{"id":1255,"date":"2017-06-19T10:31:54","date_gmt":"2017-06-19T14:31:54","guid":{"rendered":"https:\/\/www2.law.temple.edu\/10q\/?p=1255"},"modified":"2017-06-19T10:31:54","modified_gmt":"2017-06-19T14:31:54","slug":"supreme-court-increases-delawares-role-forum-patent-litigation","status":"publish","type":"post","link":"https:\/\/law.temple.edu\/10q\/supreme-court-increases-delawares-role-forum-patent-litigation\/","title":{"rendered":"Supreme Court Increases Delaware\u2019s Role as Forum for Patent Litigation"},"content":{"rendered":"

Photo Credit: Dan Cole<\/em><\/small><\/p>\n

In\u00a0TC Heartland LLC v. Kraft Foods Group Brands LLC<\/em>, the United States Supreme Court\u00a0recently\u00a0reversed almost three decades of Federal Circuit precedent in holding that,\u00a0for purposes of the patent venue statute (28 U.S.C. \u00a7 1400(b)), domestic corporate defendants reside only in their\u00a0state of incorporation.\u00a0\u00a0This 8-0 decision will\u00a0impact\u00a0patent jurisprudence, moving cases from the\u00a0hotbed of the Eastern District of Texas to, most prominently, the District of Delaware, where most\u00a0corporate\u00a0defendants\u00a0are incorporated, and so\u00a0reside.<\/p>\n

History\u00a0of Patent Venue Statutes<\/h2>\n

Congress first enacted a patent-specific venue statute in 1897.\u00a0 That statute, the predecessor to\u00a0what is now\u00a0\u00a7\u202f1400(b), provided for venue in any district where the defendant was an \u201cinhabitant,\u201d and later, where it \u201cresides.\u201d\u00a0 For a corporation, that\u00a0meant the State of incorporation. When Congress\u00a0amended\u00a0the general civil venue statute, 28 U.S.C. \u00a7\u202f1391(c),\u00a0in 1988,\u00a0it\u00a0expanded\u00a0venue to any district where\u00a0a corporation was subject to personal jurisdiction \u201c[f]or purposes of venue under this chapter.\u201d\u00a0 In\u00a0VE Holding Corp. v. Johnson Gas Appliance Co.<\/em>, the Federal Circuit held that Congress intended the\u00a0\u201cunder this chapter\u201d language to control the\u00a0meaning of \u201cresides\u201d for purposes of\u00a0determining venue in patent cases under\u00a0\u00a7\u202f1400(b).<\/p>\n

VE Holding<\/em>\u00a0greatly\u00a0expanded\u00a0where defendants could be sued for patent infringement\u00a0beyond their\u00a0State of incorporation.\u00a0 Patent plaintiffs\u00a0shopped for\u00a0favorable forums,\u00a0and increasingly found one\u00a0that suited their interests: the Eastern District of Texas.\u00a0 The Eastern District of Texas became a\u00a0hot spot for patent litigation.\u00a0 In 2015, over 40% of all patent cases filed nationwide were filed\u00a0there.\u00a0\u00a0Many have analyzed\u00a0why\u00a0the Eastern District of Texas attracted patent suits,\u00a0but regardless of why,\u00a0VE Holding<\/em>\u00a0was\u00a0responsible for providing plaintiffs the\u00a0choice to bring suit there.<\/p>\n

TC Heartland<\/em><\/h2>\n

In\u00a0its\u00a0unanimous opinion, the Supreme Court noted its\u00a0previous\u00a0rulings\u00a0that \u00a7\u202f1400(b) \u201cis the sole and exclusive provision controlling venue in patent infringement actions,\u201d and that it \u201cis not to be supplemented by the provisions\u201d of \u00a7 1391.\u00a0 Because\u00a0Section 1400(b)\u00a0had not changed since\u00a0those\u00a0pre-VE Holding<\/em>\u00a0decisions,\u00a0the only question was whether\u00a0subsequent\u00a0amendments to\u00a0\u00a7\u202f1391(c)\u00a0changed\u00a0the meaning of \u00a7\u202f1400(b).\u00a0 The Court held they did not.\u00a0 In fact,\u00a0the \u00a7\u202f1391(c)\u00a0amendments\u00a0only placed\u00a0the Court\u2019s\u00a0previous decisions\u00a0on \u201cfirmer footing.\u201d\u00a0\u00a0As a result, the Supreme Court reiterated that \u00a7 1400(b) should be interpreted separately from \u00a7 1391(c), and that corporations reside only in their State of incorporation for purposes of\u00a0patent cases.<\/p>\n

Where are\u00a0corporations incorporated? Delaware.<\/h2>\n

The\u00a0result of the\u00a0Supreme Court\u2019s decision\u00a0is\u00a0that more patent cases will be\u00a0brought\u00a0against defendants in their state of incorporation.\u00a0 This\u00a0is a significant change, as in recent years, under\u00a0VE Holding<\/em>,\u00a0most\u00a0patent\u00a0cases were filed in places like the Eastern District of Texas where defendants were neither incorporated\u00a0nor headquartered.<\/p>\n

Because approximately 65% of publicly-traded companies in the United States are incorporated in Delaware,\u00a0TC Heartland<\/em>\u00a0<\/em>means a greater number of suits will be brought\u00a0there.\u00a0\u00a0Patent cases are not foreign to the District of Delaware, whose judiciary is well-versed in patent law, as the District\u00a0has in recent years been the second most common venue for patent suits.\u00a0\u00a0That was a distant second place though, as\u00a0in some years\u00a0three or four times as many patent suits were brought in the Eastern District of Texas as they were in Delaware.\u00a0\u00a0That will change after\u00a0TC Heartland<\/em>.<\/p>\n

There are, however, a few uncertainties.\u00a0\u00a0First, \u00a7 1400(b) also provides a suit can be brought \u201cwhere the defendant has committed acts of infringement and has a regular and established place\u00a0of business.\u201d\u00a0\u00a0Courts have not\u00a0frequently interpreted\u00a0this\u00a0clause because\u00a0venue was usually proper under\u00a0VE Holding<\/em>.\u00a0 That will\u00a0now change, and will surely be the subject of motion practice.\u00a0\u00a0Second, because the Eastern District\u00a0of Texas\u00a0is viewed as plaintiff friendly, plaintiffs may not bring\u00a0their weakest suits in other jurisdictions.\u00a0 A case\u00a0that\u00a0may have been worth a roll of the dice before a Texas jury,\u00a0or have settlement value because of that prospect,\u00a0may not be worth\u00a0pursuing elsewhere.\u00a0 Third, Congress may still address the issue through legislation.\u00a0 Senator Orrin Hatch, the Chairman of the Senate Republican High-Tech Task Force, stated in February that \u201cno matter what the Court does\u00a0[in\u00a0TC Heartland<\/em>], we\u2019re\u00a0likely to need follow-on legislation to prevent future forum-shopping.\u201d\u00a0 Regardless of\u00a0how these variables shake out,\u00a0more patent plaintiffs seeking venue over Delaware corporations are sure to\u00a0sue\u00a0in the District of Delaware.<\/p>\n

The views expressed in this article are not necessarily those of Ross<\/em>\u00a0<\/em>Aronstam<\/em>\u00a0<\/em>or its clients.<\/em><\/p>\n

\n

Benjamin Schladweiler<\/a>\u00a0(LAW \u201804) is a partner at Ross\u00a0Aronstam\u00a0& Moritz where he\u00a0specializes in complex civil litigation and intellectual property disputes, with a particular focus on patent litigation, in the United States District Court for the District of Delaware and in other federal and state courts around the country, including the Federal Circuit.\u00a0<\/em><\/p>\n

Nicholas Mozal<\/a>\u00a0(LAW \u201911) is an associate at Ross\u00a0Aronstam\u00a0& Moritz where he specializes\u00a0in representing clients in corporate and commercial litigation in the Delaware Court of Chancery and intellectual property litigation in the United States District Court for the District of Delaware.<\/em><\/p>\n","protected":false},"excerpt":{"rendered":"

Recent SCOTUS decision will bring patent cases to Delaware, says Ben Schladweiler (LAW \u201904) and Nicholas Mozal (LAW \u201911) <\/p>\n","protected":false},"author":5,"featured_media":1257,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[12,36],"tags":[311,83,110,367],"coauthors":[2,54,366],"class_list":["post-1255","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-alumni-authored","category-intellectual-property","tag-civil-procedure","tag-delaware","tag-litigation","tag-patents","masonry-post","generate-columns","tablet-grid-50","mobile-grid-100","grid-parent","grid-33"],"yoast_head":"\nSupreme Court Increases Delaware\u2019s Role as Forum for Patent Litigation - The Temple 10-Q<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/law.temple.edu\/10q\/supreme-court-increases-delawares-role-forum-patent-litigation\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Supreme Court Increases Delaware\u2019s Role as Forum for Patent Litigation - The Temple 10-Q\" \/>\n<meta property=\"og:description\" content=\"Recent SCOTUS decision will bring patent cases to Delaware, says Ben Schladweiler (LAW \u201904) and Nicholas Mozal (LAW \u201911)\" \/>\n<meta property=\"og:url\" content=\"https:\/\/law.temple.edu\/10q\/supreme-court-increases-delawares-role-forum-patent-litigation\/\" \/>\n<meta property=\"og:site_name\" content=\"The Temple 10-Q\" \/>\n<meta property=\"article:published_time\" content=\"2017-06-19T14:31:54+00:00\" \/>\n<meta name=\"author\" content=\"Books Schatschneider, Nicholas D. 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