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Supreme Court heralds tectonic shift in venue selection for patent suits

Jonathan Musch May 23, 2017

Reversing nearly 30 years of patent practice, the United States Supreme Court recently held in TC Heartland LLC v. Kraft Foods Group Brands LLC that the appropriate venue for patent-based suits against domestic corporate defendants is the defendant’s state of incorporation or where the “defendant has committed acts of infringement and has a regular and established place of business.” 

This decision overrules the Federal Circuit’s decision in VE Holding Corp. v. Johnson Gas Appliance Co., 917 F.2d 1574 (Fed. Cir. 1990). The Federal Circuit decision incorporated the meaning of “resident” from the general venue statute (28 U.S.C. § 1391) into the patent venue statute (28 U.S.C. § 1400(b)) to find that venue was proper in a patent action anywhere the defendant was amenable to personal jurisdiction. This 8-0 decision will likely have the effect of reallocating patent litigation across the country, away from some traditional hotbeds of litigation like the Eastern District of Texas or the plaintiff’s home jurisdiction to a defendant’s place of incorporation or where it “has a regular and established place of business.” 

This case is likely to be responsible for directing a significant amount of patent litigation to the District of Delaware, as many companies are Delaware corporations. In an interesting twist, the case stems from an attempt by a patent defendant to get away from Delaware based on improper venue. Kraft Foods filed suit against TC Heartland (an Indiana LLC with a principal place of business in Indiana) for patent infringement in the District of Delaware. TC Heartland argued that venue was improper and the appeal that followed resulted in this decision. 

The Supreme Court’s decision focuses primarily on statutory construction. A 1957 Supreme Court decision, Fourco Glass Co. v. Transmirra Products Corp., 353 U.S. 222, 226 (1957), concluded that under Section 1400 at the time, a corporation resides in its state of incorporation. Despite several more expansive alterations to the general venue statute (Section 1391), the patent venue statute has never been amended. It was one of these amendments to Section 1391, in 1988, that prompted the Federal Circuit’s decision in VE Holding, but the Supreme Court held that none of the changes to Section 1391 impact the plain language of Section 1400 as interpreted in Fourco.

The Supreme Court’s TC Heartland decision returns the law to its state under Fourco – limiting venue to defendant’s place of incorporation or where it “has a regular and established place of business.” The latter of these two is likely to be the focus of intense debate (one which has been practically non-existent for 30 years) due to the Supreme Court’s narrow definition of corporate residence as patent plaintiffs seek to avoid filing in a defendants’ home jurisdiction. 

Jonathan Musch is a partner in Thompson Coburn’s Intellectual Property practice area.