29 March 2017

US Supreme Court mulls significant overhaul of patent location rules

The court's decision may change the rules on where a company can be hit with a patent infringement lawsuit.

By Kathryn Higgins

On Monday, the US Supreme Court heard arguments in the case of TC Heartland vs Kraft Food Brands Group which could potentially shake up patent location rules that have been in effect across the United States for more than 25 years. TC Heartland is accusing Kraft of infringing upon a design patent for water enhancement containers. However, the most compelling element of the case is the question of whether Kraft Foods, an Indiana-based company, can bring a patent infringement case against TC Heartland in the state of Delaware.

Patent venue statute

At question is whether the venue for patent cases should be determined solely by the federal patent venue statute – which limits lawsuits to venues where the defendant ‘resides’ or has committed the infringement and has a ‘regular established place of business – or if this statute may be supplemented by the federal general venue statute, which allows lawsuits in any location where there is personal jurisdiction. While a 1957 Supreme Court decision made clear that only the patent venue statute should determine the venue of lawsuits, a 1990 Federal Circuit decision set the now prevailing practice that the two statutes be read together to allow infringement lawsuits in any state where the defendant has personal jurisdiction. ‘For 30 years, the Federal Circuit has been ignoring our decision,’ said Justice Elena Kagan on Monday.

Implications for patent enforcement

 The case is being closely watched by in-house lawyers, as a verdict to restore the federal patent venue statute as the sole determinant of patent lawsuit venues could have significant implications for the logistics and costs of patent enforcement. For instance, companies that previously enjoyed the convenience of being able to file all their patent infringement actions in a single district may soon have to face the costly logistical nightmare of having to file in multiple districts across the country. Other general counsel, however, have support TC Heartland’s efforts to have the 1957 Supreme Court decision returned as the law of the land, arguing that relying on the patent venue statute alone would help limit the practice of ‘forum shopping’ and its associated abuses.

Sources: Bloomberg BigLaw Business; Corporate Counsel

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