Finding Favorable Fora For Foreign Firms

• Published date: 26 May 2023
• Subject Matter: Intellectual Property, Patent
• Law Firm: Finnegan, Henderson, Farabow, Garrett & Dunner, LLP
• Author: Mr Daniel Cooley and Alexander Harding

Why Patent Venue Matters

When it comes to patent cases, venue matters. As just one example, we noted in an article we published ear- lier this year that outcomes for early motions to dismiss based on patent eligibility differed among America's five busiest district courts ²:

Venue may also impact the ease of discovery and time- to-trial (2.1 years for Delaware vs. 2.6 years for Northern California) in patent cases.³

These differences come into play for American technology companies when considering the implications of where they have incorporated and set up office. Under a 2017 decision by the Supreme Court in TC Heartland LLC v. Kraft Foods Grp. Brands LLC, 137 S. Ct. 1514, 1517 (2017), a patent owner may only bring suit for patent infringement in the district where an American defendant (a) "resides" or (b) "has committed acts of infringement and has a regular and established place of business."⁴ In the years since TC Heartland, American defendants have used the Supreme Court's holding to steer patent cases to their home districts (or places of incorporation). By August 2018, Northern California's share of new patent suits had doubled (7.64% vs. 3.63%). The Eastern District of Texas, on the other hand, fell to less than half of its pre-TC Heartland traffic (14.97% vs. 39.01%). ⁵

Venue Strategy for Foreign Corporations

But what about foreign firms doing business in the United States? According to a 2018 decision by the Federal Circuit (In re HTC Corp.), TC Heartland's restrictions on proper venue do not directly extend to foreign corporations. Instead, per the court, "a defendant not resident in the United States may be sued in any judicial district." ⁶ However, certain circumstances may still provide foreign firms a degree of control over venue in a patent case.

The American Subsidiary

Although TC Heartland may not cover foreign firms directly, it has been applied to American subsidiaries of those firms. If a patent owner wishes to sue a foreign firm and its American subsidiary, it must generally do so in the same district that the American subsidiary (i) is incorporated in (or "resides in") or (ii) is headquartered.⁷ A patent owner may sue only the foreign firm but there can be limitations in doing so. Often, the foreign parent isn't the one alleged to be selling or making the allegedly patent-infringing products; the American subsidiary is.

Issues may also arise with discovery for a patent-owner seeking documents and information from a foreign...