Where Can Corporations Be Sued for Patent Infringement? Part I

Where Can Corporations Be Sued for Patent Infringement? Part I

Legal Sidebari

Where Can Corporations Be Sued for Patent
Infringement? Part I
Updated February 20, 2018
In May 2017, the U.S. Supreme Court issued arguably the most important patent decision in several years,
TC Heartland v. Kraft Foods Group Brands, which overturned the U.S. Court of Appeals for the Federal
Circuit (Federal Circuit)’s longstanding precedent regarding where proper venue lies in patent
infringement cases. The venue statute specifically applicable to patent infringement lawsuits requires
plaintiffs to file: (1) in the judicial district where the defendant “resides,” or (2) “where the defendant has
committed acts of infringement and has a regular and established place of business.” Since 1990, the
Federal Circuit –the court with exclusive, nationwide jurisdiction over most patent appeals – had
interpreted “resides” in such a manner that allowed domestic corporations to be sued for patent
infringement wherever they are subject to a court’s personal jurisdiction. For nearly 30 years, plaintiffs
relied on this interpretation to “forum shop” and sue domestic corporations in almost any federal district
court in the country, often strategically choosing districts where judges and juries have reputations as
being favorable to patent owners.
In TC Heartland, a unanimous Supreme Court reversed the Federal Circuit, concluding that a domestic
corporation accused of patent infringement “resides” only in its state of incorporation. The opinion has
had a measurable impact on the patent litigation system by shifting patent suits away from federal district
courts that have handled the vast majority of infringement complaints to other judicial districts. In
addition, TC Heartland has spurred litigation and questions over several venue-related issues that were
not addressed in the opinion. Because of TC Heartland’s effect on the patent litigation landscape, patent
venue law is currently in flux and subject to future alterations by courts and possibly by Congress.
Part I of this Sidebar will discuss patent venue jurisprudence, including the TC Heartland opinion, and
then address the impact of the decision on the patent litigation system generally. Part II discusses
implications of the decision, including litigation in the lower courts and potential issues that may be
addressed by courts or Congress in the future.
Patent Venue Statute Jurisprudence
A 1957 Supreme Court opinion, Fourco Glass Co. v. Transmirra Products Corp., concluded that, for
purposes of the patent venue statute, a domestic corporation “resides” only in the state where it is
incorporated. In 1988, Congress amended the general federal venue statute, but not the patent-specific
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venue statute, to provide that “[f]or purposes of venue under this chapter, a defendant that is a corporation
shall be deemed to reside in any judicial district in which it is subject to personal jurisdiction.” In 1990,
the Federal Circuit ruled in VE Holding Corp. v. Johnson Gas Appliance Co. that, as a result of the 1988
amendments to the general venue statute, Fourco no longer applied in determining corporate residence in
patent cases. As mentioned, since its issuance patent owners relied on VE Holding to sue domestic
corporations in any district where they conducted business, as long as the requirements of personal
jurisdiction were satisfied (that is, they sued in any district where the company has meaningful “contacts,
ties or relations,” such as where the business sells products or where such products are used). However, in
May 2017, the Supreme Court in TC Heartland determined that Congress did not intend to alter Fourco’s
interpretation of “resid[ence]” in the patent-specific venue statute when it had amended the general venue
statute, and therefore, the Federal Circuit’s broader view of patent venue was inconsistent with Fourco.
Thus, the Supreme Court affirmed that Fourco remains the law regarding patent venue, such that a
domestic corporation accused of infringement “resides” only in its state of incorporation.
TC Heartland’s Impact on the Patent Litigation System
Prior to TC Heartland, the majority of patent infringement suits were concentrated in a handful of
districts, most notably the Eastern District of Texas and the District of Delaware, in part because plaintiffs
believed those district courts’ patent rules and practices gave them certain procedural advantages over
defendants. The Eastern District of Texas has been particularly popular with “patent assertion entities”
(sometimes referred to by their critics as “patent trolls”), which are firms that do not make products
incorporating the patented technologies, but rather purchase patents to file lawsuits or threaten legal
action against alleged infringers to extract settlements or licensing fees. TC Heartland appears to have
limited the ability of patent plaintiffs, including patent assertion entities, to forum shop and has
“significantly” reduced the number of patent cases filed in the Eastern District of Texas, where few
companies are incorporated. Instead, the District of Delaware and the Northern and Central Districts of
California have experienced an increase in patent litigation due to the number of companies incorporated
in Delaware and the many technology companies with headquarters in California (such firms often being
the target of lawsuits brought by patent assertion entities). A legal scholar has asserted in congressional
testimony that these districts may benefit patent defendants and may increase litigation costs for patent
owners because the Northern District of California provides a “home court advantage” for Silicon Valley
technology companies and the District of Delaware’s relatively small number of judges could struggle
with handling an expanded patent docket and moving patent cases along to final judgment in a timely
manner.
For more on the implications of the TC Heartland decision and the impact it is currently having in lower
courts, as well as potential issues for courts and Congress in the future, proceed to Part II of this post.

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Author Information

Brian T. Yeh

Legislative Attorney

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