Choosing a favorable jurisdiction in which to bring suit is known as “venue shopping.” Since 1988, plaintiffs in patent lawsuits have had almost free rein in choosing jurisdiction. But a recent Supreme Court ruling in TC Heartland LLC v. Kraft Foods Group Brands LLC, No. 16-341(S. Ct. May 22, 2017) has changed the legal landscape, severely limiting the possible venues for patent lawsuits against domestic corporations.
The venue statute for patent cases, 28 U.S.C. § 1400, provides that “any 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 regular and established place of business.”
At the same time, the venue statute governing general lawsuits allows a plaintiff to bring an action in “any judicial district in which any defendant resides” and further provides that a corporation “shall be deemed to reside, if a defendant, in any district in which such defendant is subject to personal jurisdiction with respect to the civil action in question.” (28 U.S.C. § 1391(a), (c).)
Before the recent Supreme Court decision, district courts have routinely interpreted the general venue statute to apply to patent cases , thus allowing the term “residence” to be construed broadly. This broader construction of “residence” has allowed plaintiffs to bring infringement actions in any jurisdiction in which the defendant’s products were sold. Practically speaking, this meant a deluge of patent cases in jurisdictions like the Eastern District of Texas which is known to work fast and be plaintiff-friendly.
In the Kraft Foods v. TC Heartland case, Kraft Foods brought a patent infringement suit in Delaware, its state of incorporation, concerning products that TC Heartland distributed for sale in Delaware. TC Heartland, however, argued that, because it had no “regular and established place of business” in Delaware and did not “reside” in Delaware under § 1400(b), the Delaware court lacked jurisdiction.
Agreeing with TC Heartland, the Supreme Court clarified that, for domestic corporations, the term “resides” in §1400 is limited to defendant’s state of incorporation. As a result, a patent infringement lawsuit against a domestic corporation must now be brought either in its state of incorporation or where the defendant has committed acts of infringement and has a regular and established place of business.
The decision will have immediate consequences. Courts in East Texas will probably see far fewer patent cases, despite still being the likely home for suits brought against foreign corporations.. On the other hand, courts in jurisdictions that are home to disproportionate numbers of corporations, such as Delaware and California, may be swamped with patent litigation over the coming months.
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The venue statute for patent cases, 28 U.S.C. § 1400, provides that “any 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 regular and established place of business.”
At the same time, the venue statute governing general lawsuits allows a plaintiff to bring an action in “any judicial district in which any defendant resides” and further provides that a corporation “shall be deemed to reside, if a defendant, in any district in which such defendant is subject to personal jurisdiction with respect to the civil action in question.” (28 U.S.C. § 1391(a), (c).)
Before the recent Supreme Court decision, district courts have routinely interpreted the general venue statute to apply to patent cases , thus allowing the term “residence” to be construed broadly. This broader construction of “residence” has allowed plaintiffs to bring infringement actions in any jurisdiction in which the defendant’s products were sold. Practically speaking, this meant a deluge of patent cases in jurisdictions like the Eastern District of Texas which is known to work fast and be plaintiff-friendly.
In the Kraft Foods v. TC Heartland case, Kraft Foods brought a patent infringement suit in Delaware, its state of incorporation, concerning products that TC Heartland distributed for sale in Delaware. TC Heartland, however, argued that, because it had no “regular and established place of business” in Delaware and did not “reside” in Delaware under § 1400(b), the Delaware court lacked jurisdiction.
Agreeing with TC Heartland, the Supreme Court clarified that, for domestic corporations, the term “resides” in §1400 is limited to defendant’s state of incorporation. As a result, a patent infringement lawsuit against a domestic corporation must now be brought either in its state of incorporation or where the defendant has committed acts of infringement and has a regular and established place of business.
The decision will have immediate consequences. Courts in East Texas will probably see far fewer patent cases, despite still being the likely home for suits brought against foreign corporations.. On the other hand, courts in jurisdictions that are home to disproportionate numbers of corporations, such as Delaware and California, may be swamped with patent litigation over the coming months.
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