GOODBYE, TEXAS… HELLO, DELAWARE??

A patent owner planning an infringement suit against a U.S. corporate entity now could likely be forced to file suit in the state where the alleged infringer is incorporated.

The Supreme Court placed tight restrictions on where a patent owner can sue a domestic corporation for patent infringement in their unanimous decision issued Monday May 22, 2017.  (Justice Gorsuch did not take part in the consideration or decision.)  The TC Heartland LLC v. Kraft Foods Group Brands LLC decision reversed the Federal Circuit, and now having a defendant subject solely to personal jurisdiction will not be enough to permit a patent owner to bring an infringement suit.

Accused corporate patent infringers now will be subject to patent infringement suits only in districts in the state where they are incorporated, or in districts where infringing acts have been committed and the corporation has a regular and established place of business.  The Court ruled that the definition of “reside[nce]” in the statute controlling venue, 28 U.S.C. §1400(b), “refers only to the State of incorporation.”

The Federal Circuit, since 1988 when Congress changed 28 U.S.C. §1391, had looked at §1391(c) as controlling venue with respect to patent infringement cases, and thus a finding of personal jurisdiction was the determining factor.  However, the Supremes found that Congress, in both 1988 and 2011, had not, in their judgment, changed §1400(b)’s definition and scope of “resides,” as further interpreted by an older Supreme case, Fourco Glass Co. v. Transmirra Products Corp., 353 U.S. 222 (1957).  So, “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,” as stated in §1400(b).

This decision should greatly affect the number of suits filed in the current epicenter of patent litigation, the Eastern District of Texas.  Approximately 35% of all the country’s patent infringement suits are filed in this district with the quaint town of Marshall gaining some renown for its hospitality. It is anticipated that Delaware litigators soon will be much busier.

Sam Burkholder is a member and intellectual property attorney at Capitol City TechLaw.  His practice covers a range of issues, including patent prosecution and counseling.  He can be reached at sburkholder@capcitytechlaw.com.

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