Under Heartland, Patent Litigation Filings in Delaware Expected to Rise

In a long awaited decision having the potential to impact where patent suits are litigated, the Supreme Court issued its opinion in TC Heartland LLC v. Kraft Foods Group Brands LLC today. TC Heartland confirms that, for the purposes of the venue statute for patent infringement actions—28 U.S.C. § 1400(b)—“resides” is limited to the state of incorporation for a domestic corporation.

§ 1400(b) provides that

[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.

The question before the Court was whether § 1400(b), the specific venue statute for patent infringement actions, is properly modified by the general venue statute, 28 U.S.C. § 1391. Under the general venue statute, “ [f]or the purposes of venue under this chapter, a defendant that is a corporation shall be deemed to reside in any judicial district in which it is subject to personal jurisdiction at the time the action is commence.” § 1391(c). The Federal Circuit previously interpreted the phrase “for the purposes of venue under this chapter” as language of incorporation relating to § 1400(b), as both sections are in the same chapter. As a result, the Federal Circuit found the definition of “reside” in § 1391(c) to also define “reside” as used in § 1400(b). VE Holding Corp. v. Johnson Gas Appliance Co., 917 F.2d 1574 (1990).

The Supreme Court reversed the Federal Circuit. Citing earlier precedent (including Fourco Glass Co. v. Transmirra Products Corp., 353 U.S. 222 (1957)), the Court concluded that “reside” was “definitively and unambiguously” held to mean the state of incorporations for domestic corporations. In a footnote, the Court explained that this holding did not extend to foreign corporations. The Court also found instructive a subsequent amendment to § 1391, which added a saving clause that it does not apply when “otherwise provided by law.” § 1400(b)—a statute directed to venue in patent infringement cases—provided “otherwise,” in the Court’s view.

Using this logic, the Court reversed the Federal Circuit’s holding that venue existed in Delaware over TC Heartland, an entity organized under Indiana law and headquartered in Indiana, despite the fact that TC Heartland had indisputably shipped the allegedly infringing products into Delaware.