by Dennis Crouch
In a case with the potential to truly shake-up the current state of patent litigation, the Supreme Court has granted certiorari in the patent venue case TC Heartland v. Kraft Food (SCT Docket No. 16-341). An 8-0 reversal of the Federal Circuit is quite likely, although my headline is likely premature.
The case centers on the patent litigation venue statute which states rather simply that patent infringement actions “may be brought” either (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.” 28 U.S.C. § 1400(b). Under any normal interpretation of the provision, very few cases would be amenable to proper venue in the Eastern District of Texas because almost none of the accused infringers “reside” in that district or even have a place of business in that district. However, the “normal” interpreation was seemingly thrown under the bus by a congressional provision that expands the definition of a corporation’s residence to all districts where the company has minimum contacts. See 28 U.S.C. § 1391. For its part, the Federal Circuit found that Section 1391 applies to expand the scope of 1400(b) to all for, inter alia, the filing of infringement lawsuits in the Eastern District of Texas.
It turns out that the Supreme Court has already decided almost this exact case in Fourco Glass Co. v. Transmirra Products Corp., 353 U.S. 222 (1957). In Fourco, the Court held that “§ 1400(b) is not to be supplemented by § 1391(c), and that as applied to corporate entities, the phrase “where the defendant resides” in § 1400(b) “mean[s] the state of incorporation only.” (quoting from the certiorari petition). Although the provisions have been amended since 1957, non of the amendments appear to warrant such a dramatic change in the Supreme Court’s analysis of the statutes.
In its 1990 VE Holdings decision, the Federal Circuit rejected Fourco based upon some reasoning, but without any good reasons. There are two reasons to stick with the Federal Circuit’s 26 year old rule: (1) The rule is 26 years old and well settled with almost every patents now in force applied-for after the rule change. At this point, it is Congress’s turn (not the courts) to amend the statute if its wants a policy change. (2) The actual reasoning of Fourco is quite dodgy – not the most stellar statutory interpretation. If the Supreme Court actually takes a fresh look at the statute it may well overturn Fourco of its own accord. Still, I expect that these arguments will not carry the day and instead that the Supreme Court will reverse the Federal Circuit. The result would then be a major redistribution of patent infringement cases.