“By ignoring venue restrictions, courts like the Eastern District of Texas have turned into havens for patent trolls. Forty percent of all patent-infringement suits were filed there last year. The Supreme Court has put a stop to such forum shopping by properly enforcing rules governing patent venue.”
—Richard Samp, WLF Chief Counsel
(Washington, DC)—The U.S. Supreme Court today overturned a Federal Circuit decision that construed federal venue statutes so broadly that many nationwide businesses were subject to suit in virtually any federal district court. Today’s decision in TC Heartland v. Kraft Foods Group Brands was a victory for WLF, which filed a brief urging the Court to construe the venue statute more narrowly. WLF warned that the Federal Circuit’s liberal venue rule—to which it had adhered for more than 25 years—raised serious due process concerns and encouraged rampant forum shopping by “patent trolls,” entities that file numerous, inappropriate patent-infringement cases.
Because the Federal Circuit venue rule permitted patent owners to file suit in virtually any federal district court in the country, patent trolls—entities that buy up old patents for the purpose of extorting licensing fees via nuisance lawsuits (rather than to use the patented invention)— have gravitated to the few districts where they receive a friendly hearing, particularly the Eastern District of Texas.
In reversing the Federal Circuit, the Supreme Court agreed with WLF that rules governing venue generally require a patent owner to file an infringement suit in a State: (1) where the defendant “resides” (for a corporation, that means its State of incorporation); or (2) where infringement has occurred and in which the alleged infringer maintains a regular and established place of business. WLF argued that the Federal Circuit’s broader rule raised serious constitutional concerns by subjecting alleged infringers to lawsuits in States in which they lacked the “minimum contacts” required by due-process limits on a court’s personal jurisdiction over out-of-state defendants.
WLF acknowledged that today decision’s decision may cause difficulties for patent holders seeking to sue all alleged infringers in a single court. Under current venue rules, it may not always be possible for a patentee to locate a federal district court in which venue is proper as to all potential defendants. WLF noted, however, that Congress could easily remedy that difficulty through new patent legislation.
Celebrating its 40th year, WLF is the nation’s premier public-interest law firm and policy center that advocates for free-market principles, a limited and accountable government, individual and business civil liberties, and the rule of law.