The Unites States Supreme Court is getting more and more involved in patent related matters. In this year’s decision of TC Heartland LLC v. Kraft Foods Group Brand LLC, No. 16-341, May 22, 2017 (U.S.) , the Supreme Court significantly restricted where a patent owner can file a patent infringement action. For the last twenty plus years, patent owners had routinely filed infringement lawsuits in federal district courts that are known to be more plaintiff-friendly, such as the feared Eastern District of Texas (located in a relatively rural part of the State of Texas that has no major technological industry). This type of “forum shopping” has been eliminated.
The TC Heartland case is about a patent infringement lawsuit between two companies located in different states. TC Heartland is a company that is incorporated as well as located in Indiana. Kraft Foods is a company that is incorporated under Delaware law and located in Illinois. Kraft Foods sued TC Heartland for patent infringement in the federal district court located in Delaware. TC Heartland, however, is not incorporated in Delaware nor does it have a business location there. Its only connection to the Diamond State is that the accused infringing products are shipped into it.
TC Heartland asked the Delaware district court to have the case transferred to the district court in Indiana (where it is headquartered). The request was refused by the Delaware district court and, on appeal, the Federal Circuit Court of Appeals agreed. TC Heartland then sought the assistance of the Supreme Court.
There is a special patent venue statute which provides that infringement actions must be filed in the judicial district where 1) the defendant resides or 2) has committed infringement and has a regular and established place of business. The related general venue statute states that “residence” for a corporate defendant is any judicial district where the corporation is subject to personal jurisdiction. Because the Delaware district court had personal jurisdiction over TC Heartland (since the accused products were being shipped into Delaware), the Federal Circuit Court of Appeals concluded that TC Heartland resided in Delaware under the general venue statute and, therefore, also under the patent venue statute.
The Supreme Court, in a unanimous decision, did not agree. The Court relied on a previous decision in finding that Congress enacted the patent venue statute as a self-contained venue statute and that “resides” for purposes of the patent venue statute means the state of incorporation (and only the state of incorporation). The Court further concluded that the patent venue statute is the only law that is applicable to where patent infringement actions should proceed and that it should not be supplemented by any other federal statute.
Accordingly, the geographic location where a patent case may be filed is now limited to (1) a district court in a State where a defendant is incorporated or (2) a district court in a location where a defendant has a regular and established place of business and in which it committed accused acts of patent infringement.
The Supreme Court’s decision will undoubtedly have a serious effect on the filing of patent infringement suits. A patent owner’s choices when deciding where to file an infringement action are now greatly reduced. A patent owner can no longer drag companies to far away inconvenient forums that presumably favor the patent owner, but have little connection to the lawsuit.