Congress best suited to reform patent venue, says Kraft

US Congress is better suited to reform rules on patent venue than the US Supreme Court, according to Kraft Foods.

Kraft filed its brief in TC Heartland v Kraft Foods on Wednesday, March 1.

“This court is presented with a binary choice: use section 1391(c)’s definition of residence, or apply Heartland’s place-of-incorporation rule,” said Kraft.

Section 1391(c), the statute governing “venue generally”, contains a subsection (c) which, where applicable, deems a corporate entity to reside in multiple judicial districts.

Kraft had argued that section 1391(c) should supplement 28 USC section 1400(b), the provision governing venue in patent infringement actions.

Section 1400(b) provides that patent infringement actions “may be brought in the judicial district where the defendant resides”.

In its brief, Kraft explained: “Congress, however, can adopt more tailored reforms that could eliminate the excesses of the current regime without creating new problems. It should be allowed to do so.”

According to the brief, Congress could develop a venue rule that “limits forum-shopping without also impairing the ability of operating companies to enforce their patent rights in an appropriate district”.

The dispute stems from a patent infringement claim that Kraft brought against TC Heartland at the US District Court for the District of Delaware.

TC Heartland asked the judge to transfer the case to the US District Court for the Southern District of Indiana, but was unsuccessful, so it appealed to the US Court of Appeals for the Federal Circuit.

But TC Heartland’s petition for a writ of mandamus was denied in April 2016.

In the petition, TC Heartland had urged the court to cast aside a 26-year-old ruling (VE Holding Corp v Johnson Gas Appliance) that said patent suits can be filed in any district where the defendant sells its products.

TC Heartland’s writ of certiorari was granted in December last year by the Supreme Court.

Indiana-based TC Heartland argued that Fourco Glass Co v Transmirra Products Corp held that section 1400(b) is not to be supplemented by section 1391(c).

But Kraft disagreed in its filing at the court, claiming that TC Heartland’s “contrary interpretation conflicts with the statutory structure and would sow confusion”.

It added: “Neither Fourco’s interpretation of statutes that have since been amended, nor the policy arguments put forward by Heartland and its amici, provide any basis to depart from the unambiguous statutory definition.”

According to Kraft, TC Heartland’s approach would mean that, in some cases, patent owners could not sue foreign companies for patent infringement anywhere and it would create inconsistent definitions of residence for corporations and unincorporated business entities.

As the clash proceeded through the courts, observers such as the Electronic Frontier Foundation (EFF) asked the courts to change the rules in a bid to limit the number of lawsuits being filed at the US District Court for the Eastern District of Texas, a popular destination for patent claims.

The Texas court was not part of the proceedings, but was brought into consideration as part of the argument put forward by the EFF.

Earlier this month, the attorney general of Texas urged the court to end the Eastern District of Texas’ hold on patent litigation.

The case is currently set for trial in October 2017.

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