Supreme Court Agrees to Hear Patent Venue Case

Earlier this week, the U.S. Supreme Court granted certiorari to TC Heartland, LLC, a liquid sweetener company based in Indiana was sued in 2014 by Kraft Foods Group Brands LLC in Delaware.  TC Heartland is asking the Court to overturn longstanding precedent set by the Federal Circuit in 1990 in VE Holding Corp. v. Johnson Gas Appliance Co.  Under the precedent established in VE Holding, a patent plaintiff may file an infringement suit in any federal court that has personal jurisdiction over the defendant.  (Generally speaking, a corporation can be subject to personal jurisdiction if there are sufficient sales in the state to establish “minimum contacts.”)  Plaintiffs’ choices about where to file suit are known as “forum shopping,” with many patent plaintiffs choosing to file in just a few districts perceived—whether rightly or wrongly—to be plaintiff-friendly, with the most notable such jurisdiction being the Eastern District of Texas.

Interpretation of Patent Venue Statute

The patent venue statute, 28 U.S.C. § 1400(b), provides that patent infringement actions “may be brought in the judicial district where the defendant resides….”  In a 1957 decision, the U.S. Supreme Court held in Fourco Glass Co. v. Transmirra Products Corp. that in § 1400(b), as applied to corporate entities, the phrase “where the defendant resides” “mean[s] the state of incorporation only.”  In VE Holding, the Federal Circuit developed its more permissive interpretation of Fourco, establishing the existing precedent that TC Heartland claims is contrary to the Supreme Court’s holding in Fourco.

Public Support for Patent Venue Reform

TC Heartland has received large waves of support in its venue reform quest, with notable public support from companies including Adobe, FedEx, and Oracle, and even from Paul R. Michel, retired Chief Judge of the U.S. Court of Appeals for the Federal Circuit.

Possible Effects of Overturning VE Holding Precedent

If TC Heartland is successful in convincing the Supreme Court that § 1400(b) should be interpreted such that plaintiffs may only file infringement proceedings in judicial districts where defendants are incorporated or where defendants have established places of business and have allegedly infringed, “forum shopping” would be drastically curbed, with plaintiffs being forced to consider new strategies for selecting forums for patent litigation.  Perhaps there may even be a reduced number of infringement suits due to a lack of access to courts perceived to be plaintiff-friendly.  Whatever the effect, patent owners around the country will be watching and waiting for the Supreme Court’s ultimate decision.