Supreme Court Significantly Narrows Where Patent Cases May Be Brought

Supreme Court Significantly Narrows Where Patent Cases May Be Brought

On May 22, the Supreme Court reversed a ruling from the Federal Circuit which allowed for patent infringement cases to be brought in any district where the defendant conducts business. Liquid sweetener brand TC Heartland was sued by Kraft Food Brands in Delaware, its state of incorporation, and unsuccessfully moved to transfer venue to the Southern District of Indiana, where it primarily conducts business.

The relevant patent venue statute, 18 U.S.C. § 1400(b), states that any patent infringement case may be brought in the district where the defendant resides or has a regular and established place of business. However, the 1957 Supreme Court decision in Fourco Glass Co. v. Transmirra Products Corp. provided a more narrow definition of “resides,” holding that “resides” refers only to the defendant’s state of incorporation. TC Heartland appealed to the Supreme Court to instead adopt the definition from the 1990 Federal Circuit case VE Holding Corp. v. Johnson Gas Appliance, which more broadly interpreted “resides” to include any venue in which a defendant conducts business.

In the 8-0 majority opinion written by Justice Thomas, the Court concluded that a domestic corporation “resides” only in its state of incorporation and thus a patent holder invoking § 1400(b) is limited to bring suit only in the defendant’s state of incorporation. The Court’s decision is a significant defeat for the many patent holders who hope to file in the Eastern District of Texas, which has become a popular forum for plaintiffs. As the majority of the defendants in these patent cases are not incorporated in the Eastern District of Texas, the VE Holding Corp. decision would likely cause many patent cases to transfer to Delaware, a common state of incorporation for domestic companies.

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