TC Heartland – US forum shopping
24 May 2017
In an important judgment from the US Supreme Court, the court reversed the Federal Circuit holding that the term "resides" as used in the patent venue statute "refers only to the State of incorporation" of the alleged infringer.
The patent venue statute, 28 USC § 1400, states that:
Any civil action for patent infringement may be brought 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.
Previously the courts had interpreted the term "resides" broadly as anywhere where the alleged infringer was subject to personal jurisdiction which in practice gave patentees a relatively free hand in choosing where to bring infringement actions.
Under the US patent system there are 94 Federal Districts where patent cases can be brought but with the top five accounting for around 60% of all lawsuits. The reasons for this vary, but certain venues, in particular the East District of Texas, have come to be regarded as being particularly patentee friendly. This has led to allegations of "forum shopping" where litigants have been remarkably free to pick venues to maximise their chances of success.
In light of the Supreme Court's ruling the ability of patentees to choose their choice of venue appears to have been substantially reduced. Initial analysis suggests that the ruling is likely to lead to a sharp decrease in the number of cases being brought in the East District of Texas with the Northern District of California and the District of Delaware being the primary beneficiaries.
Finally, it is worth noting that the Supreme Court avoided commenting on the status of foreign corporate defendants so until this issue is directly tackled it is likely that infringement lawsuits against foreign (non-US) corporations can still be brought in any district.