\/em> expanded the range of permissible options for venue over patent infringement cases because it subjected corporate defendants to lawsuits anywhere they might be subject to personal jurisdiction.[20]<\/a><\/p>\n Jurisdiction over patent cases is unique because the patent right is not limited to a specific location, but exists in every district in the United States.[21]<\/a> Patentees are able to be injured in every district where an infringing sale was made because that is where the patent owner suffers economic loss.[22]<\/a> Therefore, patentees can obtain specific jurisdiction over the accused infringer in any district the infringer sells his products.[23]<\/a><\/p>\n The only option for an alleged infringer is to make a motion for transfer of venue based on Forum non conveniens.[24]<\/a> However, courts rarely grant transfers in patent cases due to the fact the convenience of litigation in one district is not drastically different from another district.[25]<\/a><\/p>\n As a result, over the past ten years, the patent-friendly district, the Eastern District of Texas, has been the capital of patent litigation.[26]<\/a> Also, Delaware, where the patentee filed a patent infringement suit in TC Heartland<\/em>, has been the second-busiest court behind the Eastern District of Texas in recent years.[27]<\/a><\/p>\n A patentee, Kraft Foods Group Brands LLC, filed a patent infringement suit in the District Court for the District of Delaware against a competitor, TC Heartland LLC, who is organized under Indiana law and headquartered in Indiana but ships the allegedly infringing products into Delaware.[28]<\/a><\/p>\n The competitor moved to transfer venue to a district court in Indiana, claiming that venue was improper in Delaware.[29]<\/a> The competitor argued that the patentee did not \u201cresid[e]\u201d in Delaware and had no \u201cregular and established place of business\u201d in Delaware under \u00a7 1400(b).[30]<\/a> The District Court rejected these arguments.[31]<\/a> The Federal Circuit denied a petition for a writ of mandamus, concluding that \u00a7 1391(c) supplies the definition of \u201cresides\u201d in \u00a7 1400(b).[32]<\/a> The Federal Circuit reasoned that because petitioner resided in Delaware under \u00a7 1391(c), it also resided there under \u00a7 1400(b).[33]<\/a><\/p>\n The Supreme Court reversed the Federal Circuit and interpreted \u201cresides\u201d in the patent venue statute narrowly.[34]<\/a> The Court reaffirmed its interpretation of the patent venue in Fourco Glass Co.<\/em>[35]<\/a> In Fourco Glass Co<\/em>.<\/em>, the Supreme Court interpreted that the word \u201creside[nce]\u201d in \u00a7 1400(b) to only the State of incorporation.[36]<\/a> In TC Heartland<\/em>, the Court noted that \u201cCongress has not amended \u00a7 1400(b) since Fourco<\/em>, and neither party asks [the Court] to reconsider [its] holding in that case.\u201d[37]<\/a><\/p>\n First, the Court pointed out that the current version of \u00a7 1391 does not contain any indication that Congress intended to alter the meaning of \u00a7 1400(b) as interpreted in Fourco Glass Co<\/em>.<\/em>[38]<\/a> The Court noted that no material difference existed between the phrase \u201c[f]or all venue purposes\u201d in the current version of \u00a7 1391(c) and the phrase \u201cfor venue purposes\u201d in the version at issue in Fourco Glass Co.<\/em>[39]<\/a> Also, the Court noted that the addition of the word \u201call\u201d to the current provision does not suggest that Congress intended for us to reconsider that conclusion.[40]<\/a><\/p>\n Indeed, the Court reasoned that the saving clause of \u00a7 1391 in its current version, which states \u201cthat it does not apply when \u2018otherwise provided by law,\u2019\u201d makes explicit the qualification that [the] Court previously found implicit in the statute.[41]<\/a><\/p>\n Finally, the Court noted that there was no indication that Congress in 2011 ratified the Federal Circuit\u2019s decision in VE Holding Corp.<\/em> because nothing in the current version of \u00a7 1391 suggests congressional approval of VE Holding Corp.<\/em>[42]<\/a><\/p>\n The Court reaffirmed that a domestic corporation resided only in its State of incorporation, and bringing a patent infringement action is proper only (1) in the state where the corporation is incorporated, or (2) where the defendant has committed acts of infringement and has a regular and established place of business.[43]<\/a><\/p>\n The TC Heartland LLC<\/em> case will alter the patent litigation landscape. It blocks patentees from choosing the forum that has favorable rules and procedures.<\/p>\n First, many alleged infringers will seek to dismiss or transfer their venue based on this ruling. They alleged that venue is only proper for patent cases in (1) a patentee\u2019s State of incorporation or (2) where the alleged infringer has committed acts of infringement and has a regular and established place of business.<\/p>\n Second, the holding in TC Heartland LLC<\/em> will preclude patentees from bringing cases in patent-friendly jurisdictions like the Eastern District of Texas, or the District of Delaware. The decision will reduce the opportunity for forum shopping.<\/p>\n Finally, more patent infringement suits will rise in the common states of incorporation and states that have recognized industries. For example, there will likely be a greater number of cases brought in Delaware, a common state of incorporation, as well as in technological hubs like the Northern District of California, where many companies are incorporated or headquartered.<\/p>\n In sum, the Supreme Court declared that the forum shopping in patent litigation is finished.<\/p>\n <\/p>\n [1]<\/a> TC Heartland LLC v. Kraft Foods Grp. Brands LLC, 137 S. Ct. 1514, 1520 (2017).<\/p>\n [2]<\/a> Id. <\/em>at 1520; 28 U.S.C. \u00a7 1400(b) (2017).<\/p>\n [3]<\/a> TC Heartland LLC<\/em>, 137 S. Ct. at 1517.<\/p>\n [4]<\/a> Id.<\/em><\/p>\n [5]<\/a> Id.<\/em> at 1516.<\/p>\n [6]<\/a> Id.<\/em> at 1520.<\/p>\n [7]<\/a> Id.<\/em> at 1517.<\/p>\n [8]<\/a> Id.<\/em> at 1521.<\/p>\n [9]<\/a> 28 U.S.C. \u00a7 1400(b).<\/p>\n [10]<\/a> 28 U.S.C. \u00a7\u00a7 1391(a), (c) (2017).<\/p>\n [11]<\/a> See<\/em> Fourco Glass Co. v. Transmirra Products Corp., 353 U.S. 222, 225 (1957); VE Holding Corp. v. Johnson Gas Appliance Co., 917 F.2d 1574, 1578 (Fed. Cir. 1990); 28 U.S.C. \u00a7 1391.<\/p>\n [12]<\/a> Fourco Glass Co.<\/em>, 353 U.S. at 229.<\/p>\n [13]<\/a> Id<\/em>. at 228.<\/p>\n [14]<\/a> Id.<\/em> at 229.<\/p>\n [15]<\/a> See<\/em> Judicial Improvements and Access to Justice Act, \u00a7 1013(a), 102 Stat. 4669.<\/p>\n [16]<\/a> VE Holding Corp.<\/em>, 917 F.2d at 1578.<\/p>\n [17]<\/a> Id.<\/em><\/p>\n [18]<\/a> Id.<\/em><\/p>\n [19]<\/a> See<\/em> Federal Courts Jurisdiction and Venue Clarification Act of 2011, \u00a7 202, 125 Stat. 763.<\/p>\n [20]<\/a> See<\/em> Alisha Kay Taylor, What Does Forum Shopping in the Eastern District of Texas Mean for Patent Reform?<\/em>, 6 J. Marshall Rev. Intell. Prop. L. 570 (2007).<\/p>\n [21]<\/a> Id.<\/em> at 576.<\/p>\n [22]<\/a> Id.<\/em><\/p>\n [23]<\/a> Id.<\/em><\/p>\n [24]<\/a> Id.<\/em><\/p>\n [25]<\/a> Id.<\/em><\/p>\n [26]<\/a> Id.<\/em> at 580.<\/p>\n [27]<\/a> Id.<\/em><\/p>\n [28]<\/a> TC Heartland LLC<\/em>, 137 S. Ct. at 1517.<\/p>\n [29]<\/a> Id.<\/em><\/p>\n [30]<\/a> Id.<\/em><\/p>\n [31]<\/a> Id.<\/em><\/p>\n [32]<\/a> Id.<\/em><\/p>\n [33]<\/a> Id.<\/em><\/p>\n [34]<\/a> Id.<\/em> at 1520.<\/p>\n [35]<\/a> Id.<\/em><\/p>\n [36]<\/a> Fourco Glass Co.<\/em>, 353 U.S. at 229.<\/p>\n [37]<\/a> TC Heartland LLC<\/em>, 137 S. Ct. at 1520.<\/p>\n [38]<\/a> Id.<\/em><\/p>\n [39]<\/a> TC Heartland LLC<\/em>, 137 S. Ct. at 1520 (citing<\/em> Pure Oil Co. v. Suarez, 384 U.S. 202, 204\u201305 (1966)).<\/p>\n [40]<\/a> TC Heartland LLC<\/em>, 137 S. Ct. at 1521.<\/p>\n\n
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