In an 8-0 decision in TC Heartland LLC vs. Kraft Foods Group, the Supreme Court reined in venue in patent litigation, ruling that “for purposes of §1400(b) a domestic corporation ‘resides’ only in its State of incorporation.” The decision overrules the previous precedent that a corporation “resides” in any district where it is subject to personal jurisdiction, and may eliminate much of the widespread forum-shopping present in patent litigation. Nearly 40% of patent infringement suits in the entire country are brought in the rural, but very plaintiff friendly, Eastern District of Texas. Post-TC Heartland, venue would not be proper in many of those cases. It is likely that we will see patent infringement lawsuit filings flowing out of the Eastern District of Texas and into the District of Delaware, where many entities are incorporated, and other districts where business is more prevalent.
The Supreme Court established that venue is proper (1) where a defendant is incorporated, and (2) where the defendant has committed acts of infringement and has “a regular and established place of business.” In the coming months we can expect litigation regarding what “a regular and established place of business” means and especially for importing manufacturers and e-commerce. Particularly, the Court noted that foreign companies can be an exception to §1400(b).
Clinton E. Duke, a registered patent attorney and a member of the Intellectual Property and Litigation Sections at Durham Jones & Pinegar, feels that this is a very welcome decision for patent infringement defendants and particularly for those that find themselves faced with frivolous lawsuits. For decades, patent holders have been able to escalate the nuisance value of a patent infringement case simply by filing in a place like the Eastern District of Texas. More problematic, venues like this have continued to attract patent plaintiffs, and the dollars their lawsuits bring, by finding in plaintiffs’ favor far too often. “Hopefully, this ruling help bring justice and fairness, rather than just individual and regional economics, back to the forefront of patent infringement disputes,” said Clink Duke, Shareholder.