In a highly anticipated decision, the Supreme Court significantly limited the choice of venue afforded to patent infringement plaintiffs. The Court’s opinion in TC Heartland LLC v. Kraft Food Brands Group LLC upended nearly three decades of jurisprudence that had allowed such suits to be filed almost anywhere in the country.
Before the Court’s unanimous May ruling, patent plaintiffs could pursue cases in district courts with plaintiff-friendly reputations. This new decision limits the options to jurisdictions where the defendant is incorporated, or where the defendant has committed acts of infringement and has a regular and established place of business.
"The impact of T.C. Heartland on the future of patent infringement cases cannot be overstated," says H. Michael Hartmann, a member in Leydig’s Chicago office.
“For decades, patent plaintiffs had the luxury of being able to choose almost any venue in the country where a defendant conducted even a minute amount of business,” Hartmann says. “Now, plaintiffs can no longer select a forum, such as the Eastern District of Texas, based primarily on its convenience or perceived friendliness to patent holders.”
28 U.S.C. § 1400(b) limits venue in patent cases to judicial districts “where the defendant resides, or where the defendant has committed acts of infringement and has a regular and established place of business.” In 1957, the Supreme Court held in Fourco Glass Co. v. Transmirra Products Corp that § 1400(b) was not to be interpreted in conjunction with the general venue statute, 28 U.S.C. § 1391, which broadly defines “residence” for venue purposes as “any judicial district in which it is … licensed to do business or is doing business.” Rather, the court held that “where the defendant resides,” as used in § 1400(b), only means the defendant’s state of incorporation.
In 1988, Congress amended the general venue statute to expand the definition of residency “for all venue purposes” as “any judicial district in which such defendant is subject to the court’s personal jurisdiction.”
The U.S. Court of Appeals for the Federal Circuit had consistently held that the 1988 amendment implicitly overruled the Supreme Court’s decision in Fourco Glass. Since most patent defendants are now subject to personal jurisdiction almost anywhere they conduct business, this allowed plaintiffs to choose the venue they believed would be the most advantageous, regardless of where the defendant is located.
The Supreme Court soundly rejected the Federal Circuit’s interpretation of those amendments. Writing for the Court, Justice Thomas asserted that the Federal Circuit had been wrong in deviating from earlier Supreme Court precedent since 1990. The Court held that the more limited venue provisions set forth in § 1400(b) were the sole basis for determining proper venue in patent cases.
With this decision, the center of gravity in patent litigation may shift dramatically, Hartmann says.
“I think you can expect a pretty big increase in patent infringement suits in states like Delaware, where so many companies are incorporated, as well as in places like Illinois, New York, and California, where major corporations have a significant physical presence,” Hartmann predicts. “Correspondingly, I’d bet that things slow down substantially in the Eastern District of Texas, which will no longer be an option in most cases, much to plaintiffs’ chagrin.”