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December 14, 2016

Fix Venue - Fix Patent Litigation, Part II

The Federalist Society

On December 14, 2016, the Supreme Court granted certiorari in the TC Heartland case.  Case No. 16-341.  Regardless of whether a person favors additional patent "reform" legislation, simply tightening the patent venue rules would rein in current practices.  According to Law360, in the most recent year, nearly 50% of all patent cases filed nationwide were filed in the Eastern District of Texas.  Even accounting for multi-defendant cases that have been split into multiple actions because of the AIA’s joinder rules, this one district is still handling a disproportionate number of patent suits.  

This focus on the Eastern District of Texas is the result of the current reading of a pair of venue statutes: 28 U.S.C. §§ 1391(c) (applicable to entities generally) and 1400(b) (governing patent suits).  Section 1400(b) limits venue in patent cases to districts where an entity is incorporated or where the entity allegedly committed the acts of infringement and has a regular and established place of business.  In contrast, section 1391(c) states that venue over an entity is proper wherever that entity is subject to personal jurisdiction – essentially anywhere that entity sells the product or service accused of infringement.  In 1957, the Supreme Court held that the patent venue statute stood alone, that it was the sole and exclusive provision controlling venue in patent cases.  Fourco Glass Co. v. Transmirra Prods. Corp., 353 U.S. 222,  229 (1957).  Nevertheless, in 1990, the Federal Circuit held that section 1391(c) also applied to patent cases because of a 1988 change in the wording of section 1391(c).  See VE Holding Corp. v. Johnson Gas Appliance Co., 917 F.2d 1574 (Fec. Cir. 1990).

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