For the past several years, Congress has mulled changes to the patent venue statute, which sets forth guidelines for the appropriate courts in which patent cases should be situated.
But in December, the decision (0) by the United States Supreme Court in TC Heartland v. Kraft to consider the issue of venue in patent cases could potentially short-circuit any legislative efforts to alter the venue statute.
Under current law, specifically 28 US Code § 1400 (1), “any civil action for patent infringement may be brought in the judicial district where the defendant resides, or where the defendant has committed acts of infringement and has a regular and established place of business.” Under 28 USC § 1391(c) (2), a corporation is deemed a resident of “any judicial district in which such defendant is subject to the court’s personal jurisdiction.”
This broad language enables patent holders to file suit in a wide variety of courts, including certain courts, such as the Eastern District of Texas and the District of Delaware, which many practitioners believe to be especially patent friendly.
But Sen. Jeff Flake (R-AZ) and others introduced a bill last March that would have tightened these standards considerably. As I explained last year (3), the Venue Equity and Non-Uniformity Elimination Act would have restricted patent cases to districts in which:
- The defendant is incorporated or has its principal place of business;
- The defendant has committed an act of infringement and has a “regular and established physical facility” giving rise to that act;
- The defendant has consented to be sued;
- A named inventor on the patent-in-suit conducted research and development leading to the application;
- A party has a “regular and established physical facility” that it controls and operates not for the purpose of creating venue, and has:
- Engaged in research and development that led to the application of a different patent prior to the patent-in-suit;
- Manufactured a tangible product embodying the patented invention; or
- Implemented a manufacturing process embodying the patented invention.
- In the case of a foreign defendant, in which that foreign defendant can assert venue under Sec. 1391(c)(3).
However, Flake’s bill died an ignominious death in the Senate two months later, as Senate Judiciary Committee Chairman Charles Grassley (R-IA) quietly smothered it (4), arguing that Congress should instead confront all patent reform issues comprehensively, not piecemeal.
But now, the Supreme Court has granted certiorari in the TC Heartland case, which originated in Delaware, where Kraft sued Heartland (5), a water enhancer and sweetener company based in Carmel, Indiana, for infringement of three Kraft patents.
Heartland — which claimed it wasn’t registered to do business in Delaware, had no local presence there, never entered into supply contracts there, and never contracted accounts in the state — moved the Delaware trial court to dismiss the case and/or to transfer it to Indiana, where it believed the venue was more appropriate. After the Delaware court denied the motion, Heartland sought relief from the appellate court, which also rebuffed the company, claiming that decades-old precedent tied its hands.
So Heartland petitioned the Supreme Court to overturn those precedents, and in December, the high court agreed to consider it. Among those who follow the issue, the outcome among the justices is anything but certain; the legal debate turns on highly technical issues (6) of statutory interpretation, and it’s unclear whether public policy issues will even arise.
Some industry groups hope, if not necessarily expect, that the high court will side with Heartland and tighten venue standards. At AEI’s patent reform panel event last week (7), Ellen Schrantz of the Internet Association contended that venue is a problem that’s “only getting worse” and emphasized the importance of ensuring that “the patent in question is connected to the district [court] in question.”
One practitioner (8) jeered the Supreme Court, calling it “unconscionable” that “the Supreme Court would take this case and force Kraft to play an unwilling and unjustifiable role in a macabre judicial protest with heavy political overtones.”
However it plays out, the change-of-venue debate has now itself changed venue from Congress to the high court.