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Supreme Court Agrees to Hear Blockbuster Patent Venue Case

In a win for the tech industry, the U.S. Supreme Court agreed on Dec. 14 to hear a case that could move patent cases out of the Eastern District of Texas.

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In a win for the tech industry, the U.S. Supreme Court agreed on Dec. 14 to hear a case that could move patent cases out of the Eastern District of Texas.

The justices said they will hear an appeal filed by drink flavoring company TC Heartland LLC, which is facing patent infringement claims brought by Kraft Food Brands Group LLC. A ruling for TC Heartland could limit patent infringement suits to venues where defendants have a “regular and established place of business” like California, Delaware and New York.

Kraft Foods sued TC Heartland in federal court in Delaware in 2014. Heartland sought to have the litigation moved to Indiana, where it’s based, arguing it does virtually no regular business in Delaware.

The U.S. Court of Appeals for Federal Circuit rejected TC Heartland’s transfer bid in an April 29 ruling. The court held that arguments over venue had been “firmly resolved” by VE Holding v. Johnson Gas Appliance, a 1990 decision that held that patent cases can be heard anywhere a defendant is subject to personal jurisdiction. [For more on TC Heartland and its aftermath, see "Patent Venue Rule Remains the Same -- For Now," in our June 2016 issue.]

In its petition to the Supreme Court, TC Heartland argues that VE Holding was wrongly decided and that, in any event, it was overruled by later congressional amendments. More than 20 tech companies, including Oracle Corp. and Newegg Inc., filed an amicus brief in support of TC Heartland. They argue that “the Federal Circuit’s misreading of the patent venue statute has led to pervasive forum shopping with the unintended and undesirable concentration of most patent litigation in a handful of judicial districts.”

While TC Heartland is a Delaware case, it could have major repercussions for the Eastern District of Texas, a popular venue for patent-holders. As The Intellectual Property Strategist‘s ALM sibling Corporate Counsel has reported, nearly one-third of all patent cases filed in 2015 were assigned to U.S. District Judge Rodney Gilstrap of the Eastern District of Texas. Many of the cases heard in East Texas are filed by nonpracticing entities (pejoratively referred to as “patent trolls”).

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Jan Wolfe writes for Corporate Counsel, an ALM sibling of The Intellectual Property Strategist.

The views expressed in the article are those of the authors and not necessarily the views of their clients or other attorneys in their firm.

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