The Ongoing Evolution Of Patent Venue

By: Maxwell J. Petersen, Brian G. Arnold & Joshua D. Curry

A refresher and update on the ongoing evolution of what constitutes proper venue in a patent case.

For over 20 years, venue in a patent case was proper in essentially any court in the United States. That all changed in May 2017 when the Supreme Court held in TC Heartland LLC v. Kraft Food Grp. Brands, LLC that 28 U.S.C. §1400(b) is the sole and exclusive venue provision for patent infringement actions, and cannot be supplemented by the general venue statute at 28 U.S.C. §1391.[1] Under §1400(b), venue for a U.S. company is proper in the judicial district where the defendant (1) resides or (2) has committed acts of patent infringement and has a regular and established place of business. The plaintiff has the burden of establishing that venue is proper.[2]

A domestic company resides only in its state of incorporation. If that state has multiple judicial districts, the company resides only in the judicial district where it has its principal place of business or, if the principal place of business is not in the state, the judicial district where its registered office is located.[3] The principal place of business is where the company has its headquarters.

In order to have a “regular and established place of business,” (1) the defendant must have a physical place in the judicial district, (2) it must be regular and established, and (3) it must be the place of the defendant.[4] If any of these requirements is not met, venue is improper.

A “physical place” is “a building or a part of a building set apart for any purpose” or “quarters of any kind” used for conducting business. The place is “regular and established” if it operates in a “steady, uniform, orderly and methodical manner” and the place is “not transient” but “settled certainly or fixed permanently.” Sporadic activity will not create venue, nor will a place that operates temporarily, or for some special work or transaction.

In order to be “the place of the defendant,” the defendant must “establish or ratify” the place of business. Considerations include whether the defendant owns, leases, or otherwise exercises possession or control over the place; whether the defendant lists the place in a website or directory; whether the defendant places its name on a sign associated with the building; and how the activity of the place compares with the defendant’s places of business in other venues.

The changing patent venue law has caused a marked shift in where patent litigation cases can be litigated. For many years, the Eastern District of Texas was the top patent litigation district in the country; however, because few companies are incorporated there or have a regular and established place of business there, the District of Delaware has become the country’s most popular patent forum after the Supreme Court’s decision in TC Heartland. Other districts, such as the Northern District of California, have also seen a significant increase in the number of new patent case filings. As the venue laws continue to evolve, companies bringing and defending patent litigations will want to pay close attention to the choice of venue in every case.

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[1] TC Heartland LLC v. Kraft Food Grp. Brands, LLC, 137 S. Ct. 1514, 1518-20 (2017)

[2] In Re ZTE (USA) Inc.), 890 F.3d 1008, 1013-4 (Fed. Cir. 2018).

[3] In Re BigCommerce, Inc., 890 F.3d 978, 982-86 (2018)

[4] In Re Cray, Inc., 871 F.3d 1355, xxx (Fed. Cir. 2017)

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