Patent Venue Exceptionalism after TC Heartland v. Kraft
17 Pages Posted: 10 Apr 2017 Last revised: 22 Apr 2017
Date Written: April 6, 2017
In late 2016, the Supreme Court granted certiorari in TC Heartland, LLC v. Kraft Foods Group Brands LLC, a case addressing the interpretation of the special patent venue and the general venue statutes. The case was brought by Heartland, a sweetener manufacturer organized as a limited liability company under Indiana law and headquartered in Indiana. In 2014, Kraft sued Heartland for infringement of three patents on liquid water enhancers. Although Kraft is headquartered in Illinois, the lawsuit was brought in the District of Delaware, where Heartland is not registered to do business and does not have a regular or established place of business. However, in 2013, some of Heartland’s accused products (representing approximately 2% of Heartland’s annual sales) were drop-shipped to locations in Delaware at the request of an Arkansas-based customer. The court deemed this link sufficient to trigger personal jurisdiction in the patent lawsuit brought by Kraft.
A thinly construed nexus — chiefly through the sale of goods — is not uncommon in establishing personal jurisdiction for corporations in general, and in patent infringement cases in particular. For the past quarter of a century, the Federal Circuit has interpreted the patent venue statute permissively, enabling patentees to bring a lawsuit against a corporation in any district where personal jurisdiction arises. In the case of national companies like Heartland, this permissive approach allows patent infringement lawsuits to be brought anywhere in the United States where a modicum of sales may occur.
From a venue perspective, what sets patent infringement cases apart are the idiosyncrasies of forum shopping and forum selling created by permissive constructions of the patent venue statute. Among these idiosyncrasies, most notably, is the overwhelming volume of patent infringement cases being filed in the anomalous rural Eastern District of Texas. TC Heartland, now before the Supreme Court, provides an opportunity to alter this scenario. In 2015, Heartland petitioned the Federal Circuit for a writ of mandamus directing the Delaware trial court to dismiss the Kraft lawsuit for lack of personal jurisdiction, or transfer the case to the Southern District of Indiana due to improper venue. After the Federal Circuit denied the mandamus petition, Heartland filed a petition for a writ of certiorari in September 2016, which the Supreme Court granted in December. If the Supreme Court rules in favor of Heartland, patent venue will be interpreted independently from the general venue statute, which will result in a narrower construction of venue in patent infringement cases. This, in turn, will likely lead to less patentee forum-shopping as well as a redistribution of patent litigation across the country.
This essay explores the implications of the upcoming Supreme Court decision in TC Heartland v. Kraft. In Part II, this essay addresses the legislative history and interpretation of the patent venue statute by the Supreme Court and the Federal Circuit, as well as the effects that the Federal Circuit’s permissive constructions of venue have had on patent litigation over the past 27 years. Part III looks at possible outcomes after the Supreme Court’s decision in TC Heartland v. Kraft: it starts by discussing patterns of patent litigation redistribution in the event of a decision for Heartland, and then turns to alternative channels for achieving patent venue reform, should the Court side with Kraft. Finally, this essay concludes by positioning the outcome of the case into the larger ongoing debate surrounding patent exceptionalism.
Keywords: TC Heartland v Kraft, Venue, Patent Venue, Patent Exceptionalism, Personal Jurisdiction, Eastern District of Texas, Supreme Court, Federal Circuit
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