by Dennis Crouch
In TC Heartland LLC v. Kraft Foods Group Brands LLC, the Supreme Court has significantly shifted the balance away from the geographically fringe Eastern District of Texas – holding that the residence requirement of 28 U.S.C. § 1400(b) refers only to a defendant’s State of Incorporation for patent infringement venue purposes.
Read the Decision: 16-341_8n59.
The short (10-page) unanimous opinion authored by Justice Thomas reaffirms the court’s prior decision in Fourco Glass Co. v. Transmirra Products Corp., 353 U. S. 222, 226 (1957) — holding again that “for purposes of §1400(b) a domestic corporation ‘resides’ only in its State of incorporation” and rejecting the notion that a much broader definition of venue (found in §1391) applies.
Although the Supreme Court law appears continuous. The Federal Circuit created a major blip in its 1990 decision of VE Holding Corp. v. Johnson Gas Appliance Co., 917 F. 2d 1574 (1990). In that case, the appellate court held that patent infringement venue is proper in any court having personal jurisdiction over the defendant. That expansive change allowed for the rise of patent-focused venues such as the Eastern District of Texas where the majority of infringement lawsuits have been filed over the two decades (heat map below).
What next: Section 1400(b) limits patent cases to the judicial district (1) “where the defendant resides,” or (2) “where the defendant has committed acts of infringement and has a regular and established place of business.” This means a likely large boost of lawsuits in Delaware. National retailers will still be amenable to suit essentially everywhere, but many would-be defendants will be able to avoid E.D.Texas at least. There will also be new litigation on the implications for foreign companies with no established place of business in the US. The decision here expressly refuses to address that question other than noting that it did previously decide that foreign corps can be an exception to 1400(b). Although possible, it is unlikely the court will adapt the “established place of business” to include the internet, although that portion of 1400(b) has not been explored since the e-tailing explosion. With less concentrated venue, I we can also expect a rise in multi-district litigation. For more, consider Prof Janicke’s article on the Imminent Outpouring from the Eastern District of Texas.
The title should be, “Supreme Court Fabricates Facts to Restrict Patent Venue.”
Or a tail of how Google and Mark Lemley got their way again.
See post 16.2 below, discussing the link that Malcolm himself provided.
(in part:
And one does not have to have a solid grasp of IP law to recognize the veracity of Mann’s quip:
“U.S. Court of Appeals for the Federal Circuit – patent-holding plaintiffs win;
Supreme Court – corporate defendants win.”)
May I predict that there is going to be a lot of activity in the Eastern District of Texas starting now with motions for transfer being filed alleging that the venue in the Eastern District of Texas is improper. Waiver is going to be argued. But I also predict, and in appropriate cases, that patent owners will argue that doing a large amount of sustained business in the district, through e-commerce and the like, will count as a a regular and established business in the state. Brick-and-mortar may not be required.
Ned, I think you will find from old cases on what is a “regular and established place of business” for this venue statute that mere interstate mail order catalog purchase of a product by someone remote ordering it from the subject district by mail was insufficient. Such cases could be relevant to much e-commerce.
Paul, there may be a bit of difference between one purchase using a catalog and a regular and established internet business that draws tens of millions in revenue from products sold in a district.
One clear difference tha tI can see Ned is that you have mixed apples and oranges with Paul’s comparison.
By that, I mean that you take Paul’s object of remote ordering by mail in the singular, but then you try to compare that to something else.
Instead of comparing (in an apples to apples manner) the remote ordering by mail with a remote ordering by Web, you switch the emphasis to the oranges of the aggregated non-personal end of the remote ordering (you switch from the consumer side to the business side).
Quite clearly, in its day, the “by mail” business mechanism was every bit as important and “central” to a business as today’s “internet business that draws tens of millions in revenue from products sold in a district.”
Other than mode, which is an obvious difference, what is the (apples to apples) difference that you are seeing?
But remember, folks: “anon” isn’t a defender of patent tr0lling.
Nope.
He’s all about “patent quality.”
Sure he is!
Your ad hominem here has zero tie to the discussion.
Baseless – as usual.
Thanks
I think, anon, in e-commerce, it is the location of the server is irrelevant. The location of the computer of the contracting party is what counts. Thus one has to pay state sales taxes depending on where the transaction is made.
Thus, legally, when one establishes an e-commerce business within the 50 states and territories, one establishes a business that is active within each state.
I think the courts will have to dance a weird tune to avoid holding that an e-business conducted within a particular state, were local taxes are paid, is not a regular and established business within that state.
Thanks Ned – the tax angle is indeed an interesting one (although, sales tax by mail order was present, eh?)
I actually think that there was no sales tax on mail-order’s.
There is always sales tax – AFAIK
Anon, not back in the day.
Ned,
Thought this was interesting:
link to cbo.gov
As the article indicates, the inability to collect (as a problem) means that collection requirement was there – but enforcement of that requirement was a problem.
Apples to apples remains the standard for comparison…
(this too may be of interest, as it also discusses the tax aspect: link to en.wikipedia.org )
Nevertheless, the wording of the relevant clause of 1400(b) “where the defendant has committed acts of infringement and has a regular and established place of business”.
This is not the same as saying that the alleged infringer conducts business within the state. There must be a place within the state. If that place is the computer of the purchaser, then is the regular and established place the location of that one computer, or the locations of computers of all purchasers within the state? If the computers of all purchasers, how can that be considered to be a place? A place is surely a specific location within the state. Or if just the computer of a single purchaser, whilst the transaction is taking place, how can that “place” be regular and established?
Yes – consumer-side-centric or business-side-centric; either way, for apples to apples, mail order and web order would need to have the same orientation.
Since every judicial district in the U.S. has folks electronically remote ordering a huge variety of products from their computers, Ned’s reading of the statute would render this statutorily intended venue LIMITATION [just re-blessed unanimously by the Supremes] completely ineffective and meaningless.
Meaningless? Hardly.
Well, distant, how could they not have a place of business if they are transacting business in the state so as to have to pay sales the sales taxes of their customers?
Replying to 17.1.1.1.3.2.3.
Is it really the case that a business in California cannot set up a website and allow internet users in (say) Alabama purchase items, to conveyed over the Internet if digital, or else through couriers or the U.S. postal service, and remit any necessary taxes to the State of Alabama, without setting up an office employing a couple of people in (say) Montgomery, Alabama in order to meet legal requirements for making sales in the state of Alabama?
Are the laws on interstate commerce in the US so rigid as to prevent businesses located in one state making sales (e.g., by mail order) in other states unless they set up subsidiaries or offices in those other states?
The other question is, what if there are no sales? What if the business is making freely available open source software that is alleged to infringe a patent?
Distant, one has to ask themselves what is the intent of congress initially in requiring that the defendant have a regular and established place of business in the jurisdiction before they could be sued that there?
It really is a matter of fairness is not?
If one intentionally engages in business in a jurisdiction, completes numerous sales transactions, pays sales taxes, delivers products, all in that jurisdiction, can it series be denied that they have a regular establish place of business even if the personnel that operate the equipment for the defendant that make all that possible are not located there?
Can a company headquartered in California deny that they are conducting e-business in California simply because it servers are not located there, and the people conducting the transactions a located in places such as India?
Again the issue is fairness. Would it be unfair for company gaining tens of millions of dollars of revenues from a particular jurisdiction and paying sales taxes because it is deemed that the transactions are actually occurring in that jurisdiction to actually be able to stand trial in that jurisdiction for the infringements that occur there?
Assume for example, a foreign corporation, for which the residency requirements can never be met, is conducting e-business only in Alaska and nowhere else, and paying taxes there. There is no other jurisdiction in the United States where such foreign corporation can be sued under the patent venue statute which Supreme Court has now is exclusive of the general venue statute. I we to say that that foreign corporation cannot be sued there?
And what difference does it make if it can be sued in other states?
And if it is fair to sue a foreign corporation in Alaska because it is doing business there, why not a U. S. corporation?
Ned, unless SCOTUS set an odd precedent back in the day when courts respected Fourco, the plain words of the statute surely control, irrespective of any “fairness” issues. Surely “place” refers to some specific geographical location within the state, and the qualification “regular and established” does surely imply reasonable permanancy, substance and immoveability.
Rather than focus on what some former Congress might possibly have intended, it might make sense to look at what members of the current Congress might do.
Consider for example the “VENUE Act”, that had been referred to the Senate Judiciary Committee in the 114th congress.
S.2733 – Venue Equity and Non-Uniformity Elimination Act of 2016
Introduced by Senator Jeff Flake, the text is here:
link to congress.gov
The text is almost identical with the corresponding provisions of the Innovation Act (H.R. 8). A provision concerning “retailers not eligible for customer stay” is missing from S.2733.
Presumably anyone who objects could get to work lobbying their senators and representatives. But I would presume that, if adopted by them, the House and Senate Judiciary Committees could get legislation as limited as these venue provisions through Congress.
I haven’t committed on the substance much but it might raise interesting scenarios for those attempting to transfer. Insofar as the transferee venue has to be proper it could be that a defendant who is incorporated in a state, that has its headquarters in another state, yet has its plant that manufactures and sells the infringing goods in another state cannot have the case transferred to the state of its headquarters.
Ron Mann has a kind of whiny write-up of this case over at SCOTUS blog. Read it if you like (link here): link to scotusblog.com
He did highlight a great quote from the case, though:
Thomas backed up his “relatively clear indication” standard with a lengthy quote from a treatise on “Reading Law,” co-written by Thomas’ late colleague Antonin Scalia, which explains that a “clear, authoritative judicial holding on the meaning of a particular provision should not be cast in doubt” simply because Congress has adopted some “related though not utterly inconsistent provision.”
That is most unhelpful for defenders of the eligibility of logic patents. Ouch!
Is that more of the same dissembling on “logic” patents…?
And the Scalia quote does not support your own whine (Mann has nothing on you).
I now see why you want to characterize the Mann piece as “whiny.”
It does not fit your script.
I will typically not give Mann too much due, as his grasp of IP law is not the best.
But he is much sharper on general civil procedure, and the linked article rests on his better knowledge there.
And one does not have to have a solid grasp of IP law to recognize the veracity of Mann’s quip:
“U.S. Court of Appeals for the Federal Circuit – patent-holding plaintiffs win;
Supreme Court – corporate defendants win.”
Something about sticking your head somewhere comes to mind as I read again your own whine about Mann’s “kind of whiny” write-up…
As to another dialogue (that you are not a part of) below, the Mann article shares this:
“but to me that footnote shows a court straining to decide a question that is not before it. As decided, the case involves the indisputably weighty question of where a corporation resides for venue purposes in patent cases. But the justices have decided that question in a case that clearly does not involve a corporate defendant. The defendant is “TC Heartland LLC.” As any second-year law student can tell you, a name that ends in “LLC” cannot be the name of a corporation but must instead be the name of a limited liability company, a wholly distinct type of business enterprise. Thomas notes in footnote 1 that the parties “suggest that petitioner is, in fact, an unincorporated entity.” We can only assume that this bland statement reflects an intentional effort at the ambiguity necessary to permit the court to reach the corporate question presented as opposed to a fundamental failure to understand the identity of the parties in this case.”
Contrast that with the Muskrat quote I provided at post 14, and one can readily see that the Court is infected with an anti-patent bias, an over-eagerness that transcends “the constitutional requirements of justiciability and an actual case or controversy [not being] satisfied.”
Wake up Congress – try to remember this other power that the Constitution provides you in regards to courts and matters not of ANY court’s original jurisdiction.
It would be hard for anyone to deny several things that you are correct about anon, but you miss the punchline, as usual.
– The CAFC is far more patentee friendly than some district courts and the Supreme Court.
– E.D. of Texas was not practical to ignore as a policy problem for much longer
– That this case was clearly orchestrated from start to finish by the Supreme Court to be a timely intervention to ward off political interference, or to solve a policy problem where the political branches were not getting it done, or both.
-They sailed close to the wind of not having an actual controversy, so this opinion is indeed quasi-advisory.
– The unanimous decision and bulletproof presence of the saving clause introducing ambiguity into the statue means that no serious resistance to the opinion will be forthcoming until the new regime shakes itself out.
The punchline is that as always, the three branches overlap. Each does some degree of legislating, enforcing, and interpreting. Rather than despising and decrying that fuzzy overlap, which must always exist, people should focus their policy perspectives to balancing the interests of all 9 branches and making sure none become disproportionate.
This court did what it had to do. It did it cleverly and unassailably. Will it do the same when somebody finally gets cert on subject matter again?
If they see rumblings about really changing 101, I would not be surprised to see a case appear on a cert list- and the facts of that case may render it too semi-advisory.
And you anon will predict that outcome badly too. It’s what you do.
PS, fuzzy or not, the court will never, ever, never never ever put up with any notion of jurisdiction stripping WRT patents. The ultimate judicial power of the United States will remain with the Supreme Court. This opinion should be a stark reminder of that fact.
The punchline – as you put it – is not at issue here, and while YOU may reflect that I am correct in what I am saying, it is clear that those with whom I am having the dialogue with have not yet reached that point.
Further, your own “punchline” remits a joke of its own as “policy” is not an open ended invitation to the Court (or courts) to address.
You are heavily intox1cated on the mead of Ends justify the Means.
That “overlap” you want is beyond the limits of what our Constitution provides.
As to “predict badly,” you confuse my views on the law and whatever passes from a broken scoreboard as being “the law.”
Clearly, it is you that has failed to grasp the punchline in the larger context of dicussions about the Supreme Court, the other branches of the government and the proper balances under the Constitution.
As far as “putting up with,” you need to first understand what jurisdiction stripping is, why the point of original jurisdiction is important, and what power the Constitution provides to Congress in this manner.
Clearly – you are not there yet.
Just so very thankful to not be going to EDTX as much in the future. Former Judge Ward and others and those courts can go back to being a small docket, thankfully.
in the likes of distant perspective….
😉
“The Supreme Court has steadfastly resisted subsequent efforts to elicit advisory opinions, even when these efforts appear under the guise of an actual lawsuit. Thus, in Muskrat v. United States, 219 U.S. 346, 31 S. Ct. 250, 55 L. Ed. 246 (1911), the Court struck down an act of Congress that authorized the plaintiffs to sue the United States to determine the validity of certain laws. The Court found the lawsuits authorized by the act to be thinly veiled attempts to obtain advisory opinions, since the constitutional requirements of justiciability and an actual case or controversy were not satisfied. Justice william r. day, writing for the Court, predicted that if the justices rendered a judgment in the case,
the result will be that this court, instead of keeping within the limits of judicial power and deciding cases or controversies arising between opposing parties, as the Constitution intended it should, will be required to give opinions in the nature of advice concerning legislative action, a function never conferred upon it by the Constitution.”
from link to legal-dictionary.thefreedictionary.com
Apparently, “resistance” optional if “policy” intersects with “patents.”
Let me see if I’ve got this right: patent infringement suits from trolls, especially in EDTx, were the scourge of big companies post-State Street Bank. This eventually led to the passage of the AIA, with its patent death squads, loss of grace period and general introduction of uncertainty into the patent landscape.
Now SCOTUS tells us, “Well, actually, the CAFC was wrong on this venue thing all along (even though we denied cert more than 25 years ago in VE Holding, implicitly saying that the CAFC *wasn’t* wrong, but we’re the Supremes so we can change our minds).”
Gee, thanks SCOTUS. If you guys had gotten your s–t together back then we might have been spared the AIA.
Is that an accurate summary?
(And yeah, 6 years on I still miss the old days.)
The part about the SCOTUS fabricating facts to fit their judgment is true. The part about the trolls is fiction.
Reality: far fewer patent applications per $1 billion of GDP generated by high-tech companies are being filed today than 30 years ago.
Reality: if you add all the monetary judgments together for software, the total is less than one year of profits banked by Google.
Reality: if you add all the monetary judgments together for software, the total is less than one year of profits banked by Google.
So what?
If you have a problem with Google’s profits, you’re certainly not alone. To suggest that the answer if “more patents, easier to enforce” is absolutely absurd. That’s not what the patent system is for.
If I thought for one second that you actually cared about excessive corporate profits, I might join you in formulating ways to cure that ill. But I know that you could care less about that, just like all you’re li’l maximalist friends.
MM, obviously the comment goes to the narrative that the supposed “patent trolls” are destroying all the companies. Obviously, the scale is not there for the narrative to be true.
NW – Reality: far fewer patent applications per $1 billion of GDP generated by high-tech companies are being filed today than 30 years ago.
So? Should we expect it to remain constant? If by high-tech you mean computer and software industries, they were in their infancy 30 years ago. The low hanging fruit has already been picked. Innovations are harder to come by these days. I would expect patent apps to be down vs the early days, independent of other factors at play.
NW – Reality: if you add all the monetary judgments together for software, the total is less than one year of profits banked by Google.
Assuming that’s true – so what? Google is a huge company with huge revenues (profits can vary wildly due to accounting vagaries. not a good measure). Should the software industry expect to pay this much in judgments every year? What about all the other costs: litigation, settlements, etc? Surely that is substantially larger than the figure just for judgments.
Judgements-to-profits is an irrelevant comparison. The real questions are: are those patents sound? Do they advance the art? Are software companies using those innovations? Are the licensing / royalty payments in line with the value added by the patents?
If the answer to all those is yes, then the system is working fine. Many suggest the answers are not all yes though. In which case, your “realities” have no bearing on the issue.
>> I would expect patent apps to be down vs the early days, independent of other factors at play.
First the patent applications being down shows that the narrative that patent applications are way out of hand and being filed frivolously is not true.
Second, your explanation of this is so ridiculous as to not merit a response. (And, gee, now who was it that said everything had already been invented. )
“, implicitly saying that the CAFC *wasn’t* wrong, but we’re the Supremes so we can change our minds”
No.
As commented below, this is not an accurate statement. Denial of cert does not – and cannot – impute the meaning that you want to impute.
That being said, there IS a separate notion that Congress acting on legislation is aware of the state of law as developed by the courts, and that if it changes a law – and does not change what the courts have done in that particular area of law being changed immediately in front of and by Congress – then Congress is (here is your) implicitly accepting what the courts have done.
Except in those situations in which the Supreme Court does not want to listen to what Congress may (or may not) have done and instead wants its own policies in place.
Contrast this with the Kimble case, where the Supreme Court did not want to “disturb” the law, even after acknowledging that its old law was wrong. The only apparent concern is the Ends that the Court wants.
You’re going to blame SCOTUS for the patent troll problem by not granting certiorari in VE Holdings in 1990!? That’s silly. No one back then foresaw the mischief and abuse that decision would create. In fact, it took more than a decade (in the early 2000s) to get the EDTex patent troll train rolling.
I’ve been around long enough to know how this happened, and to put it bluntly, the reason it took more than a decade for the rampant abuse to crop up after VE Holdings was that other federal districts simply had too much integrity to become “patent litigation hot spots.” In the 1990s, the Eastern District of Virginia was a brief hotbed because of its very fast docket speeds. Plaintiffs thought that the ultra-fast dockets would create significant settlement pressure. It did for some, but the problem was that the judges in Virginia were not interested in catering to forum shopping, so if you didn’t have a good reason for being in that forum, they transferred your case out (usually to the defendant’s preferred venue, which coincided with the plaintiff’s least favored venue). And if you managed to stay in Virginia, the judges there would grant summary judgment against the garbage cases. Then came the Western District of Wisconsin, with its lightening fast seven month filing-to-trial schedule. But if you didn’t belong there, you got transferred, or if your case managed to stay there but stunk on the merits, it got thrown out. Lots of other districts briefly got trendy but dried up for similar reasons. Central District of California. Middle District of Florida. Western District of Arkansas. Eastern District of Michigan. Northern District of Illinois. The list goes on and on, and the pattern was the same — plaintiffs initially flocked there, with venue being technically “proper” under the expansive view of VE Holdings, but the judges granted discretionary transfer motions against cases that didn’t belong there, and for those few cases that remained, the judges acted impartially by throwing out the junk patent cases. You could win, or lose, it depending on the strength of your case, but you weren’t guaranteed a trial simply because you filed a complaint. There were certainly plenty of patent cases filed back in those days, but the reasonableness of those districts acted as a backstop against the filing of the kinds of garbage we later saw littering the EDTex docket.
Plaintiff’s lawyers by 2004, after experimenting with all of these other districts, figured out the whole E.D. Tex. thing. And like 9/11, it changed everything. People quickly realized that Judge Ward and Judge Davis would play ball with patent trolls, go out of their way to deny transfer motions and keep cases there (like sitting on transfer motions for a year and then denying them on questionable grounds shortly before trial), and most importantly, they let even the most meritless cases reach trial.
All of a sudden, junk patent suits that would get tossed just about anywhere else on account of the patent not being infringed, or invalid, became extremely valuable assets in E.D.Tex. that yielded millions on pretrial settlements. Because the E.D.Tex. judges almost never granted summary judgment, and never transferred, and almost never stayed cases pending post-grant reviews like reexamination, defendants there were basically screwed. If a defendant got tagged for a specious patent suit in EDTex, that suit became a $2 million defense cost proposition, with the best outcome simply being winning the case after spending all of that money. Because even if you won the case, everyone knew you’d almost never get your fees back from those judges under 35 USC 285, no matter how specious the case was.
Defendants figured out the lose-lose economics of defending suits in EDTex and settled out the vast majority of cases, for widely varying amounts. There were certainly a few exceptions and holdouts who wanted to act tough and send a message by trying cases, but overall, most defendants figured out that the economics of fighting just made no sense. Fear of the district grew such that, by simply filing a three page complaint in EDTex, you could all but guarantee a significant settlement from just about anyone.
The disastrous distortions created by EDTex were also far reaching. It created a secondary market for just about any kind of technology patent, especially the marginal ones that could be bought for cheap, once people realized that the most marginal patents could become a tool to extract money from operating companies. Want a good investment? Buy a cheap patent, file a complaint for $400 against two dozen defendants, and even if you settle everyone out for $10K, that’s the best return on investment you’ll ever get…
And things got even worse when you saw how EDTex judges responded to the legal reforms in patent law, in the area of damages, pleadings, 101, and IPRs. They bucked the trend of the rest of the country by denying 101/Alice challenges, denying most Daubert motions against inflated damages reports, denying motions to dismiss based on insufficient pleadings, and refusing to stay most cases pending IPR or CBM reviews. The clear pro-plaintiff bias on these issues became so stark that even more cases got filed there until, by 2016, basically 45% of all patent cases in the entire country were filed there.
So if you want to blame anyone for the patent troll problem, and the arguable legislative overreaction, it is silly to blame SCOTUS. You’d have to place that blame on the EDTex judges and the troll lawyers who profited from that district, as well as the CAFC failing for more than a decade to reign in forum shopping.
Excellent summary of the history for those who are just stepping into the scene.
A lot of truly rotten people made a lot of money thanks to the shenanigans in the Banana Republic of Junk Patents. It’ll be interesting to see how the EDTX adjusts.
I wonder what’s happening at Big G’s blog? Nonstop headless chicken dance as usual?
The problem with trolls are not the big cases, but the small ones. The abusive behavior is when plaintiffs ask for licenses on dubious patents that are far lower than the cost of defense, banking on the fact that companies will make the rational choice. Procedural issues in EDTex drive up the cost of litigation, and make the economics even better for trolls.
The AIA lowered the cost of defense dramatically due to IPRs. That alone stopped much of the worst behavior. Alice and now TC Heartland are probably both unnecessary and will likely have negative unintentional long term effects.
There appears to be some bitter after taste to that Kool-aid, LR.
Is that almonds…?
No, sorry, this patent suit venue issue was not a driving factor for the AIA legislation, and would not have affected the widely bi-partisan support for IPRs. It was even thought then [erroneously, as it turned out] that the non-joinder provision of the AIA would get most patent suits moved out of E.D.TX on the existing forum inconveniens basis established by that Circuit [not the Fed. Cir.] in the Volkswagen case.
If you guys had gotten your s–t together back then we might have been spared the AIA.
Doubtful. In addition to eliminating interference proceedings (anybody miss those yet? I didn’t think so) one of the main goals of the AIA was to provide a systematic means for eliminating the huge pile of junk created in the wake of State Street.
If you want to criticize the Supremes, criticize them for not destroying the State Street Bank decision immediately. And prior to that, you can criticize them for writing Diehr in, shall we say, a less-than-careful manner.
“provide a systematic means for eliminating the huge pile of junk created in the wake of State Street.”
It appears that no such “wake” exists:
See graph two at:
link to ipwatchdog.com
LOL
Don’t make me laugh.
Are the facts getting in the way of your rants again?
The opinion is shoddy at best. The Congress knew in 2011 all about how venue was being handled.
I would characterize this case as: Google lobbies for a change in the patent venue. The usual suspects rally and generate lots of papers and other propaganda about patent venue. The SCOTUS decides to legislate. And, the hack job is given to Thomas again.
I would appreciate a comment on the intra-mural implications of this case, i.e., the decades long smacking down of the CAFC by the Supreme Court. In this case, the CAFC had relied on its more recent case law (VE Holdings – 1990). Smackdown! The Supreme Court invoked their earlier three decisions and reversed. Much like the Supreme Court constantly invokes Benson to smackdown any CAFC 101 caselaw. So the question I have is, when the issue of patents being private (Supreme Court) or public (CAFC) rights gets to the Supreme Court, and it will eventually, will the Supreme Court smackdown Newman’s more recent (flip-flopping) CAFC case law and and invoke their earlier decisions …. once again …. and rule that patents are private rights, with the added bonus of a smackdown on Congress for its making the AIA inseparable? This is not an abstract question because I wrote it down on a piece of paper, so that it doesn’t “exist solely in my human mind”, a phrase that deserves a complete semantic smackdown.
Greg A will the Supreme Court smackdown Newman’s more recent (flip-flopping) CAFC case law and and invoke their earlier decisions …. once again …. and rule that patents are private rights, with the added bonus of a smackdown on Congress for its making the AIA inseparable?
No.
This has been another edition of easy answers to simple questions.
Unfortunately it is hard to convince some folks of the enormous difference between such routine Sup. Ct. “smackdowns” [reversals] of its own lower circuit courts and the very rare declaring of Federal Acts of Congress to be unconstitutional, even though the Supreme Court itself has repeatedly articulated and demonstrated that important distinction.
…another snipe from the sidelines from someone who refuses to engage in any actual dialogue on the merits….
Lovely pom-poms, Paul.
Greg,
I see that you are picking up the torch on “making the AIA inseparable.”
I had set that torch aside after dialogue with Greg here on these boards and my inability to find the actual amendment that would have introduced separability into the AIA being rejected.
Do you have a link or other information about the rejection of separability?
my inability
What did you do with the real “anon”????
Well I guess Marshal will lose its skating rink.
#maga
A well reasoned decision by Justice Thomas, but it does have a glaring flaw, and it is this: prior to VE holdings, the Supreme Court took up the issue of the patent venue statute three times, the last being Brunette Machine Works in 1972. The latter case dealt with foreign corporations; and the Court held there held that the residency requirements of the patent venue statute did not apply to foreign corporations for the obvious reason that they were not incorporated in United States. But in 1990, the Federal Circuit held that the language of the general venue statute was unambiguous and its definition of residency for corporations applied rather than that of that of the prior Supreme Court decisions that had limited residency to the State of incorporation only consistent with the statute in 1892.
Today’s decision then moves on as if there is nothing else that happened, stating, “Following VE Holding, no new developments occurred until Congress adopted the current version of §1391 in 2011.” But something else did happen. VE Holdings was petitioned to the Supreme Court and the Supreme Court denied certiorari. The clear implication of this is that the members of the Supreme Court at that time agreed with the Federal Circuit. It was with this background that Congress amended venue statute in 2011 believing that VE Holdings stated the law.
Question: your competitor hires an employee from its widget manufacturing plant in Minnesota, and moves the employee to Chicago where the employee discloses trade secrets. The competitor then begins manufacturing the widget in its Tennessee plant for sale abroad only. Your competitor is incorporated in Delaware. The widget infringes one of your patents.
Where is venue proper for both the trade secret case and the patent case?
Does Minnesota, Illinois or Tennessee law apply to the trade secret case?
The Sup. Ct. decision expressly indicates that Congress did NOT ever indicate any agreement with the Fed. Cir. VE Holdings decision.
The decision also indicates why VE Holdings was contrary to proper statutory interpretation to begin with [as I noted at the time]: Congress left the more specific patent venue Section 1400(b) on the books, with no indication of any intent to amend it, much less to render it effectively moot [since almost all patent suit defendants are corporations], when Congress amended the more general venue statute.
Paul, patent venue statute did come up in discussions leading up to the 2011 venue amendments. If I recall correctly, the American Law Institute recommending the amendments to the general venue statute also recommended that the patent venue statute be repealed as being now unnecessary. Congress did not adopt that suggestion. But it was the clear understanding of the people in the American Law Institute that VE Holdings was the law, and that there amendments in 2011 would apply to patent venue.
The folks over at the American Law Institute behind the 2011 amendments should and probably will be shocked by this decision. To the extent that any in Congress thought that VE Holdings was not law, I would like them to step forth and say something because I would find it hard to believe because everybody involved seemed to understand that VE Holdings was the law.
John B. Oakley, Prospectus for the American Law Institute’s
Federal Judicial Code Revision Project, 31 U.C. DAVIS
L. REV. 855, 966 (1998) (“The Federal Circuit harmonized
subsection 1400(b)’s corporate residency requirements
with subsection 1391(c)’s requirements in VE
Holding Corp. v. Johnson Gas Appliance Co.”)
All in all, this was a very political decision by the Supreme Court.
Ned, you are beating a legally dead horse with wet noodles. The debate is over. They don’t get any deader than from unanimous Supreme Court decisions.
Paul,
1. LLC are not included in this decision. There are a lot of closely held companies that are LLCs.
2. The ALI might have a say in Congress. I expect Congress to act. There is no excuse for corporations to have such narrow venue when LLCs and foreign companies can be sued everywhere.
3. Pharma is up in arms.
Why would Pharma be up in arms?
Good question. I don’t recall seeing a lot of pharma patent suits being brought in E.D.TX?
Interestingly, there was a CAFC opinion published just yesterday re a pharma case that was filed in E.D.TX (Mylan. v. Aurabindo.
Why did Pharma companies file amicus briefs in support of Kraft? Because they wanted the ruling we have now?? Obviously Pharma didn’t want this, and it has nothing to do with EDTEX. Probably didn’t want all the Pharma cases to end up in D. Del.
Thanks, that makes sense.
anony, when a number of generics file ANDA’s, patent owners like to sue them all in one forum for obvious reasons. The current decision in TC Heartland is going to make that it all but impossible.
If [?] an LLC is not treated as a corporation [?] under this statute, how does this decision make its patent suit venue narrower than it already was before?
Are there really that many LLCs getting sued for patent infringement?