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Patent litigation may soon undergo a seismic geographical shift. According to 28 U.S.C. § 1400(b), venue is proper in a patent case “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.” For many years, starting with VE Holding Corp v. Johnson Gas Appliance Co., courts have interpreted this statute extremely broadly, allowing suits in any jurisdiction in which the defendant is subject to personal jurisdiction. This essentially allows a plaintiff to sue a defendant in any district in which that defendant sells its products, exposing large, nationwide companies to suit in nearly any venue a plaintiff desires. Commentators believe this leads to inconsistent results and plaintiffs seeking refuge in certain districts not for any reasons relating to their case, but simply because those districts are seen as friendly to plaintiffs.

This relatively settled state of affairs may soon be upended. In a case called Kraft Food Group Brands LLC v. TC Heartland LLC, defendant TC Heartland moved to transfer its case to another district. After its motion was denied, TC Heartland appealed the issue to the Court of Appeal for the Federal Circuit, arguing that The Federal Courts Jurisdiction and Venue Clarification Act of 2011’s modifications to 28 U.S.C. nullified the VE Holding decision and necessitated a revisiting of the venue rules. The case is fully briefed to the U.S. Supreme Court and awaits oral argument. Meanwhile, the case in the district court continued despite the appeal, and is now scheduled for trial in October 2017.

Legislation has also been introduced to alter the venue statute but appears to have stalled, perhaps in anticipation of the Supreme Court’s ruling. If the Supreme Court decides to change the interpretation of the venue statute, it will almost certainly be narrowed. Requiring a more stringent reading of where a defendant “resides” or “has a regular and established place of business” will almost certainly restrict a plaintiff’s choices to a few districts, such as where a defendant is incorporated or where it is headquartered. This could have particularly massive impacts on the Eastern District of Texas.

Few companies have particular contact with that district, yet more than 36 percent of all patent cases were filed there in 2016, nearly four times as many cases as in the next leading district. If these cases could no longer be filed in Texas, they would likely be filed elsewhere, such as Delaware, where many companies are incorporated, or the Northern District of California, where many technology companies are headquartered. Unsurprisingly, these are the second and fifth most common patent litigation districts under the current system.

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Patent litigation may soon undergo a seismic geographical shift. According to 28 U.S.C. § 1400(b) , venue is proper in a patent case “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.” For many years, starting with VE Holding Corp v. Johnson Gas Appliance Co., courts have interpreted this statute extremely broadly, allowing suits in any jurisdiction in which the defendant is subject to personal jurisdiction. This essentially allows a plaintiff to sue a defendant in any district in which that defendant sells its products, exposing large, nationwide companies to suit in nearly any venue a plaintiff desires. Commentators believe this leads to inconsistent results and plaintiffs seeking refuge in certain districts not for any reasons relating to their case, but simply because those districts are seen as friendly to plaintiffs.

This relatively settled state of affairs may soon be upended. In a case called Kraft Food Group Brands LLC v. TC Heartland LLC, defendant TC Heartland moved to transfer its case to another district. After its motion was denied, TC Heartland appealed the issue to the Court of Appeal for the Federal Circuit, arguing that The Federal Courts Jurisdiction and Venue Clarification Act of 2011’s modifications to 28 U.S.C. nullified the VE Holding decision and necessitated a revisiting of the venue rules. The case is fully briefed to the U.S. Supreme Court and awaits oral argument. Meanwhile, the case in the district court continued despite the appeal, and is now scheduled for trial in October 2017.

Legislation has also been introduced to alter the venue statute but appears to have stalled, perhaps in anticipation of the Supreme Court’s ruling. If the Supreme Court decides to change the interpretation of the venue statute, it will almost certainly be narrowed. Requiring a more stringent reading of where a defendant “resides” or “has a regular and established place of business” will almost certainly restrict a plaintiff’s choices to a few districts, such as where a defendant is incorporated or where it is headquartered. This could have particularly massive impacts on the Eastern District of Texas.

Few companies have particular contact with that district, yet more than 36 percent of all patent cases were filed there in 2016, nearly four times as many cases as in the next leading district. If these cases could no longer be filed in Texas, they would likely be filed elsewhere, such as Delaware, where many companies are incorporated, or the Northern District of California, where many technology companies are headquartered. Unsurprisingly, these are the second and fifth most common patent litigation districts under the current system.

Copyright Corporate Counsel. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.