In a somewhat surprising move, the U.S. Supreme Court has agreed to address the question of the proper forum for patent litigation in TC Heartland, LLC v. Kraft Foods Group Brands LLC, No. 16-341. Although the U.S. Code contains a special venue provision for patent infringement actions that the Supreme Court had interpreted to be limited to the defendant’s state of incorporation, the Federal Circuit has long held that nonresident defendants may be sued for patent infringement in any U.S. judicial district where they have purposefully shipped the accused products. In practice, that has meant that a typical patent infringement suit could be filed virtually anywhere. As a result (and as noted in our previous blog post on this case), plaintiffs have increasingly directed their cases to districts that they perceive more favorable to patent litigation, with one district in particular, the Eastern District of Texas, accounting for 44% of all patent infringement cases filed in 2015.
If the Supreme Court reverses this longstanding interpretation of U.S. venue law, it is certain to dramatically reshape the patent litigation landscape by redistributing cases now filed in the Eastern District of Texas to other district courts around the country, but especially to Delaware, where many companies are incorporated. (Delaware already receives 12% of patent infringement filings.) So-called patent assertion entities (PAEs), who regularly filed their cases in Texas, will be the most significantly affected and will face difficult decisions on whether lawsuits in forums perceived as less plaintiff-friendly will be worth pursuing.
In the meantime, it remains possible that Congress will itself address patent venue issues in its next session. At least two bills were previously pending in Congressional committees that would restrict venue for patent cases. The Senate’s “Venue Equity and Non-Uniformity Elimination Act” (S. 2733) and the House’s “Innovation Act” (H.R. 9) have matching provisions that would restrict venue to districts where the defendant is incorporated, or has its principal place of business, or has a physical facility performing manufacturing or research and development on an accused product.
Given the keen interest in the venue issue among the U.S. business community, it is not surprising that Heartland’s cert petition was supported by a diverse group of amici that included the American Bankers Association and the Software Industry Association. The merits briefing is certain to generate even more interest from amici. Any such briefs will be due in the first week of February 2017.