Tuesday, 13 June 2017 16:53

SCOTUS Narrows Where Patents Suits May Be Brought Under the Venue Statute

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On May 22, 2017, the United States Supreme Court in TC Heartland LLC v. Kraft Foods Group Brands LLC, 581 U.S. ___ (2017) narrowed the scope of where a corporate defendant “resides” for venue purposes under the patent venue statute (28 U.S.C. § 1400(b)).  Previously, patent plaintiffs could sue corporate defendants in any district court where the corporation was subject to personal jurisdiction, essentially where a defendant sold products.  However, and as a result of TC Heartland’s unanimous (8-0) decision reversing the Federal Circuit, 28 U.S.C. § 1400(b) remains the only applicable patent venue statute, and as applied to domestic corporations in patent cases, a “defendant resides only in the state of its incorporation.”

A number of results are likely in the wake of this dramatic shift in venue law.  First, TC Heartland presents a significant roadblock to patentees filing lawsuits in a particular forum – which critics label “forum shopping” -- simply because a corporate defendant placed a product into the stream of commerce.  The inevitable outcome will steer the filing of patent cases to Delaware, the state where many U.S. companies are incorporated.  Second, and where litigation is already pending, corporate defendants are likely to file motions to change venue (assuming the waivable defense of venue has been properly preserved). 

 Third, and as alternative to filing suit in the defendant’s state of incorporation, plaintiffs’ attorneys may file suit in a forum that instead satisfies the second prong of 28 U.S.C. § 1400(b), “where the defendant has committed acts of infringement and has a regular and established place of business.”  While the Federal Circuit has interpreted this phrase to mean doing business “through a permanent and continuous presence,” parties will surely battle over the confines of the pertinent statutory language, and litigate factors such as physical stores of the business, where key personnel are located, and the business’ online presence.  Fourth, situations may arise where there is no district court in which venue would be proper for all named defendants.  To avoid risking inconsistent rulings from litigating cases in separate districts, expect to see an increase in multi-jurisdiction litigation (“MDL”), which can serve as a useful vehicle in litigating overlapping issues in pretrial proceedings, with the individual cases referring back to the original court for trial.

 Many issues in the field of patent law will arise in the aftermath of TC Heartland.  Malloy and Malloy, P.L’s knowledgeable and experienced intellectual property lawyers are ready to advise you and guide your case as these issues come to the forefront. 

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