U.S. Supreme Court Issues Game-Changing Opinion on Patent Venue

This case summary was prepared in large part by Harrison Krupnick.
In TC Heartland LLC v. Kraft Foods Group Brands LLC,[1] the U.S. Supreme Court upended nearly 30 years of established practice in the world of patent litigation.  It has long been assumed in the field that patent infringement suits may be filed in any jurisdiction in which the infringing product is sold.  Accordingly, many patent infringement suits were filed in the Eastern District of Texas, which developed a reputation of having a fast-moving docket and knowledgeable judges.  The Supreme Court’s recent holding that infringement suits must be filed in the jurisdiction of the defendant’s domicile means that much of this litigation will move to popular corporate domicile jurisdictions such as Delaware and Nevada.
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.” (emphasis added). The word resides has been the subject of litigation over the years.
In Fourco Glass Co v. Transmirra Products Corp,[2] the Supreme Court concluded that for purposes of §1400(b) a domestic corporation “resides” only in its State of incorporation, thus the Court rejected the argument that §1400(b) incorporates the broader definition of corporate “residence” contained in the general venue statute, 28 U.S.C. §1391(c). Although Congress has not amended §1400(b) since Fourco, Congress has amended §1391 twice. §1391 now provides that, “[e]xcept as otherwise provided by law, and “[f]or all venue purposes,” a corporation “shall be deemed to reside, if a defendant, in any judicial district in which such defendant is subject to the court’s personal jurisdiction with respect to the civil action in question.”
Herein lies an express contradiction—consistent with the Fourco Court’s §1400(b) analysis, a domestic corporation resides only in its State of incorporation. However, §1391 states that for all venue purposes, domestic corporations shall be deemed to reside in any judicial district in which such defendant is subject to the court’s personal jurisdiction with respect to the civil action in question. (emphasis added). Accordingly, §1400(b) and §1391 directly contradict each other.
Initially, Kraft sued TC Heartland (“TC”) in the District Court for the District of Delaware alleging that one of TC’s products infringed a Kraft patent. TC moved to dismiss or transfer venue to Indiana, arguing that venue was improper in Delaware. TC cited Fourco’s holding that a corporation resides only in its State of incorporation for patent infringement suits. Thus, TC argued that it did not “reside” in Delaware under §1400(b).  Further, it argued that it had no “regular and established place of business” in Delaware under the second clause of §1400(b).
The District Court in Delaware ultimately rejected TC’s arguments and the Federal Circuit denied a petition for a writ of mandamus. The Federal Circuit Court, however, concluded that subsequent statutory amendments had effectively amended §1400(b) as construed in Fourco, with the result that §1391(c) now supplies the definition of “resides” in §1400(b). Under this logic, because the District of Delaware could exercise personal jurisdiction over petitioner, petitioner resides in Delaware under §1391(c) and, therefore, under §1400(b). The Supreme court granted cert.
The Court reversed the Federal Circuit’s decision. Relying on Fourco, the Court acknowledged that they “definitively and unambiguously” held that the word “reside” in §1400(b) has a particular meaning as applied to domestic corporations—it refers only to the State of incorporation. The Court noted that Congress has not amended §1400(b) since Fourco, and thus the only question the Court sought to answer was whether Congress changed the meaning of §1400(b) when they amended §1391.
Ultimately, the Court concluded that the amendments to §1391 did not modify the meaning of §1400(b) as interpreted by Fourco. The Court held that a domestic corporate resides only in the State of incorporation for purposes of the patent venue statute. Respondent-Kraft argued that “‘all venue purposes’ means ‘all venue purposes’—not ‘all venue purposes except for patent venue.’” The Court rejected this argument because §1391 has a saving clause, expressly stating that it does not apply when “otherwise provided by law.” Thus, the Court reasoned that when Congress amended §1391, it contemplated that certain venue statutes may retain definitions of “resides” that conflict with its default definition. Thus, the amendments to §1391 do not apply to §1400(b)’s definition of “reside.”

[1] TC Heartland LLC v. Kraft Foods Group Brands LLC, No. 16-341, slip op. (U.S. Supr. May 22, 2017).
[2] Fourco Glass Co v. Transmirra Products Corp, 353 U.S. 222, 226 (1957).