The Supreme Court issued a unanimous decision narrowing the scope of the patent-venue statute with respect to corporations in TC Heartland LLC v. Kraft Foods Group Brands LLC on May 22, 2017. Venue, along with personal jurisdiction and subject-matter jurisdiction, is a due process requirement that must be met before a court can decide a patent case.
The United States Court of Appeals for the Federal Circuit effectively merged the personal jurisdiction requirement with the venue requirement for corporations in patent cases in VE Holding Corp. v. Johnson Gas Appliance Co., 917 F. 2d 1574 (1990). The Federal Circuit determined that an amendment to the general venue statute also applied to a specific patent-venue statute. Through this amendment, corporations were deemed to “reside” in any judicial district in which they were subject to personal jurisdiction.
The Supreme Court overruled the 27-year-old Federal Circuit interpretation of the patent-venue statutes in TC Heartland and determined that “domestic corporations” only reside within their state of incorporation. However, the decision does not appear to extend to alien corporations.
The decision has major implications with respect to the practice of forum shopping, which is a practice in patent law in which a patent owner attempts to bring a lawsuit in a court that is known for favorable treatment of patent owners. Many courts, lawmakers, patent practitioners and corporations have been critical of this practice, especially by so-called “patent trolls” (i.e., non-practicing entities that aggressively enforce their patents).
Since many large corporations have been incorporated in Delaware, it is likely that many patent cases that were going to be filed in the Eastern District of Texas, a reputed favorable forum for patent owners, are now going to be filed in Delaware.
Another consequence of this decision is that it may lessen calls for patent reform, which is directed at a perceived need to “rein in the patent trolls.”
Finally, the patent-venue statute includes a second, disjunctive prong that indicates that a patent-infringement lawsuit may be brought “where the defendant has committed acts of infringement and has a regular and established place of business.” 35 U.S.C. § 1400. This prong has not been applied to many corporations by many courts because of the Federal Circuit’s previously applied expansive interpretation of the term “resides.” However, this is likely to change in the near future, as courts apply the Supreme Court’s narrowed test for the first prong of the venue statute.