PATENT INFRINGEMENT VENUE AFTER TC HEARTLAND

In this past year the U.S. Supreme Court decided TC Heartland LLC v. Kraft Foods Grp. Brands LLC[1] and made a major change in the prevailing practice in federal courts regarding proper venue in patent infringement cases. By way of background, venue in federal civil cases generally is controlled by the federal venue statute, 28 U.S.C. § 1391, while venue in patent infringement cases is governed by the patent venue statute, 28 U.S.C. § 1400(b). 

In TC Heartland, the Supreme Court reminded litigators that the patent venue statute constituted “’the exclusive provision controlling venue in patent infringement proceedings’ and thus was not supplemented or modified by the general venue provisions,” citing Stonite Prods. Co. v. Melvin Lloyd Co.[2]

Further, the Supreme Court went on to reject a long-standing view in federal courts that venue with respect to corporate defendants in patent cases was proper in “any judicial district in which such defendant is subject to the court’s personal jurisdiction,”[3] (see 28 U.S.C. § 1391(c)(2)).  The Court held instead that under 28 U.S.C. § 1400(b), a corporate defendant resides only in its state of incorporation.[4]  Thus, after TC Heartland, a domestic corporation may be sued for patent infringement (1) in its state of incorporation, or (2) where it has committed acts of infringement and has a regular and established place of business.

The Patent Venue Statute is the Exclusive Authority for Venue in Patent Infringement Suits

The exclusive authority of the patent venue statute has been the law of the land at least since Stonite was decided in 1942, and its holding reiterated in 1957 in Fourco Glass Co. v. Prods. Corp.[5] Nonetheless, a number of practitioners both before and after the Supreme Court’s decision in TC Heartland, have routinely alleged venue in patent infringement cases under both the patent venue statute and the general federal venue statute.  For example, in 17 patent infringement complaints filed in the U.S. District Court for the Eastern District of Virginia from January 1, 2017 to May 21, 2017 (the day before the Supreme Court decided TC Heartland) venue was alleged under both the patent venue statute and the general federal venue statute.[6]  In 5 of the 6 patent infringement complaints filed in the same court from November 1, 2017 to March 20, 2018, well after the Supreme Court’s ruling, venue was alleged under both statutes, while in one case the patent venue statute was alleged as sole authority.[7]  Thus, it seems the reminder by the Supreme Court in TC Heartland that in patent infringement cases, the patent venue statute is the sole authority for venue was ignored by 5 of the 6 filers.  Whether because of caution, habit or ignorance we cannot say. 

“Residence” Under the Patent Venue Statute

The primary issue before the court in TC Heartland was whether the statement of “deemed” residency in the general federal venue statute extended to the patent venue statute.  The relevant language in the general venue statute with respect to the residency of a defendant corporation is:

 

(c) For all venue purposes--

 

(2) [A corporation] shall be deemed to reside, if a defendant, in any judicial district in which such defendant is subject to the court’s personal jurisdiction with respect to the civil action in question …

 

28 U.S.C. § 1391(c)(2). 

 

The patent venue statute refers to the residency of a defendant as follows:

 

Any civil action for patent infringement may be brought in the judicial district where the defendant resides, or … .

 

28 U.S.C. §1400(b).

 

The Supreme Court had to decide whether Congress’ use of the phrase “[f]or all venue purposes,” in section 1391(c) meant that the statement in subsection 1391(c)(2) of where a corporate defendant “shall be deemed to reside” should be read into “where the defendant resides” in the patent venue statute, §1400(b).

 

The Court in an 8-0 decision (with Justice Gorsuch not participating) had little trouble ruling against reading language from section 1391(c)(2) into section 1400(b) despite the Federal Circuit having twice ruled in favor of such incorporation (see VE Holding Corp.[8] and In re TC Heartland.[9]).  In VE Holding Corp the Federal Circuit found the 1988 amendment language in section 1391(c) (“For purposes of venue under this chapter …”) to be “exact and classic language of incorporation.”[10]  In TC Heartland, the Federal Circuit held the 2011 amendment language in section 1391(c): “For all venue purposes,” was a “broadening of the applicability of the definition of corporate residence, not a narrowing,”[11] and thus reaffirmed its decision in VE Holding

 

In reversing, the Supreme Court relied heavily on its prior decision in Fourco Glass, which had rejected reading in language from section 1391(c) and ruled that for purposes of section 1400(b), a corporation was resident only in its state of incorporation.[12] It reminded the Federal Circuit that the current 2011 amendment language in section 1391(c) (“For all venue purposes …”) was not materially different from the “for venue purposes” language in the statute interpreted in Fourco Glass.[13] 

 

The Supreme Court also rejected the argument that in its amendments to section 1391(c), Congress had intended the language in that section to be applied to the patent venue statute.  The Court stated that there was no “relatively clear statement of intent in the text of the amended provision,” as there would have been according to Congressional practice if Congress had so intended.[14]  The Court also pointed out that section 1391(a) contains a “savings clause” (“Except as otherwise provided by law—“)

which strengthens the Fourco holding by expressly contemplating that certain venue statutes may retain their own definitions of “reside.”[15]

 

 

 

Toikka Law Group stands ready to assist you with venue questions pertaining to your, or your adversary’s, filing of a patent infringement action.  We also provide local counsel representation in the federal courts of the District of Columbia, Virginia, Maryland and Florida.

 

© 2018 Richard S. Toikka.  All rights reserved.

 

 

[1] 137 S. Ct. 1514 (2017)

[2] 315 U.S. 561, 563 (1942)

[3] In 1990, the Federal Circuit held that Congress’s 1988 amendment of the general venue statute, 28 U.S.C. § 1391, affected the interpretation of “reside[]” within the patent venue statute, 28 U.S.C. § 1400(b). VE Holding Corp. v. Johnson Gas Appliance Co., 917 F.2d 1574, 1584 (Fed. Cir. 1990), abrogated by TC Heartland LLC v. Kraft Foods Grp. Brands LLC, 137 S. Ct. 1514 (2017).  

[4] 137 S. Ct. at 1517

[5] 353 U.S. 222, 229 (1957) 

[6] We excluded all cases in which non-patent infringement claims were asserted, one case in which no statutory basis for venue was alleged, and another case in which the pro se complaint was sealed so we could not determine the alleged basis for venue.  Also, the sample size of 17 does not consist of entirely independent cases because a single law firm filed 7 complaints on behalf of the same plaintiff and another firm filed 2 on behalf of another plaintiff. 

[7] Again, we excluded all cases in which non-patent infringement claims were asserted.

[8] 917 F.2d at 1584.

[9] 821 F.3d 1338, 1341-43 (Fed. Cir. 2016)

[10] 917 F.2d at 1579.

[11] 821 F.3d at 1341.

[12] TC Heartland, 137 S. Ct. at 1519, citing and explaining Fourco.

[13] Id. at 1520.

[14] Id.

[15] Id. at 1521.