TC Heartland’s One Year Anniversary: Changes in Patent Venue
It’s been one year since the TC Heartland decision was issued by the Supreme Court, and it’s had a big impact on patent litigation. See TC Heartland LLC v. Kraft Food Brands LLC, 137 S. Ct. 1514, 1521 (May 22, 2017).
The TCH decision limited where patent cases could be filed in U.S. district courts to where the defendant “resides” or “has committed acts of infringement and has a regular and established place of business.” Prior to TCH, plaintiffs could file virtually anywhere in the country, because in VE Holding Corp v. Johnson Gas Appliance Co., 917 F.2d 1574 (Fed. Cir. 1990), the court had held that venue in patent cases would lie in any judicial district where the defendant is subject to personal jurisdiction. That practice is now over.
Since TCH issued, the Federal Circuit and a number of district courts have grappled with the implications of this decision. The courts have found that, for a U.S. defendant, it “resides” only in the District in which it operates (not anywhere in a state in which it operates) (In Re Big Commerce), and the “principal place of business” must be where the defendant has a regular and established physical presence (not a virtual or even occasional presence there) (In Re Cray). For a foreign defendant, it can still be sued in any district where it is subject to personal jurisdiction, as the standard has not been changed for them, but that raises the issue of whether that entity is the proper defendant for allegations that there is infringement within the United States sufficient to create liability (In Re HTC Corp.). The burden of proving patent venue rests with the plaintiff, as well (In Re ZTE (USA) Inc.).
With all of these changes, it clear that there are fewer proper venues for patent infringement cases. The data (from Docket Navigator) supports that parties have recognized this shift, and there are (1) slightly fewer cases overall (from about 6300 in 2017 to a projection of 6000 for 2018, down from a high of 7600 in 2015), and (2) they have stayed in the same venues percentage-wise for the most part, except that traditionally plaintiff-friendly venues are suffering, while industry-heavy districts are seeing more cases than ever.
Texas is on track to have 66% fewer cases filed from just 2 years ago and the Eastern District of Virgina is poised to similar down by 50%. On the flip side, Delaware will be up 200% and nearing its peak in the early 2010s, ND Cal and CD Cal and comparatively slower ED Cal will be up around 30%-40% of prior years (SD Cal will remain about the same), and industry-heavy districts are also up – specifically Massachusetts and the Southern District of Ohio will be up by about 50% of usual numbers.
This is a stunning reversal of the patent landscape from just a few years ago, and figures to continue now that the Supreme Court has spoken and these decisions from lower courts continue to interpret that decision and further narrow venue. This will likely drive jurisprudence to where litigants look to Delaware for trends, and back to California judges as they did in the 1990s for many of the procedural precedents, such as claim construction, discovery limitations, and use of patent local rules.