The small town of Marshall, Texas, located in the judicial Eastern District of Texas, has been described as the “patent litigation capital of America” because a large percentage of patent infringement lawsuits in the United States are filed there. In 2015, nearly 44% of all patent cases were filed in the Eastern District of Texas, with this particular courthouse in Marshall handling more patent cases than the federal district courts for Los Angeles, Chicago, San Francisco, New York, Boston, and Delaware combined.
Patent owners filing infringement lawsuits may prefer the Eastern District of Texas because of its reputation for fast trials and plaintiff-friendly verdicts. However, plaintiffs ordinarily cannot file a lawsuit anywhere they please. Venue in patent cases is nominally governed by a patent-specific venue statute, 28 U.S.C. § 1400(b), which provides that patent cases may be filed in a district in which the defendant resides, or has a place of business and has committed infringing acts. The meaning of the term “resides” can be somewhat unclear when the defendant is a company, but in 1957 the Supreme Court ruled in Fourco Glass Co. v. Transmirra Pros. Corp. that venue for patent cases was controlled by § 1400(b) and could not be supplemented by the general venue statute, 28 U.S.C. § 1391. This limited the number of places a patent infringement lawsuit could be filed.
However, in 1990, the Federal Circuit, the main appeals court responsible for patent issues, held in VE Holding Corp. v. Johnson Gas Appliance Co. that Congressional amendments to the venue laws in the 1980s broadened the general venue statute to apply to all civil cases, including patent infringement lawsuits. This increased the number of states in which patent plaintiffs could file lawsuits, resulting in patent infringement litigation becoming concentrated in a handful of federal courts preferred by plaintiffs, such as the Eastern District of Texas.
That may soon change. On March 26, 2017, the Supreme Court will hear oral argument in TC Heartland v. Kraft Foods. In this case, Kraft accused TC Heartland of infringing one of Kraft’s patents and filed a patent infringement lawsuit in Delaware. TC Heartland sought to transfer the case to Indiana, where it is incorporated, but both the trial court and the Federal Circuit rejected TC Heartland’s arguments, stating that TC Heartland was subject to the Delaware court’s jurisdiction under the general venue statute.
However, TC Heartland has taken its case to the Supreme Court, arguing that subsequent Congressional amendments to the venue laws nullify the holding of the VE Holding case. Specifically, in 2011, Congress amended the venue law to say that it governs all civil cases, except as otherwise provided by law. TC Heartland argues that these amendments restore the Supreme Court’s ruling in Fourco, because the patent-specific venue statute, 28 U.S.C. § 1400(b) is one such law, and limits the number of venues available to patent plaintiffs.
The case has ignited substantial interest both within and outside the legal world, as demonstrated by the nearly 40 amicus briefs filed with the Supreme Court. These briefs represent the views of inventors, law schools, economics professors, the American Bar Association, the American Bankers Association, and numerous technology and pharmaceutical companies, among others. Those supporting TC Heartland argue that the current venue system results in unfair “forum shopping,” while others contend that narrowing venue choices would negatively impact individual inventors, who would be forced to file suit effectively on a defendant’s “home turf.”