Could The Eastern District Of Texas's Reign Come To An End?

It has become a patent litigation trope, discussed at every Silicon Valley water cooler, that patent litigation is broken because all patent cases are tried in the plaintiff-friendly Eastern District of Texas. While this reputation is arguably undeserved, the Eastern District of Texas does end up with the majority of patent cases.

On Friday, March 11, 2016, U.S. Circuit Judges Kimberly A. Moore, Richard Linn, and Evan J. Wallach heard arguments in In re: TC Heartland, LLC, 16-105. The underlying case involves an allegation of patent infringement by Kraft Foods Group Brands LLC, and TC Heartland appeals the denial of a motion to transfer from the District of Delaware to the Southern District of Indiana, where it is headquartered and incorporated. TC Heartland's appeal centers on the issue of whether 28 U.S.C. § 1400(b) or § 1391(c) should control venue in patent cases. Section 1400(b), which TC Heartland argues should control, states that venue in patent litigation is appropriate only (a) where the defendant resides or (b) has committed acts of infringement and has a regular and established place of business. Section 1391(c) states that venue is appropriate wherever the defendant is subject to personal jurisdiction.

Since a 1990 Federal Circuit decision holding that § 1391(c) controls venue for patent cases, a corporation is said to reside, for purposes of determining venue, wherever it makes any sales. VE Holding Corp. v. Johnson Gas Appliance Co., 917 F.2d 1574 (Fed. Cir. 1990). TC Heartland asks the Court to set aside this holding based on Congress's 2011 Federal Court Jurisdiction and Venue Clarification Act, which narrowed the introductory language of § 1391(c) to, as TC Heartland argues, signal that it should no longer apply patent cases. If TC Heartland prevails, it could mean plaintiffs in patent cases would have to bring suit where the defendant has an established place of business. As very few defendants have an established place of business in the Eastern District of Texas, it would become difficult to establish venue in that court.

The three-Judge panel acknowledged that there are policy reasons on both sides of the argument. After all, it may be problematic that the Eastern District of Texas hears roughly 40% of all patent cases in the country. However, at oral argument, Judge Moore consistently emphasized that such an issue should be legislated by Congress. Indeed, Judge Moore pointed out, Congress has tried several times...