The Supreme Court’s recent decision in TC Heartland v. Kraft Foods dramatically restricts where patent lawsuits can be brought. Previously, a patent owner could sue an accused infringer in any district where the infringer was subject to personal jurisdiction, which often meant anywhere that products accused of infringement were sold. For products sold nationwide, this led to lawsuits in odd places – courts that offered tactical advantages to plaintiffs but were often thousands of miles from either party.
Now, the Supreme Court has ensured that patent litigation plaintiffs can sue domestic corporate defendants only in either: 1) the defendant’s state of incorporation; or 2) where the defendant has committed acts of infringement and has a regular and established place of business. This sea change in the patent litigation landscape tilts the balance in favor of defendants.
For over twenty years, many patent owners filed infringement lawsuits in perceived pro-patent jurisdictions that often have few ties to either the patent owner or the accused infringer. For example, the Eastern District of Texas (in rural areas like Marshall and Tyler) and the Eastern District of Virginia (home of the “rocket docket”) became popular venues for patent infringement because of shorter time-to-trial schedules, higher patent-owner success rates, and trends towards higher damage awards.[1]
For similar reasons, many patent owners have also filed patent lawsuits in the Western District of Wisconsin (in Madison) and the Middle District of Florida (with courthouses in Tampa and Orlando). Defendants often hated those forums because the tactical advantages for patent owners are usually tactical disadvantages for accused infringers. And plaintiffs’ choice of those forums often forced defendants to litigate cases in inconvenient places thousands of miles from home.
The longtime enabler of forum-shopping had been the Federal Circuit, the court that hears all appeals from patent decisions in the trial courts. In its 1990 decision in VE Holding, the court interpreted a patent-specific venue statute, 28 U.S.C. § 1400(b), in conjunction with a general venue statute, 28 U.S.C. § 1391(c).
The patent-specific statute states that a patent infringement lawsuit can be brought in the district where the defendant either (a) resides or (b) has committed acts of infringement and has a regular and established place of business. The general venue statute states that a corporate defendant will be deemed to reside anywhere it is subject to personal jurisdiction for the lawsuit in question. In combination, the Federal Circuit interpreted the two venue statutes to allow patent owners to sue accused infringers in any district where the infringer was subject to personal jurisdiction.
In coming to this conclusion, the Federal Circuit disregarded an authoritative precedent. In Fourco Glass (1957), the Supreme Court had held that the general venue statute did not apply to patent cases and that, for purposes of the patent venue statute, a domestic corporation “resides” only in its state of incorporation. The Federal Circuit brushed aside Fourco by reasoning that later amendments to the general venue statute rendered the Supreme Court’s interpretation irrelevant. More...
[1]See, e.g., PricewaterhouseCooper’s 2017 Patent Litigation Study, at 22-23, available at https://www.pwc.com/us/en/forensic-services/publications/patent-litigation-study.html
Now, the Supreme Court has ensured that patent litigation plaintiffs can sue domestic corporate defendants only in either: 1) the defendant’s state of incorporation; or 2) where the defendant has committed acts of infringement and has a regular and established place of business. This sea change in the patent litigation landscape tilts the balance in favor of defendants.
For over twenty years, many patent owners filed infringement lawsuits in perceived pro-patent jurisdictions that often have few ties to either the patent owner or the accused infringer. For example, the Eastern District of Texas (in rural areas like Marshall and Tyler) and the Eastern District of Virginia (home of the “rocket docket”) became popular venues for patent infringement because of shorter time-to-trial schedules, higher patent-owner success rates, and trends towards higher damage awards.[1]
For similar reasons, many patent owners have also filed patent lawsuits in the Western District of Wisconsin (in Madison) and the Middle District of Florida (with courthouses in Tampa and Orlando). Defendants often hated those forums because the tactical advantages for patent owners are usually tactical disadvantages for accused infringers. And plaintiffs’ choice of those forums often forced defendants to litigate cases in inconvenient places thousands of miles from home.
The longtime enabler of forum-shopping had been the Federal Circuit, the court that hears all appeals from patent decisions in the trial courts. In its 1990 decision in VE Holding, the court interpreted a patent-specific venue statute, 28 U.S.C. § 1400(b), in conjunction with a general venue statute, 28 U.S.C. § 1391(c).
The patent-specific statute states that a patent infringement lawsuit can be brought in the district where the defendant either (a) resides or (b) has committed acts of infringement and has a regular and established place of business. The general venue statute states that a corporate defendant will be deemed to reside anywhere it is subject to personal jurisdiction for the lawsuit in question. In combination, the Federal Circuit interpreted the two venue statutes to allow patent owners to sue accused infringers in any district where the infringer was subject to personal jurisdiction.
In coming to this conclusion, the Federal Circuit disregarded an authoritative precedent. In Fourco Glass (1957), the Supreme Court had held that the general venue statute did not apply to patent cases and that, for purposes of the patent venue statute, a domestic corporation “resides” only in its state of incorporation. The Federal Circuit brushed aside Fourco by reasoning that later amendments to the general venue statute rendered the Supreme Court’s interpretation irrelevant. More...
[1]See, e.g., PricewaterhouseCooper’s 2017 Patent Litigation Study, at 22-23, available at https://www.pwc.com/us/en/forensic-services/publications/patent-litigation-study.html
No comments:
Post a Comment