Posts Tagged: "TC Heartland v. Kraft Foods"

Due to the death of the patent troll narrative, venue reform would never have made it through Congress, but the infringer lobby doesn’t need Congress when they have a Supreme Court. They just need to make it sound like Congress may pass it and the Supreme Court will just do it for them, as if the Court can’t help themselves but to meddle in patent politics as they continue to disrupt generations of well settled patent law with practically every decision. However, this mode of lawmaking comes with very serious consequences. A group of nine liberal art majors who have never started up a company with the sole asset of a patent need a lot of information in order to understand the effects of their decisions. It is clearly evident from eBay, Alice and virtually all of the Supreme Court’s major patent decisions in the last decade that they do not understand the consequences of their decisions.

In the U.S. Supreme Court case of TC Heartland LLC v. Kraft Foods Grp. Brands LLC, venue in patent infringement cases are governed by 28 U.S.C. § 1400(b), which states that patent infringement suits can be brought in the district where the defendant “resides” or where the defendant has committed acts of infringement and has a regular and established place of business.

What follows is reaction from a distinguished panel of industry insiders who have been following this case. Each have offered their own instant analysis, several pointing out that important questions remain about what this Supreme Court decision will mean for the many thousands of patent cases already filed, many that are now in inappropriate venues. It is probably fair to say that the ruling did not surprise most of our panel, although several point to the Supreme Court’s decision as more in a decade-plus line of cases that have continually eroded the rights of patent owners.

The Supreme Court reversed the Federal Circuit and ruled that 28 U.S.C. 1400(b) remains the only applicable patent venue statute, that 28 U.S.C. 1391(c) did not modify or amend 1400(b) or the Court’s 1957 ruling in Fourco Glass Co. v. Transmirra Products Corp., and that the term “residence” in 28 U.S.C. 1400(b) means only the state in which a company is incorporated. The importance of this ruling should be immediately felt on patent litigation in the United States. No longer will a patent owner be able to sue an infringing defendant in a district court where the defendant is subject to personal jurisdiction. Instead, patent infringement lawsuits will only be able to be filed in districts within states where the infringing defendant is incorporated, or in districts where there has been an act of infringement and the defendant has a regular and established place of business.

Because patent trolls prefer filing in the Eastern District of Texas, the thinking goes that it will be a significant blow to patent trolls if the Supreme Court does not agree with the Federal Circuit. In other words, the days will be numbered for patent trolls if the Supreme Court determines that Congress did not expanded patent venue with the 1988 amendment that made the statutory definition of corporate residence found in § 1391 applicable to patent cases. That conventional wisdom is wrong!… Reflection Code has brought patent infringement actions in the Eastern District of Texas, but on March 31, 2017, Reflection Code brought two separate patent infringement lawsuits in the Eastern District of Michigan — one against Bissell, Inc. and the other against Mattel, Inc.

Justices Kagan and Ginsburg seemed skeptical. Indeed, Congress has already passed a general venue statute that defined residency “for all venue places – all venue purposes,” as Justice Ginsburg put it. Justice Kagan chimed in, questioning the propriety of overturning the broader rule, which she called “the decision that the practice has conformed to” and the “practical backdrop” against which Congress was legislating. Next, Justice Breyer noted the many arguments and briefs discussing the Eastern District of Texas, but which he felt were not relevant.

On Monday, March 27th, the U.S. Supreme Court heard oral arguments in TC Heartland LLC v. Kraft Food Group Brands LLC. The case, arising from allegations of patent infringement over liquid water enhancement products, will ask the court to decide whether 28 U.S.C. Section 1400(b), the patent venue statute which provides that judicial actions for patent suits take place in the district within which the defendant resides, is supplemented by 28 U.S.C. Section 1391(c), which provides that an entity may reside in multiple districts.