The Eastern District Court of Texas has been the most popular court for patent owners for many years. It received 38% of all patent infringement lawsuits in 2016. A recent ruling by the U.S. Supreme Court will change this situation. It states that an American company must primarily be brought to court for patent infringement in the state in which it is domiciled.
Kraft Foods Group Brands LLC, a Delaware-domiciled company, sued Indiana-domiciled TC Heartland LLC in Delaware District Court for patent infringement. Venue in Delaware was established because TC Heartland shipped the infringing beverages to Delaware.
TC Heartland requested that the Lawsuit be dismissed or transferred to the Indiana court. TC Heartland is domiciled in Indiana and also has its headquarters and production there. The company has no branch of any significance in Delaware.
The District Court and the Court of Appeals for the Federal Circuit both denied TC Heartland’s petition for remittitur.
The Supreme Court took up the case and reversed the judgment of the lower court. The reasoning is essentially as follows:
28 USC §1400 (b) specifically and exclusively governs jurisdiction over patent litigation: “Any civil action for patent infringement may be brought in the district in which the defendant is located or in which the defendant has committed infringing acts and in which the defendant has a regular and established place of business.”
In the 1957 decision Fourco Glass v. Transmirra Products, the Supreme Court held that a domestic corporation is “domiciled” for purposes of § 1400(b) only in the state in which it is domiciled for commercial law purposes. Even then, the court denied that § 1400(b) would also include the broader definition of the general venue clause under § 1391(c).
The specific venue section §1400(b) has remained unchanged since that earlier ruling. Only §1391(c) on default venue has been amended twice by Congress. The last amendment was in 2011 by clarifying that the general venue provision of §1391 applies unless otherwise provided by statute.
The Supreme Court has now held that § 1400(b) still contains an independent definition for patent litigation and that the earlier ruling therefore retains its validity. The amendment to § 1391 even supports the Supreme Court’s earlier interpretation in that the specific provision of § 1400(b) has been given express precedence over the general provision of § 1391 with the amendment.
Thus, the motion to transfer the patent litigation from Delaware to Illinois should be granted.
Note: This judgment places a limit on the free choice of court by the patent holder. If the patent infringer is an American company, the Lawsuit must be filed primarily in the state in which the company is registered. Since the state of Delaware has the most corporate registrations due to its favorable tax policy, patent litigation in this state is likely to become more important in the future.
However, if the patent infringer to be attacked is a foreign company that is not registered in the USA, this judgment has no restrictive consequences.
Left: https://www.supremecourt.gov/opinions/16pdf/16-341_8n59.pdf