May 22, 2017
United States Supreme Court Clarifies Patent Venue in TC Heartland LLC Reversal
By: Stephen B. Brauerman, Sara E. Bussiere, Megan McGovern
In TC Heartland LLC v. Kraft Foods Group Brands LLC, No. 16-341, 581 U.S. _____ (2017), the United States Supreme Court interpreted the patent venue statute, 28 U.S.C. § 1400(b), and held that “a domestic corporation ‘resides’ only in its State of incorporation for purposes of the patent venue statute.” As a result, a patent holder may only file an action for patent infringement in an alleged infringer’s state of incorporation or in a venue where the alleged infringer committed an act of infringement and has an established place of business. The primary impact of this decision is that plaintiff-friendly districts, like the Eastern District of Texas, where few accused infringers are incorporated or conduct business, are no longer eligible venues for patent infringement actions.
In TC Heartland, the Supreme Court considered whether recent amendments to 28 U.S.C. § 1391, the general venue statute, which states that a corporation resides “in any judicial district in which such defendant is subject to the court’s personal jurisdiction with respect to the civil action in question[,]” changed the meaning of “resides” in § 1400(b). 28 U.S. C. §§ 1391(a), (c). As discussed below, the Court held that it does not.
Kraft Food Group Brands LLC (“Respondent”), a Delaware corporation with its principal place of business in Illinois, filed a patent infringement suit in the United States District Court for the District of Delaware against TC Heartland LLC (“Petitioner”), an Indiana corporation with its principal place of business in Indiana. Petitioner moved to transfer venue to the District Court for the Southern District of Indiana. Citing Fourco Glass Co. v. Transmirra Products Corp., Petitioner argued venue was improper in Delaware because it did not “reside” in Delaware and did not have a “regular and established place of business” in Delaware under 28 U.S.C. § 1400(b). Section 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.” 28 U.S.C. § 1400(b).
The District Court rejected Petitioner’s argument on the basis, inter alia, that § 1391(c) defines “resides,” as determined by the Federal Circuit in VE Holding Corp. v. Johnson Gas Appliance Co., 917 F.2d 1574 (Fed. Cir. 1990). See Kraft Foods Group Brands LLC v. TC Heartland, LLC, 2015 WL 5613160 (D. Del. Sept. 24, 2015), adopting Report and Recommendation, 2015 WL 4778828 (D. Del. Aug. 13, 2015). Because Petitioner resided in Delaware pursuant to § 1391(c), it also resided in Delaware for purposes of § 1400(b). The Federal Circuit denied a petition for a writ of mandamus on the same basis. In re TC Heartland LLC, 821 F.3d 1338 (Fed. Cir. 2016).
The Supreme Court reversed. In analyzing the inter-play between §1400(b) and § 1391, the Court reviewed the legislative history of both statutes. At the outset, the Court noted that when Congress enacted a patent-specific venue statute, it “placed patent infringement cases in a class by themselves, outside the scope of the general venue legislation.” The Court further observed that the original patent-specific venue statute permitted suit in the district in which the defendant was an “inhabitant” or in which the defendant committed acts of infringement and has a regular and established place of business. A corporation was understood to “inhabit” only the state in which it was incorporated.
In 1948, Congress enacted § 1391, a general venue statute, which defined “residence” for corporate defendants as any district in which the corporation is incorpor
In TC Heartland LLC v. Kraft Foods Group Brands LLC, No. 16-341, 581 U.S. _____ (2017), the United States Supreme Court interpreted the patent venue statute, 28 U.S.C. § 1400(b), and held that “a domestic corporation ‘resides’ only in its State of incorporation for purposes of the patent venue statute.” As a result, a patent holder may only file an action for patent infringement in an alleged infringer’s state of incorporation or in a venue where the alleged infringer committed an act of infringement and has an established place of business. The primary impact of this decision is that plaintiff-friendly districts, like the Eastern District of Texas, where few accused infringers are incorporated or conduct business, are no longer eligible venues for patent infringement actions.
In TC Heartland, the Supreme Court considered whether recent amendments to 28 U.S.C. § 1391, the general venue statute, which states that a corporation resides “in any judicial district in which such defendant is subject to the court’s personal jurisdiction with respect to the civil action in question[,]” changed the meaning of “resides” in § 1400(b). 28 U.S. C. §§ 1391(a), (c). As discussed below, the Court held that it does not.
Kraft Food Group Brands LLC (“Respondent”), a Delaware corporation with its principal place of business in Illinois, filed a patent infringement suit in the United States District Court for the District of Delaware against TC Heartland LLC (“Petitioner”), an Indiana corporation with its principal place of business in Indiana. Petitioner moved to transfer venue to the District Court for the Southern District of Indiana. Citing Fourco Glass Co. v. Transmirra Products Corp., Petitioner argued venue was improper in Delaware because it did not “reside” in Delaware and did not have a “regular and established place of business” in Delaware under 28 U.S.C. § 1400(b). Section 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.” 28 U.S.C. § 1400(b).
The District Court rejected Petitioner’s argument on the basis, inter alia, that § 1391(c) defines “resides,” as determined by the Federal Circuit in VE Holding Corp. v. Johnson Gas Appliance Co., 917 F.2d 1574 (Fed. Cir. 1990). See Kraft Foods Group Brands LLC v. TC Heartland, LLC, 2015 WL 5613160 (D. Del. Sept. 24, 2015), adopting Report and Recommendation, 2015 WL 4778828 (D. Del. Aug. 13, 2015). Because Petitioner resided in Delaware pursuant to § 1391(c), it also resided in Delaware for purposes of § 1400(b). The Federal Circuit denied a petition for a writ of mandamus on the same basis. In re TC Heartland LLC, 821 F.3d 1338 (Fed. Cir. 2016).
The Supreme Court reversed. In analyzing the inter-play between §1400(b) and § 1391, the Court reviewed the legislative history of both statutes. At the outset, the Court noted that when Congress enacted a patent-specific venue statute, it “placed patent infringement cases in a class by themselves, outside the scope of the general venue legislation.” The Court further observed that the original patent-specific venue statute permitted suit in the district in which the defendant was an “inhabitant” or in which the defendant committed acts of infringement and has a regular and established place of business. A corporation was understood to “inhabit” only the state in which it was incorporated.
In 1948, Congress enacted § 1391, a general venue statute, which defined “residence” for corporate defendants as any district in which the corporation is incorpor