Source: https://www.omm.com/resources/alerts-and-publications/alerts/client-alert-tc-heartland/
Timestamp: 2017-07-24 06:33:40
Document Index: 297011525

Matched Legal Cases: ['§ 1391', '§ 1400', '§ 1391', '§ 1391', '§ 1400', '§ 1391', '§ 1400', '§1400', '§1391', '§1391', '§1400', '§1391', '§1400', '§1400', '§1391', '§1400', '§1391', '§1391', '§1400']

TC Heartland May 22, 2017
In a unanimous decision today, May 22, 2017, the Supreme Court ruled that a defendant may be sued for patent infringement only (1) in its state of incorporation or (2) where it has an established place of business and has committed acts of infringement. The case has been closely watched due to its potential impact on forum selection in patent cases—namely, whether patent infringement actions can be brought where there is personal jurisdiction over the defendant, e.g., in any district where defendant’s products are sold. As a result of the Supreme Court’s decision, the Eastern District of Texas—long a magnet for patent infringement filings due to its pro-plaintiff reputation—will no longer be a proper venue for cases against companies whose only relationship to that district is based on the local sale or use of allegedly infringing products.
In 1988, Congress amended § 1391(c) to define residence “for purposes of venue under this chapter.” The amendment changed the definition of corporate “residence” from where the corporation is “incorporated or licensed to do business or is doing business” to “any judicial district in which it is subject to personal jurisdiction at the time the action is commenced.” Later, the Federal Circuit in VE Holding held that this new definition applied to the patent venue statute, § 1400(b). VE Holding Corp. v. Johnson Gas Appliance Co., 917 F. 2d 1574 (1990). As a result, a corporation could “reside” in any state in which the corporation was subject to personal jurisdiction, which could be more than one state.
In 2011, Congress again amended § 1391 to further broaden the definition of corporate “residence,” which applies “[f]or all venue purposes.” Under that amendment, § 1391 shall govern the venue in all civil actions in district courts of the United States “except as otherwise provided by law.” Kraft v. TC Heartland Against this backdrop of statutory amendments and caselaw, Kraft sued TC Heartland in Delaware, arguing that TC Heartland infringed its patents directed to containers and methods for dispensing concentrated liquids. Kraft is headquartered in Illinois and incorporated in Delaware—TC Heartland is headquartered in Indiana and operates under Indiana law. TC Heartland sought to transfer the case to Indiana, but its transfer motion was denied. Kraft Foods Grp. Brands LLC v. TC Heartland, LLC, No. 14–28–LPS, 2015 WL 5613160 (D.Del. Sept. 24, 2015).
The Federal Circuit held that statutory amendments had effectively amended § 1400(b) as construed in Fourco and that § 1391(c) supplies the definition of “resides” in § 1400(b). Supreme Court Opinion
The court first looked to the history of the relevant statutes. The court noted that it has held (and subsequently affirmed) that §1400(b) “is the sole and exclusive provision controlling venue in patent infringement actions, and . . . is not to be supplemented by . . . §1391(c).” The court noted that Congress amended the general venue statute §1391(c) in 1988, and that “the only question . . . is whether Congress changed the meaning of §1400(b) when it amended §1391.” The court concluded that it had not: “In Fourco, this Court definitively and unambiguously held that the word ‘reside[nce]’ in §1400(b) has a particular meaning as applied to domestic corporations: It refers only to the State of incorporation.” The court agreed with Kraft’s argument that any changes to the meaning of the term are properly addressed by Congress: “Congress has not amended §1400(b) since Fourco, and neither party asks us to reconsider our holding in that case. When Congress intends to effect a change of that kind, it ordinarily provides a relatively clear indication of its intent in the text of the amended provision.” The court further noted that “[t]he current version of §1391 does not contain any indication that Congress intended to alter the meaning of §1400(b) as interpreted in Fourco.”
Finally, the court reasoned that there is no indication that the 2011 amendments ratified the Federal Circuit’s decision in VE Holding. The court stated that VE Holding relied heavily on Congress’ decision in 1988 to replace “for venue purposes” with “[f]or purposes of venue under this chapter” in §1391(c), and in 2011 to delete “under this chapter,” which resulted in the current version of §1391(c) being worded almost identically to the original version of the statute. Thus, the court concluded that, as applied to domestic corporations, “reside[nce]” in§1400(b) refers only to the State of incorporation.
It is important to note, however, that this change comes with limitations, and not all defendants can hope to avoid the Eastern District of Texas altogether. The patent owner can bring suit in any district where the defendant has committed acts of infringement and has an established place of business. Thus, a defendant will not be able to avoid the Eastern District of Texas if it sells its products nationally (including the Eastern District of Texas) and has an office anywhere in the district. This memorandum is a summary for general information and discussion only and may be considered an advertisement for certain purposes. It is not a full analysis of the matters presented, may not be relied upon as legal advice, and does not purport to represent the views of our clients or the Firm. John Kappos, an O'Melveny partner licensed to practice law in California, Brett Williamson, an O'Melveny partner licensed to practice law in California, Washington D.C. and New York, Bo Moon, an O'Melveny counsel licensed to practice law in California, and Hana Oh, an O'Melveny associate licensed to practice law in California, contributed to the content of this newsletter. The views expressed in this newsletter are the views of the authors except as otherwise noted. Portions of this communication may contain attorney advertising. Prior results do not guarantee a similar outcome. Please direct all inquiries regarding New York's Rules of Professional Conduct to O’Melveny & Myers LLP, Times Square Tower, 7 Times Square, New York, NY, 10036, Phone:+1-212-326-2000. © 2016 O'Melveny & Myers LLP. All Rights Reserved.
This memorandum is a summary for general information and discussion only and may be considered an advertisement for certain purposes. It is not a full analysis of the matters presented, may not be relied upon as legal advice, and does not purport to represent the views of our clients or the Firm. John Kappos, an O'Melveny partner licensed to practice law in California, Bo Moon, an O'Melveny counsel licensed to practice law in California, and Hana Oh, an O'Melveny associate licensed to practice law in California, contributed to the content of this newsletter. The views expressed in this newsletter are the views of the authors except as otherwise noted. Portions of this communication may contain attorney advertising. Prior results do not guarantee a similar outcome. Please direct all inquiries regarding New York's Rules of Professional Conduct to O’Melveny & Myers LLP, Times Square Tower, 7 Times Square, New York, NY, 10036, Phone:+1-212-326-2000. © 2016 O'Melveny & Myers LLP. All Rights Reserved.