IP Alert: "Supreme Court Restricts Where Patent Suits May Be Filed"

Today the U.S. Supreme Court tightened the reins on where patent infringement lawsuits may be filed (opinion here). 

In a closely watched case, the Court reversed the decades-old Federal Circuit interpretation that permitted patent holders to file suit in any locale where an accused infringer does business.  In doing so, the Court found that the general venue statute (28 U.S.C. § 1391) does not control over the narrower patent venue statute (28 U.S.C. § 1400).  Resurrecting its rationale from a 1957 opinion, the Court held that a domestic corporation “resides” only in its state of incorporation for purposes of the patent venue statute.  Other than a defendant’s state of incorporation, § 1400 provides for venue only where the defendant has committed acts of infringement and has a regular and established place of business.

Kraft Foods Group Brands, LLC originally filed suit for patent infringement against TC Heartland, LLC in Delaware.  In turn, TC Heartland contested jurisdiction and tried unsuccessfully to transfer the case to Indiana where it is incorporated.  While court watchers noted that oral argument in March 2017 was mixed, the 8-0 outcome was not.

Critics of the broader Federal Circuit interpretation pointed to its impact on the Eastern District of Texas, where many patent suits have been filed over the last decade, and the rise in suits filed by non-practicing entities (so-called “trolls”).  The Eastern District developed a reputation for scheduling cases on a “rocket docket” and for results that many viewed as “plaintiff friendly.” This led to a glut in case filings and often thin factual connection to the District.  While time will tell, the Eastern District of Texas may see a drop in patent cases.  It may be that Delaware could see a wave of case filings, where many businesses are incorporated.

With experience in multiple jurisdictions, we are familiar with the issues and prepared to assist clients with filing or defending against patent suits in Texas and beyond.