For nearly 30 years, courts have held that a patent holder can bring an infringement suit against a corporation anywhere that corporation does business pursuant to the general venue statute found at 28 U.S.C. § 1391(c). On May 22, however, the Supreme Court unanimously rejected that view in TC Heartland LLC v. Kraft Foods Group Brands LLC, No. 16-341, 581 U.S. __ (May 22, 2017). Specifically, the Court held that venue in patent cases is solely governed by 28 U.S.C. § 1400(b), and not section 1391(c), meaning that a corporation can be sued only where it resides or where it allegedly has committed acts of infringement and has a "regular and established place of business."
Some commentators are arguing that the Court's decision spells the end of the Eastern District of Texas as the nation's busiest patent docket. While this is a major decision, and this decision will "reform" patent litigation to some degree, the Court's decision does not mean that the Texas court has seen its last patent case.
Other commentators are arguing that the Delaware courts will see a large influx of patent cases. Again, the answer is, "not so fast."
Starting with Texas, the key will be how courts interpret "regular and established place of business." This language combined with the Supreme Court's reasoning compels courts to raise the bar for venue from the prior "merely doing business" standard. Beyond that, lawyers and judges will have to look at cases dating back three decades or more to ascertain how courts previously interpreted the "regular and established place of business" clause. Does this language require a brick and mortar presence? something more? something less? Prior cases suggest that venue must be based on more than mere authorization to do business or limited or transitory contacts with the forum, but the exact parameters are not clear. The first motions to dismiss for lack of venue already have been filed, and their outcomes may be fact-intensive.
Turning to Delaware, it is true that companies incorporated in Delaware can be sued in that state under section 1400(b). Many major companies, however, are not incorporated in Delaware. Moreover, today, many entities are organized as limited liability companies under the laws of all 50 states -- as in the TC Heartland case. Presumably, courts will hold that those companies reside in their respective states of organization.
In the end, the Supreme Court's decision represents a significant change from current practice. The Eastern District of Texas will no longer offer a permissible venue for nearly every patent suit. Whether or not Congress should consider further action, however, may depend on how the district courts, including the Texas courts, handle the forthcoming wave of motions to dismiss based on improper venue.