On May 22, 2017, the Supreme Court issued a unanimous decision in TC Heartland LLC v. Kraft Foods Group Grands LLC. At issue was whether Kraft Foods selected the proper venue for suing TC Heartland for infringement. TC Heartland asserted that venue was improper in the District of Delaware because TC Heartland did not “reside” in Delaware and did not have a regular place of business there. The District of Delaware denied TC Heartland’s motion to dismiss or transfer the case to the Southern District of Indiana. The Federal Circuit affirmed denial. The Supreme Court reversed and held that venue was not proper because TC Heartland did not “reside” in Delaware. This is a significant decision because it has the potential to impact a vast number of patent infringement cases currently filed in courts throughout the United States and where such cases will be filed in the future. For example, if you are currently a plaintiff or defendant in a patent infringement case in the Eastern District of Texas, which has the most pending patent infringement cases, your case may be subject to moving to a new district court.
28 U.S.C. § 1400(b) provides the exclusive venue provision for patent infringement cases. Section 1400(b) states: “any civil action for patent infringement may be brought in the judicial district where the defendant resides, or where the defendant has committed acts of infringement.” This provision has remained unchanged for nearly 70 years. However, the general venue statute, 28 U.S.C. § 1391, has changed over the years. In particular, Section 1391(c) changed by providing venue for all civil action generally where a defendant is subject to the court’s personal jurisdiction. In its VE Holding Corp. v. Johnson Gas Appliance Co. decision in 1990, the Federal Circuit interpreted the revision in Section 1391(c) to apply to the definition of “reside” in Section 1400(b).
The Supreme Court’s TC Heartland decision rejects the Federal Circuit’s VE Holding decision. The Supreme Court held that “a domestic corporation ‘resides’ only in its State of incorporation for purpose of the venue statute.” No longer can a patent owner select venue simply based on where personal jurisdiction can be found. This greatly decreases the number of venues for a patent infringement case to only the state of incorporation or effectively where infringement occurs and the defendant has an established, on-the-ground presence.
The net result of today’s decision will be the redistribution of patent infringement cases throughout the United States. Whereas the Eastern District of Texas has seen three to five times as many patent cases filed in its court than any other court (2,523 cases in 2015 and 1,654 in 2016), Delaware, a common choice for incorporation, is likely to become the busiest patent court in the nation with many other courts about to see significant increases as well. The redistribution of cases will impact the duration of cases; assessments of likelihood of success and damages in particular cases; the cost of cases; and the efficiency of cases in venues that do not routinely handle patent cases.
With a footprint that includes 24 offices across the southeast and experience with patent infringement cases in courts throughout the United States, Baker Donelson is available to assist both patent owners and those sued for infringement as cases are redistributed. This transition is a particularly good time to obtain a second opinion on your case or to evaluate the efficiency and effectiveness of your current counsel. Baker Donelson welcomes the opportunity to discuss your patent infringement strategy and options as a result of the TC Heartland decision.
