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Unanimous Supreme Court Decision Limits Venue in Patent Infringement Suits

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By Peter R. Montecuollo and David G. Barker

In yet another unanimous intellectual property decision (see here), the United States Supreme Court today held in TC Heartland LLC v. Kraft Foods Group Brands LLC that “reside,” as used in the patent venue statute, 28 U.S.C. § 1400(b), “refers only to the State of incorporation,” and not to each state where a domestic, corporate defendant is subject to personal jurisdiction.  This limitation alters the venue landscape for patent infringement suits that has been in place since the Federal Circuit’s 1990 decision in VE Holding Corp. v. Johnson Gas Appliance Co.

Kraft Food Group Brands sued TC Heartland in the District of Delaware, and TC Heartland moved to dismiss for lack of personal jurisdiction, seeking in the alternative to transfer venue to Indiana — TC Heartland’s State of incorporation. TC Heartland argued that, because it is not incorporated in Delaware and did not have a “regular and established place of business” in Delaware, venue was improper.  The trial court and the Federal Circuit both disagreed, reasoning that 28 U.S.C. § 1391 — the general venue statute — applied, and “reside” meant any state where TC Heartland was subject to personal jurisdiction, which included Delaware.

The Supreme Court reversed the Federal Circuit based on years of Supreme Court precedent and the lack of any Congressional intent to alter § 1400(b) with recent amendments to the general venue provisions in § 1391. In overruling VE Holding, the Court rejected Kraft’s argument that Congress’s 2011 changes to the meaning of “reside” in § 1391 (c) caused similar changes to § 1400(b).  Section 1400(b) “is the sole and exclusive provision controlling venue in patent infringement actions, and . . . is not to be supplemented by . . . § 1391(c).”

After more than two decades under VE Holding, patent owners have new issues to consider when deciding where to file infringement lawsuits.  Among other things, the decision may limit a patent holder’s ability to sue multiple defendants in the same venue, such as the Eastern District of Texas, which is typically thought to be friendly to patent owners.  The full impact of the Court’s decision, however, remains to be seen.