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SCOTUS ruling places new limits on patent suit locations

On May 22, 2017, the U.S. Supreme Court put sharp new limits on where patent-infringement lawsuits can be filed, undercutting patent owners’ ability to channel cases to favorable courts.

The court unanimously ruled in favor of TC Heartland LLC, an Indiana-based maker of water flavorings that said a Kraft Heinz Co. unit shouldn’t be allowed to sue it in Delaware. The high court said patent suits should be filed in the state where the defendant is incorporated.

The ruling will bar many patent owners from pressing cases in the patent-friendly Eastern District of Texas, where more than one-third of all infringement suits are now filed.

According to Sheridan Ross Shareholder and litigator Robert Brunelli, the significance of the decision breaks down along 2 lines:

New patent cases:  In newly filed patent cases, venue will only be proper where a US corporation is actually incorporated OR where the corporation has committed acts of infringement AND “has a regular and established place of business.”  What a “regular and established place of business” is will be the thing of motions practice and currently is not well defined.  However, I believe the cases interpreting that language currently do not allow for venue to attach just because the corporation does business in a district.  Rather, the corporation will need to really have offices, people, equipment, etc. in the district for venue to attach.

Previously filed cases:  Rule 12(b)(4) allows a defendant to seek dismissal for improper venue.  The defense is waived, however, if a motion-challenging venue is not filed or the defense is not included in a responsive pleading.  Further, even if included in a responsive pleading, the defense could be deemed waived, under some circuit precedent, where the defendant meaningfully participates in the action.  The upshot, I believe, is that motions to dismiss for improper venue that were previously denied will be reargued and new motions will be filed in any case where there is even an argument that venue is improper and waiver did not occur.

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