Supreme Court dramatically curtails patent forum shopping

May 23, 2017

Patent Law Alert

Author(s): Richard H. Tilghman IV

Yesterday, the Supreme Court reversed almost thirty years of precedent on venue selection in patent cases. The TC Heartland decision will have a dramatic impact on where patent suits are filed going forward.

The United States Supreme Court issued an opinion yesterday that will substantially limit plaintiffs’ venue options in patent infringement litigation. In TC Heartland LLC v. Kraft Foods Group Brands LLC, the Court held that, for venue purposes in patent litigation, a domestic corporation resides only in (1) its state of incorporation, or (2) where the acts of infringement occurred and where the corporation has a regular place of business.

The patent venue statute provides that patent infringement lawsuits may be brought “where the defendant resides, or where the defendant has committed acts of infringement and has a regular and established place of business.” 28 U.S.C. § 1400(b). In a 1957 decision, Fourco Glass Co. v. Transmirra Products Corp., 353 U.S. 222 (1957), the United States Supreme Court had held that, under Section 1400(b), a defendant resides in its state of incorporation, rather than applying the broader definition of residence set forth in the general statutory section on venue, 28 U.S.C. § 1391(c). Under Section 1391, a corporation is deemed to reside, for venue purposes, in any judicial district in which the defendant is subject to the court’s personal jurisdiction. 28 U.S.C. § 1391(c)(2). Since 1990, the Federal Circuit Court of Appeals had applied Section 1391 to patent cases, meaning plaintiffs could sue in any venue where the defendant was subject to personal jurisdiction (e.g., anywhere the allegedly infringing product was sold). This gave plaintiffs asserting patent infringement broad power to select a venue in which to file suit, and led many plaintiffs to file suit in the Eastern District of Texas, which was widely considered to be a friendly venue for patent holders.

In TC Heartland, the Supreme Court has significantly rolled back plaintiffs’ venue options. Absent congressional action to amend the patent venue statute, the decision will likely lead to an increase in the number of suits in Delaware federal court, where many companies are incorporated.

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