TC Heartland: It’s Time to Take Stock

IP Theory Volume 8 | Issue 1 Article 2 2019 TC Heartland: It’s Time to Take Stock Daniel Kazhdan Jones Day, Sanjiv P. Laud Jones Day, Follow this and additional works at: https://www.repository.law.indiana.edu/ipt Part of the Intellectual Property Law Commons, and the Science and Technology Law Commons Recommended Citation Kazhdan, Daniel and Laud, Sanjiv P. (2019) "TC Heartland: It’s Time to Take Stock," IP Theory: Vol. 8 : Iss. 1 , Article 2. Available at: https://www.repository.law.indiana.edu/ipt/vol8/iss1/2 This Article is brought to you for free and open access by the Law School Journals at Digital Repository @ Maurer Law. It has been accepted for inclusion in IP Theory by an authorized editor of Digital Repository @ Maurer Law. For more information, please contact . TC Heartland: It’s Time to Take Stock DANIEL KAZHDAN & SANJIV P. LAUD* INTRODUCTION It has been a little over a year and a half since the Supreme Court issued its groundbreaking venue decision in TC Heartland LLC v. Kraft Foods Group Brands LLC,1 shaking up the status quo in U.S. patent infringement litigation. The first months after TC Heartland saw a flurry of activity as litigants and courts wrestled with the impact of the decision on pending cases, pondered the true meaning of a “regular and established place of business,” and explored many other questions left by the TC Heartland decision. Eighteen months and several writs of mandamus later, it is now a good time to take stock of the newly emerging status quo in patent venue. This article does just that. The article proceeds in four parts: First, it reviews the history and holding of the Supreme Court’s TC Heartland decision. Second, it reviews the Federal Circuit’s many decisions implementing TC Heartland and addressing divisions among the district courts. Third, the article outlines some of the remaining divisions among district courts. Finally, it looks at some statistics on how the change in venue law impacted courts since the TC Heartland decision. I. THE SUPREME COURT’S TC HEARTLAND DECISION The patent venue statute allows an action for patent infringement to be brought “in 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.”2 In 1957, the Supreme Court held in Fourco Glass Co. v. Transmirra Products Corporation that a company “resides,” for these purposes, in its state of incorporation alone, rather than in all districts where it is incorporated, licensed to do business, or doing business, as was then true for most purposes.3 In 1990, the Federal Circuit held that Congress had abrogated the Supreme Court’s Fourco decision by amending other sections of Title 28 that applied to corporations in general.4 The court relied on the 1988 amendments to section 1391, which provided that, “[f]or 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 at the time the action is commenced.” 5 According to VE Holding, section 1391(c)’s definition of “reside” applied to section 1400, so “venue in a patent infringement case includes any district where there would be personal jurisdiction over the * The authors are both associates at Jones Day. The views and opinions set forth herein, however, are the personal views and opinions of the authors; they do not necessarily reflect views or opinions of Jones Day. The authors wish to thank Gregory A. Castanias, Dr. Aaron Gurwitz, and Dr. Prakash Laud for their help. The authors also wish to thank Docket Navigator for providing the statistical tools and the necessary permissions that enabled Section IV. 1 137 S. Ct. 1514 (2017) (decided May 22, 2017). 2 28 U.S.C.A. § 1400(b) (Westlaw through Pub. L. No. 115-231). 3 Fourco Glass Co. v. Transmirra Prods. Corp., 353 U.S. 222 (1957). 4 VE Holding Corp. v. Johnson Gas Appliance Co., 917 F.2d 1574 (Fed. Cir. 1990), abrogated by TC Heartland, 137 S. Ct. 1514. 5 28 U.S.C.A. § 1391(c) (1988) (current version at 28 U.S.C.A. § 1391 (Westlaw through Pub. L. No. 115-244)). 56 IP THEORY [Vol. 8:55 corporate defendant at the time the action is commenced.”6 The upshot of VE Holding was that defendants generally had no reason to challenge venue. If personal jurisdiction existed, then so did venue. If personal jurisdiction did not exist, then a defendant could seek dismissal or transfer on that ground. VE Holding remained the law for 27 years. As now PTO director Andre Iancu pointed out in 2011, the Eastern District of Texas experienced a “meteoric rise in popularity for litigating patent cases” under the venue rule announced by VE Holding.7 Defendants often tried to have their cases transferred from that district, but they were largely unsuccessful.8 By 2016, “nearly half of all patent infringement cases filed nationwide” were filed in the Eastern District of Texas.9 That all changed with TC Heartland. On January 14, 2014, Kraft Foods Group Brands LLC sued TC Heartland LLC in the District of Delaware alleging that TC Heartland infringed its patents by selling a fruit drink package. TC Heartland filed a motion to dismiss for lack of venue, suggesting that VE Holding was wrong when decided and was certainly overruled when Congress amended Section 1391 to remove the “under this chapter” provision. Magistrate Judge Burke issued a thirty-page report and recommendation concluding that VE Holding remained good law,10 and Judge Stark adopted that ruling.11 TC Heartland unsuccessfully petitioned the Federal Circuit for mandamus.12 On December 14, 2016, the Supreme Court granted certiorari,13 and on May 22, 2017, it issued its decision. The Supreme Court found that VE Holding was wrong when it was decided, and that, “[a]s applied to domestic corporations, ‘residence’ in § 1400(b) refers only to the State of incorporation.”14 Other than reviving Fourco, the Supreme Court offered little guidance on how venue questions should be decided. It expressly declined to decide how to deal with unincorporated or foreign entities.15 One month after the Supreme Court’s decision, the parties dismissed the TC Heartland case with prejudice.16 Apparently, no one told the Federal Circuit. A month after the suit was dismissed, the Federal Circuit remanded the case to the district court “to consider in the first instance whether transfer is appropriate.”17 6 917 F.2d at 1583. Andrei Iancu & Jay Chung, Real Reasons the Eastern District of Texas Draws Patent Cases-Beyond Lore and Anecdote, 14 SMU SCI. & TECH. L. REV. 299, 319 (2011). 8 Id. at 314. 9 R. Trevor Carter, Trenton B. Morton & Reid E. Dodge, Developments in Intellectual Property Law: October 1, 2015 - September 30, 2016, 50 IND. L. REV. 1281, 1293 (2017) (citing sources). 10 Kraft Foods Grp. Brands LLC v. TC Heartland, LLC, No. CV 14-28-LPS, 2015 WL 4778828 (D. Del. Aug. 13, 2015). 11 Kraft Foods Grp. Brands (...truncated)