For close to 30 years, patent owners have been able to strategically select the best location for a patent litigation, assuming that the defendant sold the contested product in that location. Popular courts include the Eastern District of Texas and the Eastern District of Virginia. But not anymore... Last week, in a unanimous decision, the U.S. Supreme Court narrowed the possible venues for bringing patent infringement suits, holding that a defendant can be sued under 1400 b(1) only as a "resident" of its state of incorporation, not in any state where it sells products. TC Heartland LLC v. Kraft Foods.
Why the change, after all these years? The patent venue statute, 28 U.S.C. 1400(b), states that any civil action for patent infringement may be brought in a judicial district where: (1) "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 has long held that U.S. corporations "reside" only in their state of incorporation under this statute. However, since the early 1990s, the Federal Circuit has interpreted the statute as permitting patent suits to be filed essentially anywhere a defendant has sold products, under the theory of "residence" contained in the general venue statute, 28 U.S.C. 1391 (which states that venue is proper in any district where the defendant is "subject to personal jurisdiction").
Kraft Foods filed suit for patent infringement against TC Heartland in Delaware. TC Heartland, which is organized under Indiana law and is headquartered in Indiana, moved to transfer venue to a district court in Indiana, arguing that it did not "reside" in Delaware. Both the district court and the Federal Circuit denied TC Heartland's motion, holding that essentially because TC Heartland's products were sold in Delaware, venue there was proper under 28 U.S.C. 1391.
In a unanimous decision authored by Justice Thomas, the Supreme Court reversed the Federal Circuit, holding that: (1) for Section 1400 purposes, a defendant "resides" only in its state of incorporation; and (2) Section 1391 does not modify Section 1400, in that proper venue for patent cases is not expanded to cover any venue where there is personal jurisdiction over the defendant.
The ruling will limit the ability of many patent owners to pursue cases in "patent-friendly" jurisdictions such as the Eastern District of Texas (where around 40% of patent infringement suits are currently filed). However, an increase is expected in patent suits filed in the District of Delaware, since many companies are incorporated there.
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