In a highly anticipated decision, the Federal Circuit recently issued an opinion denying a request made by TC Heartland LLC (“Heartland”) for new restrictions on where patent suits can be filed. In Re TC Heartland LLC, No. 2016-105, slip. op. (Fed. Cir. April 29, 2016)..
Kraft Foods Group Brands LLC (“Kraft”), a Delaware corporation with its principal place of business in Illinois, filed suit in the United States District Court for the District of Delaware against Heartland, an Indiana corporation headquartered in Indiana, alleging that Heartland’s liquid water enhancer products infringe three of Kraft’s patents. Id. at 3. Heartland argued that venue was improper in the District of Delaware. Id. The general federal venue statute provides that “an entity with the capacity to sue and be sued in its common name under applicable law, whether or not incorporated, shall be deemed to reside, 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 . . .” 28 U.S.C. § 1391(c). The patent venue statute provides that “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.” 28 U.S.C. § 1400(b).
In particular, Heartland argued that 2011 Congressional amendments to 28 U.S.C. § 1391 nullified the precedents of the Federal Circuit that held that the definition of corporate residence in the general venue statute applied to the patent venue statute, 28 U.S.C. § 1400. Id. The Federal Circuit summarily rejected those arguments:
The 2011 amendments to the general venue statute relevant to this appeal were minor. The language preceding the definition of corporate residence in § 1391 was changed from “For the purposes of venue under this chapter . . .” to “For all venue purposes . . . .” Compare 28 U.S.C. §1391(c) (1988) with 28 U.S.C. § 1391(c) (2011). This is a broadening of the applicability of the definition of corporate residence, not a narrowing. This change in no manner supports Heartland’s arguments.
The only other relevant 2011 amendment is the addition of the language in § 1391(a), “Applicability of section.–Except as otherwise provided by law.” Heartland argues that the “law” otherwise defined corporate residence for patent cases and therefore the statutory definition found in § 1391(c) is no longer applicable to patent cases. . . . It is undisputed that the patent venue statute itself does not define corporate residence and thus there is no statutory “law” that would satisfy Heartland’s claim that Congress intended in 2011 to render §1391(c)’s definition of corporate residence inapplicable to venue for patent cases. However, Heartland argues that Congress intended to include federal common law limited to Supreme Court precedent in the law which could otherwise define corporate residence and thus render the statutory definition of § 1391(c) inapplicable. Accepting without deciding whether Heartland is correct that “except as otherwise provided by law” includes such federal common law, Heartland has not established that federal common law actually supports its position. Heartland asks us to presume that in the 2011 amendments Congress codified the Supreme Court’s decision in Fourco Glass Co. v. Transmirra Products Corp., 353 U.S. 222 (1957) regarding the patent venue statute that was in effect prior to the 1988 amendments. We find this argument to be utterly without merit or logic.
Id. at 5-6.
As a result of the Federal Circuit’s ruling, litigants can continue to file patent infringement lawsuits in any Federal District in which the Defendant is subject to personal jurisdiction. Under the well-established precedent of Beverly Hills Fan Co. v. Royal Sovereign Corp., 21 F.3d 1558 (Fed. Cir. 1994), a non-resident defendant who purposely ships products into a district through an established distribution channel is subject to personal jurisdiction in that forum. For many companies, this test will be met in many or all Federal Districts in the United States. This regime has led to a very high number of patent infringement lawsuits being filed in the United States District Court for the Eastern District of Texas and other patent litigation hot spots.
Heartland will likely petition the Supreme Court of the United States for a writ of certiorari in response to the Federal Circuit’s opinion in In Re TC Heartland LLC. Fitch Law Partners LLP will continue to monitor developments in this litigation and in the area of patent infringement disputes and alleged forum shopping.