By: Jason S. Angell
A frequent complaint from accused patent infringers is that they often are sued in far-flung jurisdictions that are considered “plaintiff-friendly,” such as the Eastern District of Texas, Delaware, or, more recently, the Middle District of Florida. Defendants complain that requiring them to defend a patent case in a jurisdiction in which they have no operations or personnel is inappropriate and unfair. However, the Federal Circuit has long held that venue is proper in jurisdictions where defendant’s goods are sold, and thus infringing acts have occurred in the jurisdiction. The Federal Circuit reaffirmed that rule in its rejection of a closely-watched mandamus proceeding initiated by TC Heartland LLC (“TC Heartland”). In re: TC Heartland LLC, Case No. 16-105 (Fed. Cir. April 29, 2016).
TC Heartland’s petition sought an order directing the United States District Court for the District of Delaware to dismiss for lack of personal jurisdiction the patent infringement case Kraft Foods Group Brands LLC (“Kraft”) filed against it, or to transfer the case to the Southern District of Indiana. TC Heartland had no business operations in Delaware and was not licensed to do business in Delaware. Ninety-eight percent of the plaintiff’s damages claims arose from non-Delaware transactions or events. Sympathizers of TC Heartland’s petition had hoped the case would be a vehicle for venue reform.
TC Heartland’s argument at the district court and in its mandamus petition was that venue was not proper in Delaware under the venue statue applicable to patent cases. The patent venue statute, in relevant part, states a patent infringement action 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). The Federal Circuit held in VE Holding Corp. v. Johnson Gas Appliance Co., 917 F.2d 1574 (Fed. Cir. 1990), that corporate “residence” for purposes of Section 1400 is governed by the general venue statute, 28 U.S.C. § 1391(c). Section 1391(c) states that a corporate defendant “resides” in “any judicial district in which such defendant is subject to the court’s personal jurisdiction.” TC Heartland had shipped a small amount of products into the District of Delaware. Therefore, the district court held that TC Heartland was subject to personal jurisdiction in Delaware, and thus venue was proper in Delaware.
The Federal Circuit rejected TC Heartland’s argument that in making amendments in 2011 to Section 1391, Congress intended to overrule VE Holdings, such that the general venue statute no longer applied in patent cases. The Federal Circuit stated that, among other things, Congressional reports both before and after the 2011 amendments indicated acknowledgement by Congress that VE Holdings is the prevailing law regarding venue in patent cases.
The Federal Circuit also found that TC Heartland had not demonstrated that the exercise of personal jurisdiction over TC Heartland would offend due process. Because TC Heartland had shipped accused products directly to Delaware, and Kraft’s infringement claims arose out of or related to those shipments, TC Heartland’s minimum contacts with Delaware were sufficient to confer personal jurisdiction over TC Heartland.
TC Heartland offers no comfort to companies hoping for relief from having to defend patent suits in places like Delaware or the Eastern District of Texas. The Federal Circuit’s reaffirmation of VE Holdings in TC Heartland endorses the idea that any change to the established venue rules will need to come from Congress or the Supreme Court. For the time being, patent plaintiffs who favor filing patent infringement suits in a plaintiff-friendly forum will be able to continue to do so until Congress, the Supreme Court, or the Federal Circuit en banc step in.