The U.S. Supreme Court recently issued a unanimous decision in TC Heartland LLC v. Kraft Food Group Brands LLC related to proper venue for patent infringement actions against a domestic corporation. Prior to this decision, a patent plaintiff was essentially able to shop for a plaintiff-friendly venue for bringing a patent infringement action. These jurisdictions, which were often far removed from the defendant’s state of incorporation, rarely allowed for a transfer of venue after the action was filed. The Supreme Court’s decision now significantly narrows the available venues for patent infringement actions against domestic corporations, thereby limiting this type of forum shopping by patent plaintiffs.
The Patent Venue Statute The Supreme Court’s decision dealt with the proper interpretation of 28 U.S.C. § 1400(b), which is the patent-specific venue statute. This statue allows a patent infringement action to be brought in a judicial district: (1) where the defendant resides, or (2) where the defendant has committed acts of infringement and has a regular and established place of business. The Supreme Court’s decision evaluated the question of where proper venue lies for a patent infringement lawsuit against a domestic corporation based on the interpretation of the term “resides” in the statute.
The Federal Circuit’s Interpretation
Prior to TC Heartland, the Federal Circuit interpreted the term “resides” to incorporate the broader definition of corporate residence found in the general venue provisions for non-patent cases. The Federal Circuit’s interpretation allowed a plaintiff to file a patent infringement action in any judicial district in which the defendant corporation was subject to personal jurisdiction. Thus, a defendant’s residence, according to the Federal Circuit’s interpretation, could include a number of venues outside of the defendant’s place of incorporation or actual place of business in which the defendant could be sued for patent infringement.
TC Heartland LLC (TC Heartland) is an entity organized under Indiana law and headquartered in Indiana, while Kraft Food Group Brands LLC (Kraft) is an entity organized under Delaware law with a principal place of business in Illinois. Kraft sued TC Heartland for patent infringement in the District Court for the District of Delaware. Although TC Heartland shipped allegedly infringing products into Delaware, TC Heartland is not registered to conduct business in Delaware and has no meaningful local presence there.
TC Heartland sought to have the case dismissed or transferred to the District Court for the Southern District of Indiana arguing that it did not “reside” in Delaware under the terms of the patent venue statute. The Delaware District Court denied TC Heartland’s motion, relying on the Federal Circuit’s interpretation of the term “resides” in the patent venue statute, and determining that TC Heartland was subject to personal jurisdiction in Delaware based on TC Heartland’s shipping of allegedly infringing products into Delaware. TC Heartland appealed the denial of its motion.
The Supreme Court’s Decision The Supreme Court held that the Federal Circuit’s interpretation was improper, and that for purposes of the patent venue statute, a domestic corporation “resides” only in its state of incorporation. The Supreme Court relied on its prior precedent holding that the patent venue statute constituted the exclusive provision controlling venue in patent infringement proceedings and could not be supplemented or modified by general venue provisions. The Supreme Court further held that subsequent amendments to the general venue statutes did not alter the basis for the Supreme Court’s precedent.
The Supreme Court’s decision limits the proper venue against a domestic corporation to the corporation’s state of incorporation, or a venue where the defendant has committed acts of infringement and has a regular and established place of business. This decision significantly limits the ability for plaintiffs to forum shop in order to take advantage of what may be perceived to be plaintiff-friendly jurisdictions.