On May 22, 2017, the United States Supreme Court issued its much-anticipated decision in TC Heartland LLC v. Kraft Food Group Brands LLC. In a unanimous decision of the Court delivered by Justice Thomas (minus Justice Gorsuch who did not participate in consideration of the case), the Supreme Court reversed the Federal Circuit and ruled that 28 U.S.C. 1400(b) is the only applicable venue statute in patent infringement cases, and that 28 U.S.C. 1391(c) did not modify or amend 1400(b) or the Court’s 1957 ruling in Fourco Glass Co. v. Transmirra Products Corp.
Pursuant to § 1400(b), a “patent infringement may be brought in the judicial district where the defendant resides, or where the defendant has committed acts of infringement and has a regular and established place of business.” Under § 1391(c), a corporation is deemed to be a resident of “any judicial district in which such defendant is subject to the court’s personal jurisdiction….”
In Fourco Glass Co. v. Transmirra Products Corp., 353 U.S. 222 (1957), the Supreme Court held that § 1400(b) is not to be supplemented by § 1391(c) and that “§ 1400(b) is the sole and exclusive provision controlling venue in patent infringement actions….” While that might seem to have ended the inquiry on its face, the Federal Circuit in 1990 decided VE Holding Corp. v. Johnson Gas Appliance Co., 917 F. 2d 1574 (1990), which announced its view that the Judicial Improvements and Access to Justice Act of 1988 made 1391(c) applicable to patent infringement actions.
Following VE Holding, no new developments occurred until Congress adopted the current version of §1391 in 2011 (again leaving §1400(b) unaltered). Section 1391(a) now provides that, “[e]xcept as otherwise provided by law…this section shall govern the venue of all civil actions brought in district courts of the United States.” And §1391(c)(2), in turn, provides that, “[f]or all venue purposes,” certain entities, “whether or not incorporated, shall be deemed to reside, if a defendant, in any judicial district in which such defend- ant is subject to the court’s personal jurisdiction with respect to the civil action in question.”
In TC Heartland, the Supreme Court determined that Congress did not intend to change the meaning of 1400(b), or to overrule the decision in Fourco Glass because “[W]hen Congress intends to effect a change of that kind, it ordinarily provides a relatively clear indication of its intent in the text of the amended provision.” Furthermore, the Supreme Court simply dismissed as unbelievable the thought that Congress ratified the Federal Circuit’s decision in VE Holding with the 2011 amendments: “In short, nothing in the text suggests congressional approval of VE Holding.”
Ultimately, the question those supporting TC Heartland wanted the Supreme Court to address was whether the Eastern District of Texas, which is home to approximately 35% of all patent litigations because it is perceived to be patent-owner friendly, is a proper venue for patent owners to be choosing. This decision should have an immediate negative impact on the patent infringement docket in the Eastern District of Texas, although it is unlikely it will drop to zero, given the number of large corporations that do have regular places of business within the district. Still, with so many corporations incorporated in Delaware, it is entirely likely that the District of Delaware will become the new venue of choice.
For reaction from industry experts following the case, please see: Industry reaction to SCOTUS patent venue decision in TC Heartland v. Kraft Food Group.
Tags: patent, patents, SCOTUS, Supreme Court, TC Heartland, venue
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