This week, the Supreme Court unanimously rejected the Federal Circuit’s broad reading of the patent venue statute for domestic corporations in TC Heartland LLC v. Kraft Foods Group Brands LLC, No. 16-341, 2017 WL 2216934 (U.S. May 22, 2017).[1] Previously, the Federal Circuit had held that venue for patent infringement suits was proper in any court having personal jurisdiction over the defendant. See, e.g., VE Holding Corp. v. Johnson Gas Appliance Co., 917 F.2d 1574 (1990); Acorda Therapeutics Inc. v. Mylan Pharm. Inc., 817 F.3d 755, 757 (Fed. Cir. 2016), cert. denied sub nom. Mylan Pharm. v. Acorda Therapeutics, 137 S. Ct. 625 (2017).

The patent venue statute is codified in 28 U.S.C. § 1400(b), and provides that “[a]ny civil action for patent infringement may be brought [1] in the judicial district where the defendant resides; or [2] where the defendant has committed acts of infringement and has a regular and established place of business.” Using a plain reading of the statute, the Supreme Court reaffirmed that venue in patent cases is proper only (1) in the judicial district where the domestic defendant resides; or (2) where the domestic defendant has committed acts of infringement and has a regular and established place of business.

The venue-specific facts of TC Heartland were quite common for a patent infringement case. Kraft Foods sued TC Heartland in Delaware for patent infringement. Kraft Foods is incorporated in Delaware, a logical “home” jurisdiction for its case. TC Heartland, by contrast, is incorporated and headquartered in Indiana with no meaningful presence in Delaware, although it shipped some accused products into Delaware. The Delaware court, as well as the Federal Circuit, rejected TC Heartland’s arguments that venue was improper.

The Supreme Court reversed, noting that its decision in Fourco Glass Co. v. Transmirra Products Corp., 353 U.S. 222 (1957), which restricted the “resides” clause in the venue statute to where a defendant was incorporated, was still applicable precedent.

In general, some clear ramifications from the Supreme Court’s ruling in TC Heartland are that (1) more patent cases will be brought in Delaware, since many US corporations are incorporated there; and (2) the patent-friendly jurisdiction of the Eastern District of Texas will have a less crowded docket because defendants incorporated outside of Texas or without a regular and established place of business in the Eastern District will likely seek to remove any case from that jurisdiction. On the other hand, TC Heartland may not impact companies with large nationwide footprints, as they still may be able to be sued in nearly any district court.

In the Hatch-Waxman context, TC Heartland may have profound effects. Hatch-Waxman cases currently are concentrated in Delaware and New Jersey (the “home” jurisdictions for many branded pharmaceutical companies), based on the Federal Circuit’s broad interpretation of personal jurisdiction over generic pharmaceutical companies. See Acorda, 817 F.3d at 763–64. In light of TC Heartland, more suits may proceed in the “home” jurisdictions of the generics, and more venue challenges are likely to come.

A first ANDA filer sued in an unfavorable venue must carefully consider its options in light of TC Heartland. Although the first filer may want to transfer out of the unfavorable venue, it must be aware that the delay in transferring to a new district may extend the case past the 30-month stay, especially in the event of an appeal. And even if the transfer is successful, the branded company may attempt to tie the first filer’s case to any trailing litigation in other districts via multidistrict litigation, which could severely slow the case schedule.

The implications on cost-sharing efforts among generics are also unclear. At present, it is common for generics to be sued in the same district, where they often unite in a joint defense group to share costs and avoid duplication of efforts. After TC Heartland, however, generics may no longer be sued in the same district. Differing case schedules and local rules among the district courts may make it harder to create and coordinate a joint defense group.

The TC Heartland decision is not all bad news for the generic pharmaceutical industry. The positive impact is that generic companies now are able to counter the branded companies’ unilateral selection of forum. For a generic company that neither “resides” in nor has physical presence in New Jersey or Delaware, TC Heartland may mean that it can fight against suit in these jurisdictions. Spreading Hatch-Waxman cases into jurisdictions outside of the congested New Jersey and Delaware systems may speed up decisions and market entry for the generic. Further, a generic company with strong preferences for its “home” jurisdiction may be able to transfer cases at will.

An unusual fallout of TC Heartland may be that non-first to file generic “trailers” may waive venue objections or actively seek to proceed in the same court as the first ANDA filer. This would streamline the joint defense process, reducing individual costs while maximizing efforts. In sum, TC Heartland provides generic companies with the ability to think strategically about their jurisdictional choices.