Proper Venue in Patent Infringement Suits After 'TC Heartland'
TC Heartland Decision:
Last year, the Supreme Court's unanimous decision in TC Heartland LLC v. Kraft Foods Group Brands LLC ("TC Heartland") changed the patent litigation landscape by putting an end to forum shopping in patent infringement suits. Plaintiffs can no longer pick and choose whichever district may land them the most favorable judgment—the Eastern District of Texas having been a popular choice. Rather, a plaintiff must bring suit in the district where (1) the defendant is incorporated, or (2) in a district where the defendant committed acts of infringement and has a regular and established place of business.
The First Prong of § 1400(b):
Prior to TC Heartland, district courts and the U.S. Court of Appeals for the Federal Circuit had interpreted the first prong of the patent venue statute, 28 U.S.C. § 1400(b), to mean that venue was proper when a district court could exercise personal jurisdiction over a patent defendant, i.e., wherever the defendant sold the infringing products or services. Given the prevalence of online nationwide sales, defendants could reasonably be expected to be sued practically anywhere in the United States where they did business. However, in TC Heartland, the Supreme Court clarified that, under the first prong of § 1400(b), "residence" refers only to the defendant's state of incorporation, and thus the defendant can only be sued for patent infringement in its state of incorporation.
More recently, in In re BigCommerce, Inc., Nos. 2018-120, 2018-122, 2018 (Fed. Cir. May 15, 2018), the U.S. Court of Appeals for the Federal Circuit held that a defendant corporation cannot be sued for patent infringement in any district of its state of incorporation. Rather, venue is proper in the district where the defendant's principal place of business is located. And, if there no central headquarters that directs and controls business, then venue is proper where the registered office is located. In that case, BigCommerce was incorporated in Texas and its registered office was located in the Western District of Texas. Therefore, venue was not proper in the Eastern District of Texas.
The Second Prong of § 1400(b):
Fortunately for plaintiffs, TC Heartland does not hold that a defendant can only be sued in the district where its principal place of business or registered office is located. Instead, the second prong of § 1400(b) offers another way for a plaintiff to establish a potentially more convenient venue in which to bring suit. Specifically, under § 1400(b), venue is also proper "where the defendant has committed acts of infringement and has a regular and established places of business" (emphasis added).
According to the U.S. Court of Appeals for the Federal Circuit in In re ZTE (USA) Inc., the burden is on the plaintiff to establish that venue is proper under § 1400(b). Ways to establish proper venue under the second prong of § 1400(b) may include, for example: showing that specific instances of infringing activities occurred in the selected district; listing specific infringing products or services that were manufactured, sold, offered for sale, used, or imported into the district; listing physical locations or corporate offices that the defendant owns or operates from in the district, and so on.
A plaintiff must bring suit for patent infringement in the state where the defendant is incorporated and, more specifically, in the district where the defendant's principal place of business is located. However, if the defendant does not have a principal place of business per se, then venue is proper where the registered office is located. The plaintiff bears the burden of proving whether venue is proper in a patent infringement suit.
Res Nova Law is a boutique intellectual property and business litigation firm based in beautiful Portland, Oregon. Our friendly and knowledgeable attorneys can advise you on how to enforce your patents, trademarks, copyrights, and trade secrets against infringers, and how to avoid potential litigation. Whether the best step to resolution is arbitration, or mediation, or trial, our team can guide you through each step of the way.