CAFC Debates A Change In The Venue Standard

AIA trial proceedings, such as IPR's, provide alternatives to traditional patent litigation, as Scott Kamholz and I discussed in our article "Good, Fast, Cheap Certainty: The Case for Patent Office Litigation," (recently published in The New York Law Journal). When considering an IPR and/or traditional litigation, factors such as cost, speed and convenience must be considered. On March 11, 2016, the Federal Circuit took up the venue standard in patent litigation — one of the considerations affecting those very factors.

Heartland was sued by Kraft in Delaware, where Kraft is incorporated and where Heartland has two percent of its allegedly infringing sales. In its petition for a writ of mandamus In re TC Heartland LLC, No. 2016-0105 (Fed. Cir., argued March 11, 2016, oral argument recording here), Heartland asked the Federal Circuit to reconsider the current expansive venue standard which provides venue wherever an entity is subject to personal jurisdiction.

Title 28 U.S.C. chapter 87 governs venue in the district courts: Section 1391 addresses venue generally, and §1400(b) addresses venue for patent infringement, i.e., "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." Section1400 (b) has remained unchanged since 1948, whereas §1391(c) has been amended three times. The first two iterations of the law have each had their respective court decisions interpreting venue. With a third version of the law, Heartland believes a new interpretation is proper.

The first iteration of §1391(c) broadly provided that residency included not only the state of incorporation but also any state in which the corporation does business. In Fourco Glass Co. v. Transmirra Products Corp., 353 US 222 (1957), the Supreme Court concluded that the more restrictive §1400(b) provision prevailed over the more general §1391 provision, and thus 1400(b) was the "sole and exclusive provision governing venue in patent infringement actions."

In its second iteration, §1391(c) was amended to add "for purposes of venue under this chapter, a defendant that is a corporation shall be deemed to reside in any judicial district in which it is subject to personal jurisdiction." The Federal Circuit in VE Holding Corp. v. Johnson Gas Appliance Co., 917 F.2d 1574 (Fed. Cir. 1990), cert. denied, 111 S. Ct. 1315 (1991) held that the plain meaning of the statute required that §1391(c)...