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The Supreme Court Clarifies the Patent Venue Statute for Domestic Corporations

On May 22, 2017, the United States Supreme Court issued a unanimous (8-0) opinion in TC Heartland LLC v. Kraft Foods Group Brands LLC that will significantly change the way courts enforce the patent venue statute, giving a patentee less flexibility in choosing venue when asserting its patent.
May 23, 2017

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By Kyle Gottuso and Samuel Peck

On May 22, 2017, the United States Supreme Court issued a unanimous (8-0) opinion in TC Heartland LLC v. Kraft Foods Group Brands LLC that will significantly change the way courts enforce the patent venue statute, giving a patentee less flexibility in choosing venue when asserting its patent.

TC Heartland LLC v. Kraft Foods involved a patent dispute in which Kraft alleged that Heartland’s manufacture of certain flavored drink mixes infringed Kraft’s patent rights. Kraft sued TC Heartland for patent infringement in the District of Delaware, where TC Heartland had what the Court called, “no meaningful local presence” and where TC Heartland ships the allegedly infringing products. Importantly, TC Heartland is organized under the laws of Indiana, not Delaware. TC Heartland moved to dismiss or to transfer venue to the Southern District of Indiana based on the fact that it did not “reside” in Delaware. The Delaware court denied the motion and the Federal Circuit denied TC Heartland’s writ of mandamus, finding that 28 U.S.C. §1391(c) defines the term “resides” as it appears in the patent-specific venue provision 28 U.S.C. §1400(b). TC Heartland appealed to the Supreme Court, asking the Court to determine where proper venue lies for a patent infringement lawsuit brought against a domestic corporation under §1400(b).

In deciding this venue dispute, the Supreme Court recited a detailed history of the enactment of the venue laws codified in §1391(c) and §1400. In 1948, Congress codified §1400(b) to “define the exact jurisdiction of the federal courts in actions to enforce patent rights.” For this purpose, §1400(b) states that venue is proper where “the defendant resides, or where the defendant has committed acts of infringement and has a regular and established place of business.”

While §1400(b) has remained relatively unchanged, §1391(c), the general venue statute, was amended in 1988 to provide more generous venue rules to plaintiffs suing corporations by stating a corporation “reside[s] in any judicial district in which it is subject to personal jurisdiction at the time the action is commenced.” In 1990, the Federal Circuit held that the definition of “resides” in §1391(c) equally applied to §1400(b). VE Holding Corp. v. Johnson Gas Appliance Co., 917 F.2d 1574 (Fed. Cir. 1990). This meant that, despite §1400(b), a domestic corporation was potentially subject to venue in any State where it is subject to personal jurisdiction. For 27 years this is how §1400(b) had been applied to domestic corporations.

After providing a detailed history of §1400(b), the Supreme Court reversed and held that under §1400(b), “a domestic corporation ‘resides’ only in its State of incorporation for purposes of the patent venue statute.” In an opinion written by Justice Thomas, the Court concluded that §1400(b) stands alone and is not affected by §1391(c). The Court noted that its decision is consistent with its 1957 decision in Fourco where “this court squarely rejected” the idea that §1391(c) was relevant to determining the proper venue for patent cases. The Court’s decision in TC Heartland therefore affirms the Court’s previous “holding that §1400(b) ‘is the sole and exclusive provision controlling venue in patent infringement actions, and . . . is not to be supplemented by §1391(c).’” (quoting Fourco Glass Co. v. Transmirra Prods. Corp., 353 U.S. 222, 226 (1975)).

This case will significantly impact where patent suits are litigated. Following the Supreme Court’s decision in TC Heartland, venue in a patent infringement case is proper in only two places: (1) in the defendant’s State of incorporation; and (2) “where the defendant has committed acts of infringement and has a regular and established place of business.” 28 U.S.C. §1400(b). As a result of TC Heartland, the most noticeable and immediate impact will be the inevitably sharp decrease of patent cases brought in the patent litigation hotbed of the Eastern District of Texas. Instead, as a result of TC Heartland, patent cases will be brought in more U.S. District Courts across the country. Going forward, instead of filing in Texas, it is possible that patentees will instead choose to file their patent infringement cases in the District of Delaware—where many corporations choose to incorporate.

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