BREAKING NEWS: Supreme Court Tightens Venue Rules for Patent Cases

U.S. Supreme Court Decisions

Today, the Supreme Court ruled in TC Heartland LLC v. Kraft Foods Group Brands LLC that for venue purposes in patent litigations, a domestic corporation “resides” only in its state of incorporation.  This ruling reflects a significant departure from current patent litigation practice, which treated a domestic corporation as residing anywhere it was subject to the court’s personal jurisdiction, including where it had minimum contacts sufficient for specific personal jurisdiction.

As background, the patent venue statute, 28 U.S.C. § 1400(b), 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.”  In 1957, in Fourco Glass Co. v. Transmirra Products Corp., the Supreme Court held that for purposes of § 1400(b) a domestic corporation “resides” only in its state of incorporation.  In doing so, the Supreme Court concluded that the broader meaning of “resides” in the general venue statute, 28 U.S.C. § 1391(c), was not incorporated into § 1400(b).  Subsequently, Congress amended the general venue statute – in 1988 and again in 2011 – to provide that, in the language of the 2011 version, “[e]xcept as otherwise provided by law” and “[f]or all venue purposes,” a corporation “shall be deemed to reside, if a defendant, in any judicial district in which such defendant is subject to the court’s personal jurisdiction with respect to the civil action in question.”  In 1990, in VE Holding Corp. v. Johnson Gas Appliance, the Federal Circuit held that the 1988 amendments to the general venue statute redefined the meaning of “resides” in  §1400(b).  Since then, courts in patent cases have broadly defined “resides” for purposes of determining venue, consistent with the Federal Circuit’s interpretation of §1400(b) in VE Holdings.

In TC Heartland, Kraft filed a patent infringement lawsuit against TC Heartland in the District of Delaware.  TC Heartland was organized under Indiana law and headquartered in Indiana, but allegedly shipped the infringing products into Delaware and therefore had minimum contacts with Delaware.  TC Heartland moved to transfer venue to Indiana, relying on Fourco and arguing that it did not reside in Delaware and that it had no “regular and established place of business” there either.  The Delaware court denied the motion, relying on the broader definition of “residence” in § 1391(c) and circuit precedent.  The Federal Circuit denied mandamus, holding that because TC Heartland resided in Delaware under § 1391(c), it also resided there for purposes of § 1400(b).  In particular, the Federal Circuit concluded that the statutory amendments to § 1391(c) supplies the definition of “resides” in § 1400(b).

The only question before the Supreme Court in TC Heartland was whether Congress changed the meaning of “resides” in § 1400(b) when it amended § 1391(c).  The Supreme Court held that it did not.   The Supreme Court explained that in Fourco, it “definitively and unambiguously” held that the word “residence” in § 1400(b) is limited to a domestic company’s state of incorporation, and that since Fourco, Congress never amended § 1400(b).   It further explained that had Congress intended to effect a change in § 1400(b) through its amendment of § 1391(c), it would have provided a “relatively clear indication” of its intent to do so in the text of § 1391(c).  The Supreme Court saw no such intent.  Moreover, while § 1391(c) states that it applies “for all venue purposes,” the Supreme Court noted that the version of § 1391(c) at the time of Fourco had similar language.  Because the Supreme Court was not persuaded by that language in Fourco, it similarly was not persuaded by that language now.  Finally, the Supreme Court noted that when § 1391(c) was amended in 2011, there was no indication that Congress ratified the Federal Circuit’s VE Holding.

Notably, the Supreme Court’s ruling is expressly limited to the question of venue in patent cases for domestic corporations.  In particular, the decision does not address the applicable venue rules for unincorporated companies like LLCs and foreign corporations.

For further details regarding the Supreme Court’s decision in TC Heartland, the opinion can be found here.

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