On Monday, May 22, 2017, the Supreme Court of the United States handed down a unanimous decision, delivered by Justice Clarence Thomas (minus Justice Gorsuch who took no part in the consideration) in the highly-anticipated case of TC Heartland LLC v. Kraft Food Group Brands LLC.

The question presented in this case relates to where the proper venue lies for a patent infringement lawsuit brought against a domestic corporation.  TC Heartland, located and organized in Indiana, manufactures flavored drink mixes. Kraft Food Group, organized in Delaware, with its principal business located in Illinois, also manufactures flavored drink mixes. Kraft alleged TC Heartland infringed on three of their patents and sued the company for infringement in the district of Delaware. TC Heartland is not registered to conduct business in Delaware and does not have a significant presence in the area, but it does ship the allegedly infringing product to the State.

TC Heartland unsuccessfully petitioned the Court of Appeals for the Federal Circuit (CAFC) for a writ of mandamus to have venue of the case moved to Indiana and stated that Delaware was an improper venue. The CAFC’s interpretation of 28 U.S.C. § 1400(b) stated that the venue of the District of Delaware was in fact proper if that court was able to exercise personal jurisdiction over TC Heartland. The Supreme Court then granted certiorari.

The Supreme Court heard arguments for the case and reversed the CAFC’s decision subsequently ruling that patent venue statute 28 U.S.C. § 1400(b), which provides, “[a]ny 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.” For the purposes of § 1400(b), in light of Fourco Glass Co. v. Transmirra Products Corp., the Supreme Court’s interpretation concluded that a domestic corporation “resides” only in its State of incorporation.  Justice Thomas stated, “[t]he current version of §1391 does not contain any indication that Congress intended to alter the meaning of §1400(b) as interpreted in Fourco.”

The Supreme Court further rejected an argument that there is a broader definition of “residence” in the patent venue statute § 1391(c), which Congress has amended twice and now states, “[e]xcept as otherwise provided by law” and “[f]or all venue purposes,” a corporation is found to be a resident “if a defendant, in any judicial district in which such defendant is subject to the court’s personal jurisdiction with respect to the civil action in question.” The amendments made to § 1391(c) did not modify the meaning of § 1400(b) and the Supreme Court held “that a domestic corporation ‘resides’ only in its State of incorporation for purposes of the patent venue statute.”

Ted Gelov, CEO of TC Heartland stated “[i]ndividuals and businesses in the U.S. have been unfairly required for decades to defend patent suits in far off locales adding cost, complexity and unpredictably to the intellectual property marketplace. The Supreme Court’s decision in favor of Heartland changes that system for the better.”

Kraft also commented on the ruling. Michael Mullen, SVP of corporate and government affairs of Kraft said, “[w]hile we are disappointed in the Supreme Court’s ruling on this procedural matter, we respect the Court’s opinion and do not believe it has any impact on the ultimate outcome of our case.”

This Supreme Court ruling will put limits on where patent-infringement lawsuits can be filed, reducing the flexibility for patent owners in choosing a venue that they believe will be favorable to them. This case has a grabbed the attention of many patent owners, since a large portion of patent litigation cases, around 35%, are heard in the Eastern District of Texas, known as the “Rocket Docket.”  Many believe that this court is more favorable to patent owners.  This decision will no doubt impact the frequency with which the Rocket Docket is utilized by patent owners.

Suiter Swantz IP is a full-service intellectual property law firm serving all of Nebraska, Iowa and South Dakota. If you have any intellectual property questions or need assistance with any patent, trademark or copyright matters and would like to speak to one of our patent attorneys please feel free to contact us.