TC Heartland LLC v. Kraft Foods Group Brands and the Big Debate About East Texas: How a Delaware Case Leaves Patent Venue Unsettled and Presages As Applied Challenges to the Constitutionality of Narrow Venue Interpretations, 17 J. Marshall Rev. Intell. Prop. L. 232 (2017)

Authors

Jesse Snyder

Abstract

Lack of sanguinity for patent holders was manifest after the Supreme Court’s May 22, 2017, opinion in TC Heartland LLC v. Kraft Foods Group Brands LLC. Yet whether TC Heartland—a case from the U.S. District Court for the District of Delaware—represents a fait accompli against forum shopping remains debatable. Writing for the Court in a unanimous opinion, Justice Clarence Thomas rejected the U.S. Court of Appeals for the Federal Circuit’s interpretation that an intervening amendment to the general venue statute broadened the scope of venue for patent cases. 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.” The Court held that the Federal Circuit’s opinion from 1990, VE Holding Corporation v. Johnson Gas Appliance Company, erred in concluding that the general venue statute, 28 U.S.C. § 1391(c), superseded and redefined the meaning of “resides” to include any district in which the defendant is subject to personal jurisdiction. Without mentioning the import of the second basis for proper venue—“where the defendant has committed acts of infringement and has a regular and established place of business”—the Court determined that a U.S. corporation can only reside in its state of incorporation.

As unpropitious as TC Heartland is for many patent holders, the case ends only one debate while sparking others on where a defendant can be sued for patent infringement. TC Heartland did not decide how to determine venue for foreign corporations. It did not decide where unincorporated entities—including individuals—reside. And it made no mention of how to interpret the second clause in 28 U.S.C. § 1400(b): “where the defendant has committed acts of infringement and has a regular and established place of business.” Although lawyers can shape the contours of these issues, only the courts with time can discern their meaning. No one knows the import of TC Heartland yet—not even the courts until cases arrive and decisions are made.

This paper argues that TC Heartland begins—rather than ends—a more nuanced inquiry into what is proper venue in patent cases. In three parts, the paper describes the rise of East Texas as a nexus for patent litigation, reviews TC Heartland, and discusses the litigation-tactic implications of the case. If the perceived trajectory of limiting patent rights remains unabated, a narrow interpretation of the clause could result in U.S. corporations being subject to patent lawsuits in one of only two venues: their state of incorporation or principal place of business. Upon threat of such a restrictive interpretation, for a small business or individual patent holder without the ability to finance litigation in a distant forum, as-applied challenges surface to vindicate the unconstitutional denial of the right to access to courts. Left unbridled, TC Heartland could be a double-edged sword for small businesses, enabling them to avoid defending lawsuits in supposedly prejudicial venues while dissuading them from filing their own lawsuits for fear of financial ruin in a defendant’s hometown. The Constitution demands better and offers a salutary solution for patentees asserting public rights.

Recommended Citation

Jesse Snyder, TC Heartland LLC v. Kraft Foods Group Brands and the Big Debate About East Texas: How a Delaware Case Leaves Patent Venue Unsettled and Presages As Applied Challenges to the Constitutionality of Narrow Venue Interpretations, 17 J. Marshall Rev. Intell. Prop. L. 232 (2017)