The USITC: where patent venue has no name
In May 2017 the US Supreme Court’s decision in TC Heartland v Kraft Foods Group Brands came down. This ruling overturned years of Federal Circuit precedent related to “venue” in patent cases. “Venue” controls which jurisdiction is proper when bringing patent litigation against domestic companies. In the wake of this decision, many cases are being diverted away from perceived patent-friendly courthouses and towards defendants’ home turf.
As patent holders explore potential alternatives, they may find that the International Trade Commission (ITC), where venue is of no concern, is best situated to hear their cases.
Over the course of many years, an entire patent litigation ecosystem blossomed in the Eastern of District of Texas. Non-practising entities opened offices. Vendors serviced the daily courtroom flow. Restaurants catered to hungry advocates, and hotels were filled rooms with trial teams. By 2017, virtually all patent litigators in the country were intimately familiar with Marshall—a Texas town two to three hours outside of Dallas with little more than 20,000 residents.
The Eastern District established itself as a “rocket docket” and its jury pools were at least perceived as patent-friendly. As a result, it was by far the busiest patent litigation jurisdiction. The lifeline feeding this growth stemmed from the ease of securing venue there.
Venue analysis relates to domestic companies and is the location(s) where it is statutorily appropriate to bring a litigation. For patent cases, venue is proper “where the defendant resides, or where the defendant has committed acts of infringement and has a regular and established place of business” (28 USC §1400[b]).
Between 1990 and 2017, venue was effectively proper anywhere that a defendant had committed a purportedly infringing act. So, if a defendant did business nationwide, venue was widely available. This interpretation led to cases pouring into the Eastern District of Texas.
Notably, with respect to venue law, the Federal Circuit has clarified that TC Heartland only applies to the venue analysis when the named defendant in a patent litigation is a US company. Foreign defendants are not subject to the venue restrictions of TC Heartland.
Stemming the flow
In May 2017, however, the Supreme Court stemmed the flow of cases in the Eastern District of Texas. TC Heartland v Kraft Foods Group Brands overturned the Federal Circuit’s interpretation and effectively found that venue is only proper where a domestic defendant is incorporated or where it has a regular and established place of business. This shift in the law has not reduced the overall volume of patent cases, but it has re-directed them. Generally, more cases are flowing to defendants’ home turf.
As shown in Table 1, in the 14 months preceding the TC Heartland decision (March 2016 to May 2017), nearly 2,000 patent cases were filed in the Eastern District of Texas. In the 14 months since (June 2017 to August 2018), total case filings are down nearly 70%.
The District of Delaware, where many domestic companies are incorporated, and the Northern District of California, home to Silicon Valley, have both seen nearly double the number of filings.
Table 1: Numbers of patent cases filed in US venues
