TC Heartland May Curb a 27-Year Trend That Encouraged Forum Shopping and Promoted the Centralization of Patent LitigationPublications - Client Alert | June 9, 2017
For the past 27 years, patent holders have enjoyed relative freedom to choose where to bring infringement claims. Generally, any patent infringement action may be brought where either “the defendant resides, or . . . has committed acts of infringement and has a regular and established place of business.” 28 U.S.C. § 1400(b) (the “patent venue statute”). Before the Supreme Court’s recent ruling, courts relied on a patent venue standard created by VE Holding Corp. v. Johnson Gas Appliance Co., 917 F.2d 1574 (Fed. Cir. 1990) (VE Holding), which supplanted the patent venue statute’s meaning of “resides” with the meaning used by 28 U.S.C. § 1391(c) (the “general venue statute”). VE Holding interpreted “resides” to include any jurisdiction where the defendant is subject to the personal jurisdiction of a court. Thus, VE Holding’s standard effectively enables patent holders to bring infringement claims against defendants in any jurisdiction where the defendant sells its products. Not surprisingly, VE Holding led to an unprecedented centralization of infringement claims in plaintiff-friendly jurisdictions. By the end of 2015, more than 50% of all patent infringement cases were filed in either the first or second most plaintiff-friendly jurisdictions in America, as ranked by Price Waterhouse Coopers.
On May 22, 2017, the Supreme Court unanimously and unambiguously rejected VE Holding’s standard and held that the patent venue statute exclusively controls where venue lies for purposes of patent infringement litigation. Further, the Court unequivocally rejected all arguments that the term “resides” derives its meaning from the general venue statute and reiterated that, under the patent venue statute, a domestic corporation only “resides” in its state of incorporation. Id. Accordingly, the Court announced that patent infringement suits may be brought only in the judicial district where the defendant either: (1) is incorporated; or (2) has committed infringement and has a regular and established place of business. Id.
On its face, TC Heartland appears to limit the number of jurisdictions where defendants must defend against infringement claims, reducing the opportunity for patent plaintiff forum-shopping. At least for consumer products, however, patent holders may still bring patent infringement suits against retailers wherever they sell allegedly infringing products and have a regular and established place of business. The manufacturers of the allegedly infringing products could then be dragged along by virtue of their indemnification obligations to the resellers. Where this “sue the reseller” strategy will not work, plaintiffs may be forced to choose between the defendant’s headquarters, risking a negative (for the plaintiff) hometown verdict, or Delaware, where so many large and publicly held companies are organized. The District of Delaware is already “borrowing” judges to fill vacancies. Consequently, the anticipated influx of newly filed and transferred patent cases will make litigation delay, typically the enemy of the patent plaintiff, inevitable. This may make Delaware an unfriendly forum for most patent plaintiffs.
For additional information about the patent venue statute, TC Heartland, or to discuss protecting your intellectual property assets, please contact your Kutak Rock attorney, the authors of this client alert, or one of our intellectual property lawyers.
 TC Heartland LLC v. Kraft Foods Grp. Brands LLC, No. 16-341, 2017 WL 2216934 (U.S. May 22, 2017).