Proposed Changes to Patent Law’s Proper Venue Statute: Venue Equity and Non-Uniformity Elimination Act of 2024

by Dennis Crouch

Law school civil procedure courses spend very little time on proper venue because, in most cases venue is proper so long as the district court has personal jurisdiction over the defendant. However, in a quirk of history, Congress created a patent-law specific venue statute in the 1800s that severely limits where a patent case can be filed. See 28 U.S.C. 1404(b). A newly proposed bill, S.4095, sponsored by Republican Senators McConnell, Cotton, and Tillis, would moderately expand the scope of proper venue and resolve some indeterminacy regarding foreign defendants.  Although the proposal does not create a right to immediate appeal, it does set a standard for mandamus that would seem to permit immediate relief of erroneous transfer denials for improper venue. This portion of the bill is entitled the “Venue Equity and Non-Uniformity Elimination Act of 2024 or VENUE Act.”

Under the current patent venue statute, a civil action for patent infringement may be brought either (i) in the judicial district where the defendant resides or (ii) where the defendant has committed acts of infringement and has a regular and established place of business. The Supreme Court’s decision in TC Heartland clarified that a domestic corporation “resides” only in its state of incorporation for purposes of the patent venue statute. This decision significantly limited the ability of plaintiffs to file patent lawsuits in jurisdictions perceived as more favorable to patent holders, such as the Eastern and Western Districts of Texas.  After TC Heartland, defendants can only be sued in those districts if they both commit acts of infringement in the district (typically by selling products) and also have a “regular and established place of business” in the district.

The proposed amendments in S.4095 would expand the scope of proper venue beyond the defendant’s state of incorporation and place of business. The bill specifies several circumstances under which venue would be proper, including:

1. Where the defendant has its principal place of business or is incorporated;
2. Where the defendant has committed an act of infringement and has a regular and established physical facility that gives rise to the infringement;
3. Where the defendant has agreed or consented to be sued;
4. Where an inventor named on the patent conducted research or development that led to the patent application;
5. Where a party has a regular and established physical facility that it controls and operates (not primarily for creating venue) and has engaged in significant research and development, tangible manufacturing, or implementation of a manufacturing process related to the patented invention.

These proposed changes aim to provide greater flexibility in finding proper venue while still maintaining a closer connection between the chosen district and the parties than is required for personal jurisdiction. By allowing venue in districts where research and development, manufacturing, or implementation of the patented invention occurred, the bill recognizes the importance of these activities in patent disputes.

One notable aspect of the proposed bill is its treatment of foreign defendants. In cases where a foreign defendant does not meet the requirements of having a principal place of business or a regular and established physical facility in the United States, venue would be determined in accordance with 28 U.S.C. § 1391(c)(3). That provision provides that “a defendant not resident in the United States may be sued in any judicial district.”  This provision ensures the venue statutes do not limit the ability to sue foreign defendants U.S. courts, even if they do not have a physical presence in the country.

The bill also addresses the issue of remote workers by clarifying that the dwelling or residence of an employee or contractor working for the defendant shall not constitute a regular and established physical facility for purposes of establishing venue. This provision recognizes the growing prevalence of remote work arrangements and seeks to prevent the creation of venue based solely on the location of individual employees or contractors

Appeal: While the proposed changes in S.4095 does not create a right to immediate appeal of venue decisions, the bill would make it easier to get immediate relief via mandamus.  The proposal states that a “clearly and indisputably erroneous” denial of a motion to dismiss or transfer a case based on improper venue under § 1400(b) shall be deemed to cause irremediable interim harm.  In prior cases the Federal Circuit has denied mandamus on improper venue issues — asking parties to wait until final judgment to appeal that issue.

Inconvenient Venue: A significant caveat of the proposed bill is that it does not address the issue of inconvenient venue under 28 U.S.C. § 1404. This provision, often referred to as the “change of venue” statute, allows a district court to transfer a case to another district where it might have been brought, either for the convenience of the parties and witnesses or in the interest of justice. Much of the focus in venue disputes has been on § 1404, with defendants taking “judge dodging” actions seeking to transfer cases to more convenient or favorable districts.

If the proposed changes to § 1400(b) are enacted without corresponding modifications to § 1404, it is likely that defendants will continue to rely heavily on the change of venue statute to seek transfers to more convenient or favorable districts.  However, the additional elements found in 1400(b) will likely bleed over into the 1404 analysis — plaintiffs who file in areas where the invention occurred or other manufacturing/research activity will be able to argue that Congress intended the local courts to hear the case.  I would recommend though that Congress consider express changes to § 1404 would be that would provide clearer guidelines for determining when a transfer is appropriate based upon convenience.

One interesting bit of this proposal is that prior to TC Heartland, an identical version of the bill was introduced in congress and strongly supported by the anti-patent Electronic Frontier Foundation who wrote that the “VENUE Act would require the plaintiff in a patent suit to file in a district where it makes sense.”  At the time, the venue statute had been broadly interpreted by the Federal Circuit to effectively extend district that had personal jurisdiction over the defendant, and so the VENUE Act would have significantly narrowed the scope.  TC Heartland changed the landscape by reinterpreting 1400(b) in a way went much further. So, its reintroduction now comes the other way – expanding the scope of proper venue.  With this change, I expect that EFF would now strongly object to the proposal.

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I’ll note that S.4095 also addresses nationwide injunction issues, but that is for a different post.