Supreme Court Alters Patent Venue Landscape: Eastern District Texas No Longer the Heartland of Patent Litigation

Kaminski_Jeffri_LRFeatured Expert Contributor – Intellectual Property (Patents)

Jeffri A. Kaminski, Partner, Venable LLP, with William A. Hector, Associate, Venable LLP.

The US Supreme Court issued its decision in TC Heartland LLC v. Kraft Food Group Brands LLC altering the landscape of where patent owners may file patent infringement cases.  Previously, these cases could be filed in essentially any jurisdiction, allowing patent owners to select the forum of their choice.  TC Heartland  now requires that there be some connection between the accused infringer and the jurisdiction where suit is filed.  The Court ruled unanimously that “a domestic corporation ‘resides’ only in its State of incorporation for purposes of the patent venue statute.”  Venue over a domestic corporate defendant is now proper:

  1. In the judicial district where the defendant resides, that is, its State of incorporation, based on TC Heartland or
  2. “where the defendant has committed acts of infringement and has a regular and established place of business,” based on the patent venue statute.

Before the Supreme Court’s TC Heartland decision, the US Court of Appeals for the Federal Circuit deemed a domestic corporate defendant in patent infringement cases to “reside in any judicial district in which it is subject to personal jurisdiction.”  Under this interpretation of domestic corporate residence, plaintiffs had broad latitude in selecting a venue to file patent infringement cases.  This resulted in a high proportion of patent cases filed in patentee-friendly districts, such as the Eastern District of Texas.  As a possible reaction to this trend and potential forum-shopping abuses, the Supreme Court overruled the VE Holdings interpretation of the Patent Venue Statute—28 U.S.C. § 1400(b).  The Court reiterated its analysis in Transmirra Prods. Corp. v. Fourco Glass Co. finding § 1400(b) to be “the sole and exclusive provision controlling venue in patent infringement actions,” and domestic corporations reside in their state of incorporation.

As a result, domestic corporations can only be sued in their state of incorporation, which is in many cases Delaware, or where the corporation has committed acts of infringement and has a regular and established place of business.  But the TC Heartland decision leaves several unanswered questions.  For one, it is unclear whether a defendant can bring a motion to transfer venue if a venue challenge has not been preserved, for example, in an answer to the complaint.  The Court also specifically chose not to address venue for foreign corporations.  The Court further did not specifically address venue for partnerships and other non-corporate entities.  And the meaning of “regular and established place of business” remains somewhat ambiguous, but may still allow entities that operate nationally to be sued in remote jurisdictions.

Many defendants will likely prepare motions to transfer based on TC Heartland, and it will be interesting to see how these motions are processed.  For example, courts could sort the motions into categories:

  1. Defendant is not incorporated and does not have a place of business in the state—Motion granted with boilerplate opinion;
  2. Defendant did not preserve venue challenge—Motion granted or denied with opinion;
  3. Defendant has infringed in the state, does business in the state, but does not have a traditional place of business in the state (e.g., a virtual presence)—Motion evaluated to determine whether the corporation has “regular and established place of business” in the state.

The TC Heartland decision will likely cause a migration of patent cases from Eastern District of Texas to Delaware, altering the landscape of patent litigation.

One thought on “Supreme Court Alters Patent Venue Landscape: Eastern District Texas No Longer the Heartland of Patent Litigation

  1. Pingback: SCOTUS Report: A Fruitful Term for Free Enterprise, the Rule of Law—and WLF – The WLF Legal Pulse

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