June 9, 2017

Supreme Court Restricts Venue for Patent Litigation

In TC Heartland LLC v. Kraft Foods Group Brands LLC, the United States Supreme Court on May 22 unanimously limited the proper venue in which patent infringement lawsuits can be brought. The venue statute specific to patent cases provides that “[a]ny civil action for patent infringement may be brought in the judicial district where the defendant resides, or where the defendant has committed acts of infringement and has a regular and established place of business.” 28 U.S.C. § 1400(b) (emphasis added).

The Supreme Court held that a “domestic corporation ‘resides’ only in its State of incorporation for purposes of the patent venue statute.” Thus, venue is only proper for patent cases in (a) a defendant’s State of incorporation or (b) where the defendant has committed acts of infringement and has a regular and established place of business.

In doing so, the Court overturned Federal Circuit law that permitted venue to be found wherever a defendant was subject to personal jurisdiction—i.e., wherever a defendant committed acts of infringement, which for many defendants was nationwide.

Implications – An Increase in Delaware Patent Litigation?

The TC Heartland decision is expected to deliver dramatic results to the patent litigation landscape throughout the nation. Many defendants will no longer be subject to suit in the Eastern District of Texas, a district where a high percentage of all patent cases have been brought in recent years. Instead, venue will only be proper where defendants are incorporated or where they have a regular and established place of business. For many corporations, their place of incorporation is Delaware—making it a viable patent venue in many cases. It is expected that—given the choice between Delaware and a defendant’s home turf elsewhere—many patent plaintiffs will opt to file patent infringement cases in Delaware, a traditionally popular venue in its own right.

Delaware has a long been a popular venue for patent litigation for over a century and has been the second-busiest court behind the Eastern District of Texas in recent years. As such, the state is well-equipped to handle the expected influx of patent cases.

Only time will tell how patent litigation filings will normalize in the wake of TC Heartland. At a minimum, it is expected that patent filings will fall in the Eastern District of Texas and rise in other districts. It is also expected that Delaware will see a significant rise in filings in comparison to most other districts, something the judiciary and legal professionals in Delaware are apt to handle.

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