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SCOTUS Re-Evaluation of Venue Could End Alleged Forum Shopping in Patent Cases

May 16, 2017
Attorney At Law Magazine - Minnesota Edition
Author: Courtland C. Merrill

Venue for patent infringement cases is codified in 28 U.S.C. §1400(b). That statute says a patent infringement suit 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.”

On March 27, 2017, the U.S. Supreme Court heard argument in TC Heartland LLC v. Kraft Food Brands Group LLC, No. 16-341, a case concerning the specific geographic locations available to patent owners to sue alleged infringers for patent infringement. Under the U.S. Court of Appeals for the Federal Circuit’s current interpretation of the federal venue statute, a patent owner may file suit against an infringer in any judicial district in which the defendant is subject to personal jurisdiction. Under that broad interpretation, promulgated by the Federal Circuit nearly 30 years ago, patent owners have wide latitude in selecting the location to enforce patents against accused infringers, because an accused infringer can be subject to personal jurisdiction in virtually any district in which it has sold a product accused of infringement. However, if the Supreme Court accepts the argument by the petitioner in TC Heartland, the practice of filing lawsuits in remote, but perceived patent-friendly judicial districts, with little connection to any party, could be substantially restricted.

Venue for patent infringement cases is codified in 28 U.S.C. §1400(b). That statute says a patent infringement suit 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). In 1957, the U.S. Supreme Court in Fourco Glass Co. v. Transmirra Products Corp., held that the phrase “where the defendant resides” meant the state of incorporation. 353 U.S. 222, 226 (1957). The Fourco Glass court also held that the patent venue statute (§ 1400(b)) is “the sole and exclusive provision controlling venue in patent infringement actions, and that it is not to be supplemented by” the general venue provision for other cases in federal court. Id. at 229.

However, in 1990, the Federal Circuit in VE Holding Corp. v. Johnson Gas Appliance Co., held that 28 U.S.C. § 1391(c) – the federal statute governing “venue generally” applicable to all federal cases – defined where a defendant “resided” under § 1400(b). 917 F.2d 1574 (Fed. Cir. 1990). Applying the general venue statute, the Federal Circuit concluded a defendant was deemed to “reside” in any of the multiple judicial districts in which it could be subject to personal jurisdiction. Personal jurisdiction over a corporation generally requires little more than showing “minimal contacts” between the defendant’s act of infringement and the judicial district. Thus, according to the Federal Circuit, a single act of infringement within a judicial district could make a corporation a “resident,” regardless of whether the corporation has a regular and established place of business within the district.

For nearly 30 years after VE Holding, the Federal Circuit has allowed patent owners broad flexibility to sue accused infringers in any judicial district in the United States in which the infringer is subject to personal jurisdiction. The flexibility provided under the current interpretation of the federal venue statute has allowed so-called “patent trolls” – companies that buy patents not to use them but to demand royalties and sue for damages – to flourish. Read more.