This year in TC Heartland v. Kraft Foods, the Supreme Court is poised to decide a patent venue lawsuit that could dramatically alter the landscape of US patent litigation. Currently, the Eastern District of Texas is extremely popular among patent enforcers. In fact, an incredible 36.7 percent of all patent cases in 2016 were filed in the Eastern District of Texas, even though it is home to only 1.2 percent of the US population.1 Between 2014 and mid-2016, Judge Rodney Gilstrap of Marshall, Texas, was assigned 3,166 new patent cases, more than the combined total of cases assigned to all district court judges in California, Florida and New York.
Most patent cases in the Eastern District of Texas are filed by non-practicing entities, which lack a principal place of business and have the flexibility to form a company and file suit wherever they deem most advantageous.
Non-practicing entities choose to litigate in Eastern Texas because cases have early discovery deadlines and proceed to trial quickly, placing greater pressure on defendants to settle.2 Judges in the Eastern District are disproportionately unlikely to grant motions to transfer3 and motions for summary judgment of non-infringement or invalidity,4 and, when cases do get to trial, East Texas juries are disproportionately likely to side with patentees.5
Many companies sued for patent infringement in the Eastern District are not incorporated in Texas and have no established place of business there. Nonetheless, the Federal Circuit Court of Appeals, interpreting patent venue statute 28 U.S.C. § 1400(b), and general venue statute 28 U.S.C. § 1391, has held that jurisdiction for patent suits is proper in any federal district in which the accused product is sold.6
On December 14, 2016, the Supreme Court granted a petition for a writ of certiorari to scrutinize the Federal Circuit's expansive approach to patent jurisdiction. The Court will decide whether the patent venue statute, which provides that patent infringement actions "may be brought in the judicial district where the defendant resides[,]" is the sole and exclusive provision governing venue in patent infringement actions, or whether it may be supplemented by the statute governing venue generally, which has long contained a subsection that, where applicable, deems a corporate entity to reside in multiple judicial districts.7
The petitioner, TC Heartland, argues that this question was already answered by the Supreme Court in Fourco Glass Co. v. Transmirra Products Corp., 353 U.S. 222 (1957), where the Court held that "§ 1400(b) is the sole and exclusive provision controlling venue in patent infringement actions, and that it is not to be supplemented by the provisions of 28 U.S.C. § 1391(c)."8 The respondent, Kraft Foods, contends that the Federal Circuit correctly decided that venue in patent infringement cases should be governed by the expansive provisions of the general venue statute because of amendments to that statute made after the Court's Fourco decision. In particular, Kraft Foods points to amendments made to the general venue statute in 1988 and 2011, expanding the definition of corporate residence, and applying that definition "for purposes of venue under this chapter," which includes the patent venue statute at § 1400(b).9
If the Supreme Court decides that the patent venue statute is the sole and exclusive provision controlling venue in patent infringement lawsuits, the impact on forum shopping in patent cases will likely be immediate and dramatic. Such a decision would mean that a company could only be sued for patent infringement either in the judicial district where the company is incorporated or where the company has allegedly committed acts of infringement and has a regular and established place of business.
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- Data on population from 2010 US Census. Data on percentage of patent cases filed in EDTX from LexMachina.
- Data from Love, Brian J. and Yoon, James C., "Predictably Expensive: A Critical Look at Patent Litigation in the Eastern District of Texas" (September 21, 2016), Santa Clara Univ. Legal Studies Research Paper No. 11-16, at p.11-13, 19-22.
- Id. at 14-15.
- Id. at 15-16.
- Id. at 16-17.
- In re TC Heartland, LLC, 821 F.3d 1338, 1341-42 (Fed. Cir. 2016).
- See TC Heartland, LLC, Petition for Writ of Certiorari (September 12, 2016).
- Id. at 229.
- See Kraft Response to Petition for Writ.