Patent Venue Coming Before the Supreme Court? We’ll Find Out Soon
In September of 2016, TC Heartland LLC petitioned the Supreme Court for a writ of certiorari in the hope that the Supreme Court would intervene and change what many believe has been an incorrect precedent set forth by the Federal Circuit governing venue in patent cases over the past 26 years. This precedent has led to widespread forum shopping and has allowed for the incredible rise to prominence of the Eastern District of Texas and other patent litigation hot spots. Amicus briefs are due on October 17, 2016, and there should be no shortage of voices straining to be heard in an attempt to convince the Supreme Court that change has to be made.1
Venue in patent cases is governed by 28 USC §1400(b), which provides that patent infringement actions “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.”2 But what does “reside” mean in this context? Herein lies the issue, as §1400(b) does not say. However, the general venue statute for civil actions, 28 USC §1391(c) states that a corporate defendant can be said to reside wherever it is subject to personal jurisdiction, thus not limiting “reside” to the state of incorporation.3
In Fourco Glass Co. v. Transmirra Products Corp.,4 the Supreme Court made clear that §1400(b) was not to be supplemented with §1391(c), and so a corporate defendant in a patent infringement action was only to be considered a resident of the state in which it was incorporated. Congress amended §1391(c) in 1988; one important change being the inclusion of the phrase “for purposes of venue under this chapter.” This was important because both §1391(c) and §1400(b) are within Chapter 87 of Title 28 of the United States Code.5 that 1391(c) applied to patent cases and extended venue to any jurisdiction where the defendant could be subject to personal jurisdiction.
This expansion of venue in patent cases encouraged forum selection to be a main part of litigation strategy, and has given rise to the dominance of jurisdictions such as the Eastern District of Texas. Some patent hot spot jurisdictions have become known for being plaintiff-friendly, and being able to litigate there could have an impact on the ultimate outcome of a case. Thus, when TC Heartland came before the Federal Circuit in April of this year and again argued that §1391(c) should not apply to patent cases governed by §1400(b), it got plenty of attention. In the end, the Federal Circuit stuck to its guns and upheld VE Holding.6
TC Heartland LLC has petitioned the Supreme Court to grant certiorari. Will the Supreme Court take the case? If yes, which way will the Supreme Court rule? Will the Supreme Court hold that the past 26 years of patent venue decisions have been incorrect, overturn the Federal Circuit’s precedent established in VE Holding, and reinstate Fourco? Or will the Supreme Court agree with the Federal Circuit that the VE Holding standard is more in tune with Congress’ intent for patent venue? A decision by the Supreme Court has the potential to impact the way in which patent cases are litigated and could diminish the popularity of current hot spot jurisdictions which currently hear most patent matters.
For more background information:
28 USC §1400(b).↩
28 USC §1391(c).↩
353 U.S. 222 (1957).↩
http://www.bakerbotts.com/ideas/publications/2016/01/ip-report-s-kuhn [https://perma.cc/M87V-WE5A] Then in 1990, the Federal Circuit went against the Supreme Court’s precedent from Fourco and held in VE Holding Corporation v. Johnson Gas Appliance Company,[footnote]917 F.2d 1574 (Fed. Cir. 1990).↩
In Re TC Heartland LLC, 821 F.3d 1338 (Fed. Cir. 2016).↩