Summary of the Decision:
On May 22, 2017, the U.S. Supreme Court overturned nearly 30 years of patent litigation practice by narrowing the application of a statute describing where plaintiffs may file a lawsuit. In the past, patent holders have been able to file suit in almost any jurisdiction in which a defendant sells an infringing product despite a defendant’s physical location. Critics of the practice have argued that plaintiffs were permitted to “forum shop” since they could seek out jurisdictions with favorable laws and judges. In large part this has led to lawsuits filed in the Eastern District of Texas, which has seen the most patent litigation in the country.
The ruling interpreted 28 US Code § 1400, which states 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.” Plaintiffs have been able to capitalize on a 1990 Federal Circuit ruling, VE Holding Corp. v. Johnson Gas Appliance Co., expanding the interpretation of “resides” to mean anywhere there is personal jurisdiction. In effect, this has meant anywhere within the stream of commerce. The U.S. Supreme Court on Monday refused to take such an expansive definition in TC Heartland LLC v. Kraft Food Brands Group LLC. It ruled that “resides” only includes the defendant’s State of incorporation.
Moving Forward:
There still remains some grey area. The U.S. Supreme Court failed to comment on the second portion of 28 US Code § 1400, which states that venue is proper “where the defendant has committed acts of infringement and has a regular and established place of business.” This language has largely been disregarded by plaintiffs since most relied on the broader definition of “resides” when choosing venue. Therefore, future case law will still need to determine instances where infringing products are sold through an agent or storefront located in a different forum than the defendant’s State of incorporation. Additionally, the Court failed to comment on proper venue for foreign corporations without a State of incorporation. Future litigation will need to iron out this issue as well.
Practical Implications:
The landscape of patent litigation has undoubtedly been reshaped in light of Monday’s decision. Patent holders and corporate counsels will need to diversify their relationships with outside law firms when filing lawsuits against out of state infringers. Plaintiffs will need to find qualified legal counsel licensed to represent their interests in the home state of the infringers. Likewise, defendant’s will need the benefit of attorneys familiar with the laws of their home state.
Should you need assistance with patent litigation, the attorneys at Widerman Malek are licensed in states throughout the country and are registered with the United States Patent and Trademark Office.
