Slide1US Supreme Court Takes Up
Patent Troll Venue Question

Slide12         On December 14, the Supreme Court granted Certiorari in TC Heartland LLC v. Kraft Foods Group Brands LLC. 821 F.3d 1338 (Fed. Cir. 2016), cert. granted, 2016 WL 4944616 (U.S. December 14, 2016) (No. 16-341). This grant indicates that the Supreme Court may soon interpret the scope of the statute governing venue for patent infringement lawsuits.

          TC Heartland petition poses the question of whether or not the twenty six year old Federal Circuit decision in VE Holding Corp. v. Johnson Gas Appliance Co. is correct. 917 F.2d 1574 (Fed. Cir. 1990). In VE Holding Corp. the U.S. Court of Appeals for the Federal Circuit ruled that the statute governing venue for patent infringement cases should be interpreted in a manner similar to the statute governing venue for non-patent infringement cases.

          The patent venue statute in particular provides that “any 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.” 28 U.S.C.A. §1400(b) (West). In interpreting this statutory language, the VE Holding Corp. court concluded that patent venue is proper in any judicial district that has personal jurisdiction over the defendant. 917 F.2d 1574 (Fed. Cir. 2016).

          The significantly affect the Federal District Court for Eastern District of Texas, which for years has been the most active venue for patent lawsuits. This has been due to plaintiff-friendly laws and juries that have a reputation for handing out outsize damages awards. In Texas towns like Marshall and Tyler, hotels, restaurants, and local law firms have done a booming business thanks to planeloads of lawyers showing up to litigate patent cases.

          The practical effect of such a decision could reshape the patent litigation landscape. While not much will change for an infringement plaintiff filing suit against a large defendant that is disseminating infringing products nationwide, infringement plaintiffs that plan to litigate against smaller defendants will be more limited.

          In its 1990 VE Holdings decision, the Federal Circuit rejected Fourco based upon some reasoning, but without any good reasons.  There are two reasons to stick with the Federal Circuit’s 26 year old rule: (1) The rule is 26 years old and well settled with almost every patents now in force applied-for after the rule change.  At this point, it is Congress’s turn (not the courts) to amend the statute if its wants a policy change. (2) The actual reasoning of Fourco is quite dodgy – not the most stellar statutory interpretation.  If the Supreme Court actually takes a fresh look at the statute it may well overturn Fourco of its own accord.   Patently-O blogger Dennis Crouch, in reporting on this case states that he expects that these arguments will not carry the day and instead that the Supreme Court will reverse the Federal Circuit. The result will be a continuing strand in a national fabric of eliminating causes and effects of patent troll lawsuits.

          For more information on this case and its ramifications, see the following articles and blogs: