Patent Venue Legislation Could Have A Dramatic Impact on Popular Patent Venues

31 March 2016 IP Litigation Current Blog

This month, three United States Senators introduced the “Venue Equity and Non-Uniformity Elimination Act of 2016.”  The bill would dramatically narrow the venue statute that applies to patent cases and, it appears, prevent most cases from being litigated in the popular venues for patent cases, such as the Eastern District of Texas.

Under the proposed bill, 28 U.S.C. 1400(b) would be eliminated. The statute currently states that “[a]ny civil action for patent infringement may be brought in the judicial district where the defendant resides,” and it has been interpreted to mean that venue is proper in any district where the defendant is subject to personal jurisdiction.  (See VE Holding Corp. v. Johnson Gas Applicance Co., 917 F.2d 1574 (Fed. Cir. 1990).)  In its place, the proposed bill would provide that an action for patent infringement may only be brought where:

  1. the defendant has its principal place of business;
  2. the defendant has infringed and has a physical facility that gives rise to the act of infringement;
  3. the defendant has agreed to be sued in that case;
  4. the inventor conducted research and development that led to the application for the patent-in-suit; or
  5. a party operates a regular physical facility and has engaged in the management of significant research and development of an invention claimed in a patent-in-suit prior to the effective date, or manufactured a product or implemented a process claimed in a patent-in-suit.

In other words, under the proposed bill, and absent an agreement between the parties, a patent case could only be brought in a district where at least one of the parties (or the named inventor) actually operates. The bill even goes so far as to provide that the residence of a telecommuting employee “shall not constitute a regular and established physical facility of the defendant.”

Although a similar provision was introduced by the House of Representative with the 2015 “Innovation Act,” the timing of this particular bill is interesting because the Federal Circuit recently heard argument on a petition for a writ of mandamus filed by Kraft Foods seeking transfer of venue from Delaware to Kraft’s home state of Indiana. (In re: TC Heartland, LLC, 16-105 (Fed. Cir.).  In that case, Kraft argued to the lower court that amendments to the general venue statute (§ 1391(c)) in 2011 had the effect of changing the state of patent venue as it relates to § 1400(b).  (See Kraft Foods Group Brands LLC v. TC Heartland LLC, 14-cv-00028 (D. Del.).)

The question has been rattling around since 1957, when the Supreme Court held in Fourco Glass Co. v. Transmirra Prods. Corp. (353 U.S. 222) that “the residence of a corporation for purposes of [Section] 1400(b) is its place of incorporation.”  Then, in 1988 Congress amended § 1391(c) to begin “[f]or purposes of venue under this chapter.”  As referenced above, the Federal Circuit in VE Holding interpreted that change to mean that § 1391(c) should be read into § 1400(b), meaning a patent infringement action can be brought in any forum where the defendant is subject to personal jurisdiction.  In 2011, Congress passed the Federal Courts Jurisdiction and Venue Clarification Act of 2011, which replaced “for the purposes of venue under this chapter” with “[f]or all venue purposes.”  According to Kraft, because the Federal Circuit had relied on the now amended language of § 1391(c) in deciding VE Holding, the decision should be treated as a nullity and § 1391(c) should no longer be interpreted to define the term “resides” in § 1400(b).

Ironically, during oral argument in early March on Kraft’s Federal Circuit mandamus petition, Judge Moore mused that Kraft’s request to overturn VE Holding “feel[s] like something a legislature should do.”  Congress may now indeed address the issue.  Just yesterday, Judge Bryson, sitting by designation in the Eastern District of Texas, denied a motion to dismiss in which Amazon was also attempting to argue its way out of the Eastern District by also attacking the holding of VE Holding. See Script Security Solutions LLC v. Amazon.com, Inc. et al. (15-cv-01030 (E.D Tex.)).

This blog is made available by Foley & Lardner LLP (“Foley” or “the Firm”) for informational purposes only. It is not meant to convey the Firm’s legal position on behalf of any client, nor is it intended to convey specific legal advice. Any opinions expressed in this article do not necessarily reflect the views of Foley & Lardner LLP, its partners, or its clients. Accordingly, do not act upon this information without seeking counsel from a licensed attorney. This blog is not intended to create, and receipt of it does not constitute, an attorney-client relationship. Communicating with Foley through this website by email, blog post, or otherwise, does not create an attorney-client relationship for any legal matter. Therefore, any communication or material you transmit to Foley through this blog, whether by email, blog post or any other manner, will not be treated as confidential or proprietary. The information on this blog is published “AS IS” and is not guaranteed to be complete, accurate, and or up-to-date. Foley makes no representations or warranties of any kind, express or implied, as to the operation or content of the site. Foley expressly disclaims all other guarantees, warranties, conditions and representations of any kind, either express or implied, whether arising under any statute, law, commercial use or otherwise, including implied warranties of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Foley or any of its partners, officers, employees, agents or affiliates be liable, directly or indirectly, under any theory of law (contract, tort, negligence or otherwise), to you or anyone else, for any claims, losses or damages, direct, indirect special, incidental, punitive or consequential, resulting from or occasioned by the creation, use of or reliance on this site (including information and other content) or any third party websites or the information, resources or material accessed through any such websites. In some jurisdictions, the contents of this blog may be considered Attorney Advertising. If applicable, please note that prior results do not guarantee a similar outcome. Photographs are for dramatization purposes only and may include models. Likenesses do not necessarily imply current client, partnership or employee status.

Related Services