The U.S. Supreme Court ruled unanimously this morning in TC Heartland LLC v. Kraft Foods Group Brands LLC that patent infringement suits can no longer be brought in the Eastern District of Texas. Okay, that’s not precisely what the
Nine Eight Wise Souls held (Gorsuch didn’t weigh in), but that’s the practical result of the holding. For years, the local rules in E.D. Tex. have made it the hotbed of patent litigation, and ostensibly a paradise for so-called patent trolls.
Now, patent infringement cases can only 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.” To be sure, that’s taken directly from the patent venue statute, 28 U. S. C. §1400(b), and that text hasn’t changed of late. But the Court has applied a bit of order to the vocabulary– essentially holding that resides means resides. Until today, “resides” was interpreted more broadly, and the Court wrestled the idea back to a narrower meaning. In short, a corporation’s residence is the state of its incorporation, full stop.
That doesn’t mean a corporate defendant can’t be sued outside its home state. Obviously, it can be sued in the state where it sites its principal place of business. And it can be sued where it commits acts of infringement (or other wrongdoing) having put itself in the stream of commerce. Sure, the stream of commerce idea is being curtailed as well… but if GM intentionally sells a defective Chevy in South Dakota, you can bet South Dakota courts can get jurisdiction over the defect. And if Dell intentionally markets a computer in California that infringes on an Apple patent, you can bet California will get the case.
So what does all this have to do with Hague Conventions? Foreign companies– foreign in the “you need a passport to go there” sense– are still going to be sued for patent infringement in U.S. courts. It just won’t be in the Eastern District of Texas unless there’s a very good reason to bring the case there. They will still have to be properly served, and that means the Hague Service Convention must be followed, with all its intricacies. Today’s ruling is not going to stop patent trolling*; it will just spread it out.
A particular note for patent litigators: you’ll probably have to translate the complaint, so make sure you keep it brief. See here for more.
* For the record, just bringing a patent infringement suit doesn’t make a plaintiff a troll. Trolls are the guys who buy up patents for fractions of what they’re worth, just so they can turn around and sue designers and manufacturers who might be infringing. They just want to get in and get out, harvesting nuisance value and putting a huge burden on innovators; these guys really are a problem. But true infringement cases can no longer be centered in a court with significant expertise in the area.
Interesting footnote: rule changes proposed in D.Kan. last fall (see James Dornbrook’s article in the KC Business Journal here) would/could have made Kansas City the new epicenter for patent litigation, either to take some of the burden off of E.D. Tex. or to steal its thunder. Today’s ruling all but squelches that thought– and Kansas City’s high tech community breathes a sigh of relief. The rule changes may proceed, of course, but it won’t bring hundreds of cases to our doorstep. Yes, this is disappointing for me, because the thought of all those IP firms putting down roots in my town is exciting– not only for my own practice but for the local bar more broadly. Still, this is a heck of town for lawyers to be.