Twenty-five years ago, the Federal Circuit decided a case that transformed where (and how) patent infringement cases can be litigated.1 By expanding the scope of where a corporate defendant “resides” for venue purposes, the court in VE Holding Corp. v. Johnson Gas Appliance greatly increased the number of states and courts in which many corporations can be sued for infringement.2 This decision has contributed to the development of forum-shopping and related litigation issues over the past several years. One company, TC Heartland, LLC, is now urging the Federal Circuit to overturn that precedent and restore more stringent venue restrictions through a writ of mandamus, and dozens of others are joining the debate.
Venue in patent cases is governed by 28 U.S.C. § 1400(b), which provides that venue is appropriate either: (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.” Unfortunately, § 1400 does not define the term “resides” or explain how it should be applied to corporate defendants, thereby leaving it to the courts to deduce Congress’s intent. 28 U.S.C. § 1391(c) is a general venue statute for civil actions which does explicitly define a corporation’s “residence.” However, prior to the Federal Circuit’s 1990 decision in VE Holding, Supreme Court precedent prohibited courts from supplementing § 1400(b) with the definition from § 1391(c) because § 1400(b) was deemed the “sole and exclusive provision controlling venue in patent infringement actions.”3 During that period, a corporate defendant in a patent infringement action would generally be considered to be a resident “only of the state in which it is incorporated.”4
In 1988, Congress made several amendments to § 1391(c). Among those amendments was the addition of the clause “[f]or purposes of venue under this chapter…” at the beginning of the provision.5 Because § 1391 and § 1400 are both located in Chapter 87 of Title 28 of the U.S. Code, the Federal Circuit concluded in VE Holding that Congress clearly intended that § 1391(c) apply to § 1400(b) with respect to the meaning of “resides.”6 Congress also redefined a corporation’s residence in § 1391(c) as “any judicial district in which it is subject to personal jurisdiction.”7 Thus, the VE Holdingdecision empowered patent plaintiffs to sue corporate defendants for infringement in any district court in which the corporation is subject to personal jurisdiction.
Since VE Holding, § 1391(c) has been revised once more by Congress. The Federal Courts Jurisdiction and Venue Clarification Act of 2011, in relevant part, replaced the phrase “[f]or purposes of venue under this chapter…” with “[f]or all venue purposes.”8 The 2011 Act also introduced a new § 1391(a) entitled “Applicability of section.” § 1391(a) now states, in relevant part, that “[e]xcept as otherwise provided by law -- (1) this section shall govern the venue of all civil actions brought in district courts of the United States[.]”
On January 14, 2014, Kraft Food Group Brands LLC sued TC Heartland for patent infringement in the District of Delaware.9 TC Heartland moved to dismiss claims for lack of personal jurisdiction and to transfer the case to a different venue.10Following the district court’s denial of its motion, TC Heartland filed a petition for a writ of mandamus with the Federal Circuit, seeking an order directing the dismissal or transfer of the case.11 TC Heartland argues in both the district court motion and the Federal Circuit petition that the 2011 Act’s revisions to §§ 1391(a) and (c) nullify the court’s previous ruling in VE Holding.12 Kraft’s response (and the district court’s position) is that: (1) the new language in § 1391(c), if anything, broadens the applicability of the section, and (2) § 1400(b) does not conflict with § 1391 (and therefore does not “otherwise provide” as stated in new § 1391(a)).13 In its petition to the Federal Circuit, TC Heartland additionally argues that VE Holding should be re-examined en banc because it directly conflicts with the Supreme Court holding inFourco, and has produced “enormous venue shopping opportunities in patent infringement actions.”14
While TC Heartland’s arguments are couched in statutory interpretation and analysis of legal precedent, policy concerns are understandably at the forefront in this debate. Two amicus briefs have been filed by a total of 27 amici, and many of the arguments focus on the effects of forum shopping. One brief describes detrimental effects of forum shopping on the judiciary, such as “forum selling”15 and inconsistent results across jurisdictions.16 The other brief, filed by 24 domestic companies, argues that forum shopping undermines the public policies of scrutinizing issued patents and encouraging negotiation over litigation.17
Although Kraft does agree with many of the concerns raised by TC Heartland and the amici regarding forum shopping, it rejects TC Heartland’s approach to solving the problem. Kraft argues that TC Heartland’s legal analysis is flawed, and the policy considerations do not warrant the abandonment of decades of legal precedent in favor of a “defendant-centric venue rule.”18 According to Kraft, the relevant policy concerns are properly addressed by Congress, which has the flexibility to draft legislation to “combat perceived forum-shopping abuses without creating unintended litigation advantages for patent infringers.”19 Whether the Federal Circuit defers to Congress or uses this opportunity to, once again, re-interpret Congressional intent with respect to the venue rules remains to be seen.