Katherine White on the Ramifications of TC Heartland
By Steve Thorpe
In late May the U.S. Supreme Court reversed a lower court ruling on patent venues. Patent owners will no longer be able to sue an infringing defendant in a district court where the defendant is subject to personal jurisdiction. Instead, the suits can now only be filed in districts within states where the defendant is incorporated, or where the defendant has committed acts of infringement and has an established place of business. Professor Katherine E. White of Wayne State University Law School earned her B.S.E. degree in electrical engineering and computer science from Princeton University, J.D. degree from the University of Washington, LL.M. degree from the George Washington University Law School and master’s degree in strategic studies from the U.S. Army War College. She was a Fulbright senior scholar, a White House fellow (2001–2002) and is a registered patent attorney.
Thorpe: Can you give us a brief history of the issues addressed in TC Heartland LLC v. Kraft Food Group Brands LLC?
White: In TC Heartland, the Supreme Court clarifies where proper venue lies for domestic corporations in patent infringement cases. The specific patent infringement venue statute, 28 U.S.C. § 1400(b), provides that “[a]ny civil action for patent infringement may be brought in the judicial district where defendant resides, or where the defendant has committed acts of infringement and has a regular and established place of business.” The dispute is over the definition of the term “resides.” The lower court, the Federal Circuit, held “resides” incorporates the general venue statute definition under 28 U.S.C. §1391(c) where a domestic corporation resides in any judicial district in which a defendant is subject to the court’s personal jurisdiction. In other words, personal jurisdiction attaches in any judicial district where an infringing product is sold. The Supreme Court abrogated the Federal Circuit’s judgment and held that “resides” for domestic corporate defendants refers to the State of incorporation only. In this case, patentee, Kraft, sued TC Heartland in Delaware alleging TC Heartland sold allegedly infringing liquid water enhancer products. TC Heartland, a limited liability company headquartered and organized under Indiana law, has no ties to Delaware except that it has shipped allegedly infringing products there. After the Supreme Court’s ruling, TC Heartland’s ties to Delaware are too remote for venue to properly attach. In other words, the Supreme Court holds that the specific patent infringement venue statute stands alone and does not incorporate definitions from the general venue statute.
Thorpe: The 10-page opinion authored by Justice Clarence Thomas was joined by all of the justices except for Neil Gorsuch, who joined the court shortly after the argument. Are Supreme Court opinions about patent law issues often unanimous?
White: On the Supreme Court, patent cases are not particularly controversial. Thus, unanimity or near unanimity is not unusual. The Federal Circuit, the court from which all patent appeals originate, was created to develop national uniformity in the patent law jurisprudence and has national jurisdiction like the Supreme Court. But, unlike the Supreme Court, the Federal Circuit rarely sits en banc and generally sits in panels of three. Each panel is unable to overrule the other. This can lead to opinions that are short of overruling each other, but nevertheless make distinctions from prior rulings, often straying further away from each other. Eventually, the Supreme Court has to step in and restate its own precedent. This is what happened in TC Heartland. The Supreme Court held that its earlier precedent, Fourco Glass Co. v. Transmirra Prods. Corp., 353 U.S. 222 (1957) defined “resides” for domestic corporations as the State of incorporation only and rejected incorporating a broader definition found in the general venue statute. Since Congress has not amended the specific patent venue statute, the definition of “resides” has not changed. According to the Supreme Court, the Federal Circuit erred in incorporating the definition of “resides” used in the general venue statute into the specific patent infringement venue.
Thorpe: Some venues, like the Eastern District of Texas, which is home to approximately 35 percent of all U.S. patent litigations, are perceived as patent owner friendly. One quarter of the nation’s cases in the last three years went to a single federal judge there. How does a situation like that develop?
White: In general, criminal law cases take precedence in trial courts because criminal defendants have significant constitutional rights at stake, like a right to a speedy trial, etc. If not properly managed, complex patent litigation can clog up a court’s docket negatively affecting the pace of the criminal law docket. In addition, there are a very limited number of judges who want to and enjoy trying patent cases. When judges like patent cases, they must develop case management skills and techniques to handle complex patent litigation so as to keep the criminal docket moving. Patent litigators flock to places where sophisticated case management and technical expertise skills are prevalent. Once a jurisdiction is popular with patent litigants, this begets more popularity and then more experience is realized. Patent owners are generally doing the suing, so they often drive where the cases frequently go. Patent owners like cases to be disposed of quickly and in an organized manner. Judges who figure out how to do all of this will draw more litigators to their courtroom.
Thorpe: Counsel for Kraft had claimed that this case was a poor vehicle for the issues and presented none of the forum-shopping concerns of the petitioner. What might this concern be referring to?
White: Perhaps, Kraft’s counsel was referring to the concern about the forum-shopping characteristics of non-practicing entities (NPEs), which are patent owners that do not manufacture products and sue for patent infringement in order to obtain patent royalties. In my opinion, TC Heartland was less about addressing the NPE issues concerning forum shopping and more about the Supreme Court reinstating its precedent. Any case that created this opportunity, regardless of the facts and circumstances, would suffice.
Thorpe: This decision rejects the rules on venue for patent infringement that the Federal Circuit has been using for more than 25 years. What are the likely effects of this ruling?
White: This will likely substantially affect patent infringement litigation over a domestic corporate defendant. The holding in TC Heartland will probably reduce the number of patent infringement cases that can be brought into the Eastern District of Texas, a hotspot for patent owners that sue for infringement. But, presumably, foreign corporate defendants will still be subject to suit anywhere an allegedly infringing sale has occurred in the United States. States in which domestic corporations are incorporated are likely to see an uptick in patent infringement filings. The district courts in Delaware come to mind.
Thorpe: Is this the last word on the issue for now or do you see another case possibly on the horizon?
White: The Supreme Court is the last word on venue in patent infringement cases unless Congress steps in to change the statute, 28 U.S.C. § 1400(b). Keep in mind, however, TC Heartland only speaks to the specific patent infringement venue statute. It does not affect declaratory judgment actions, which allow a would-be infringer to sue a patent owner to have their rights declared and other relief. Here, the general venue statute, 35 U.S.C. § 1391(c), would apply. The general venue statute allows a corporate defendant to be brought into any jurisdiction where the court has personal jurisdiction over that defendant.
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