In a victory for the targets of patent-infringement suits and a defeat for venue shoppers, the Supreme Court has ruled unanimously—new justice Neil Gorsuch did not participate—that when it said in an earlier ruling that a lawsuit can only be brought against a company in the district in which it was incorporated that is exactly what it meant.
A district court had ruled that a case could be brought in any district to which a defendant is subject to jurisdiction. A federal appeals court had upheld that, but the Supreme Court remanded with clear instructions. "We hold that a domestic corporation 'resides' only in its state of incorporation" for the purposes of a patent case venue.
The case, TC Heartland LLC v. Kraft Foods Group Brands, was about whether a company headquartered in Indiana could be sued for patent infringement in Delaware because it ships its product to that state. But tech companies were following the case because of its implications, generally, for litigants shopping around for a more receptive legal venue than the state of incorporation.
The Supreme Court reversed the decision by the U.S. Court of Appeals for the Federal Circuit, which is not to be confused with the U.S. Court of Appeals for the D.C. Circuit. The federal circuit specializes in patent and intellectual property protection appeals.
“Today’s Supreme Court decision affirms the clear meaning of the patent venue statute, which establishes where patent cases may be brought," said Rep. Doug Collins (R-Ga.) "Not only does this decision correct a serious misapplication of the law, it reduces forum shopping among patent cases in doing so.”
“This Supreme Court ruling can help curb decades of misuse of the patent system by restricting a common tactic used by patent trolls—forum shopping," said Computer & Communications Industry Association president Ed Black. CCIA had filed an amicus brief with the court arguing for a narrow interpretation of venue—as the court eventually ruled—to "prevent a small business that’s headquartered and incorporated in Indiana from being dragged into court in Texas or Delaware."
"For too long patent trolls have relied on a combination of case load back up, high upfront legal costs, favorable rules in courts like the Eastern District and the cost of travel to pressure defending companies to settle court cases the trolls were unlikely to win on the legal merits," said Black.
The Innovation Alliance saw it differently.
“It is important to recognize that the Supreme Court’s decision today follows numerous other Supreme Court rulings over the last decade that have made it more difficult for patent holders to enforce their patents," it said. "This decision also comes on top of several major legislative and administrative measures adopted in recent years that have similarly weakened patent rights. Taken together, these patent system changes have made it harder for American inventors to succeed and undercut a key driver of U.S. innovation and job creation."
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