Posted by: Henry M. Sneath, Esq. – Chair of the Intellectual Property Practice Group at Pittsburgh, Pa. law firm Houston Harbaugh, P.C. Mr. Sneath is also an Adjunct Professor of Law at the Duquesne University School of Law teaching Trade Secret Law, Trademark Law and the Law of Unfair Competition. He may be contacted at firstname.lastname@example.org or 412-288-4013. See Website www.hh-law.com .
The US Supreme Court overturned the Federal Circuit’s decision in TC Heartland v. Kraft Foods and its longstanding interpretation of the patent venue statute and has reaffirmed that a corporation is a resident of the state in which it is incorporated. It had decided that question a long time ago, but the Federal Circuit and statutory changes to the general (non-patent) venue statutes had undermined the original decision of the Supreme Court in 1957 in Fourco Glass. The court provided this analysis in TC Heartland:
“The patent venue statute,28 U. S. C. §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.’ In Fourco Glass Co. v. Transmirra Products Corp., 353 U. S. 222, 226 (1957), this Court concluded that for purposes of §1400(b) a domestic corporation “resides” only in its State of incorporation.”
In overturning the Fed. Cir. decision, the Court rejected the argument that 28 U.S.C. §1400 (patent venue statute) incorporates the broader definition of corporate “residence” contained in the general venue statute 28 U.S.C. 1391 as has been allowed by the Federal Circuit for years. This changes the longstanding practice of the Federal Circuit to interpret “residence” as being any state in which a defendant corporation simply conducts business. This interpretation has allowed unfettered forum shopping which generally results in shopping and filing in the Eastern District of Texas.
“We conclude that the amendments to §1391 did not modify the meaning of §1400(b) as interpreted by Fourco. We therefore hold that a domestic corporation “resides” only in its State of incorporation for purposes of the patent venue statute.” Justice Thomas authored the court’s opinion.
The big question is whether this will indeed reduce or eliminate the monopoly held by Texas on patent cases and whether it will simply shift it to Delaware where many corporations are incorporated. The court may take additional action or so too may the US Congress to prevent that simple shifting of venues from Texas to Delaware.
See the Opinion in TC Heartland v. Kraft Foods here: https://www.supremecourt.gov/opinions/16pdf/16-341_8n59.pdf