Why Is One Courthouse Known as the “Patent Litigation Capital of America,” and Is That about to Change?March 2017
The small town of Marshall, located in the judicial Eastern District of Texas, has been described as the "patent litigation capital of America." In 2015, nearly 44% of all US patent cases were filed in the Eastern District of Texas, with its courthouse in Marshall handling more patent cases than the federal district courts for Los Angeles, Chicago, San Francisco, New York, Boston, and Delaware combined.
Patent owners filing infringement lawsuits might prefer the Eastern District of Texas because of its reputation for fast trials and plaintiff-friendly verdicts. However, venue in patent cases is nominally governed by 28 U.S.C. § 1400(b), which provides that patent cases may be filed in a district in which the defendant resides or where the defendant has a place of business and has committed infringing acts. The meaning of the term "resides" can be unclear when the defendant is a company, but in 1957, the Supreme Court ruled in Fourco Glass Co. v. Transmirra Pros. Corp. that venue for patent cases was controlled by § 1400(b) and could not be supplemented by the general venue statute, 28 U.S.C. § 1391. This constrained where a patent infringement lawsuit could be filed.
However, in 1990, the Federal Circuit, the main appeals court responsible for patent issues, held in VE Holding Corp. v. Johnson Gas Appliance Co. that Congressional amendments to the venue laws in the 1980s broadened the general venue statute to apply to all civil cases, including patent infringement lawsuits. This increased the number of states in which patent plaintiffs could file lawsuits, resulting in patent infringement litigation becoming concentrated in a handful of federal courts preferred by plaintiffs, such as the Eastern District of Texas.
That might soon change. On March 27, 2017, the Supreme Court will hear oral argument in TC Heartland v. Kraft Foods. In this case, Kraft accused TC Heartland of infringing one of Kraft's patents and filed a patent infringement lawsuit in Delaware. TC Heartland sought to transfer the case to Indiana, where it is incorporated, but both the trial court and the Federal Circuit rejected TC Heartland's arguments, stating that TC Heartland was subject to the Delaware court's jurisdiction under the general venue statute.
However, TC Heartland has taken its case to the U.S. Supreme Court, arguing that subsequent Congressional amendments to the venue laws nullify the holding of the VE Holding case. Specifically, in 2011, Congress amended the venue law to read that it governs all civil cases, except as otherwise provided by law. TC Heartland is arguing that these amendments restore the Supreme Court's ruling in Fourco, because the patent-specific venue statute, 28 U.S.C. § 1400(b) is one such law, and limits the number of venues available to patent plaintiffs.
The case has ignited substantial interest both within and outside the legal world, as demonstrated by the nearly 40 amicus briefs filed with the Supreme Court. These briefs represent the views of inventors, law schools, economics professors, the American Bar Association, the American Bankers Association, and numerous technology and pharmaceutical companies, among others. Those supporting TC Heartland argue that the current venue system results in unfair "forum shopping." Others contend that narrowing venue choices would negatively affect individual inventors, who would be forced to file suit effectively on a defendant's "home turf."
The attorneys at Lewis Rice have extensive experience in developing and protecting intellectual property rights, as well as in defending against claims of infringement. If you require assistance with your intellectual property portfolio or with limiting your risk of infringement, please call one of our intellectual property attorneys.