On May 22, 2017, the Supreme Court issued a decision in TC Heartland LLC v. Kraft Foods Group Brands LLC on the hotly contested issue of patent venue reform.  The patent venue statue provides two grounds for laying venue. Under 35 U.S.C. § 1400(b), venue in a patent case may be laid where the defendant (1) “resides,” or (2) “has committed acts of infringement and has a regular and established place of business.”  The TC Heartland decision addresses the residence basis for venue—more specifically, the determination of residence for domestic corporations.

The Court reversed a 1990 Federal Circuit decision, VE Holding Corp. v. Johnson Gas Appliance Co., which imported the general corporate venue statute, 28 U.S.C. § 1391(c),  into the residence framework of the patent venue statute.  Under the general corporate venue statute, corporate defendants are susceptible to suit anywhere personal jurisdiction can be established.  And since corporations typically operate on a nationwide basis—at least as far as sales are concerned—the effect in patent cases was to permit nationwide venue in many instances. This expansion of venue contributed to the frequently highlighted concentration of patent suits in handful of district courts.

In TC Heartland, the Court reaffirmed its holding in Fourco Glass Co. v. Transmirra Products Corp. and unequivocally stated that residence for domestic corporate defendants in patent cases is limited to the corporation’s place of incorporation. This limitation on the residence-based ground for venue will likely result in a redistribution of patent cases throughout the district courts.  However, domestic corporations with established places of business in popular patent jurisdictions such as the Eastern District of Texas should expect to continue to defend against infringement claims in those districts.  The District of Delaware may also see an uptick in patent litigation in light of the state’s popularity for incorporation purposes.  Finally, it should be noted that the decision focuses solely on residence for domestic corporations and has no apparent effect on venue determinations for international corporations.

“This is potentially a game-changing decision,” Partner Celine Jimenez Crowson told Law360. “All parties in existing cases and potential plaintiffs in future cases will be rethinking the appropriateness of where their cases are pending or where they should be filed. This resolution by the Supreme Court may partly relieve pressure for patent venue reform in Congress.‎”

We will follow on with additional details on how this decision affects currently pending and future cases.

For more of our coverage on TC Heartland, click here.