The Supreme Court Shuts Down the Eastern District of Texas

TC Heartland v. Kraft Foods Group

Large technology companies have long complained about patent suits in the Eastern District of Texas. With its decision in TC Heartland v. Kraft Foods, No. 16-341 (May 22, 2017), the Supreme Court has effectively shut down Eastern Texas as a major patent venue – while it will undoubtedly continue to attract a few cases, the vast majority will now be filed in Delaware and technology hubs like the Northern District of California, the District of Massachusetts, and the Northern District of Illinois.

The dispute in TC Heartland centered on interpretation of 28 U.S.C. § 1400(b), which reads “[a]ny civil action for patent infringement may 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.” Previously, the Federal Circuit – the Court of Appeals that reviews all patent decisions – had ruled that 28 U.S.C. § 1391(c) had established the definition of “resides,” which effectively made the test for patent venue test for personal jurisdiction limited to the particular venue in question. The Supreme Court’s decision has now severely restricted the definition of resides to only the state where a particular corporation is established. Accordingly, a Delaware Corporation, for purposes of patent venue, only resides in Delaware. Similarly, a California Corporation or Illinois Corporation would only reside in California or Illinois respectively.

In addition, the latter half of the patent venue statuate; i.e., “where the defendant has committed acts of infringement and has a regular and established place of business” is going to become a lot more important. Under this test, venue can be had where the defendant has an office and has committed acts of infringement, such as selling infringing goods. Accordingly, pre-filing detective work to discover satellite offices, and even salesmen who operate out of their home will become vital for plaintiffs seeking advantageous venue.