Anton Lesaca | Deep in the Heart of Venue: A Patent Procedure Wrinkle

Before I begin, I should note that it is difficult to pinpoint circuit splits in the intellectual property context, particularly in patent law. Because of the highly specialized subject-matter jurisdiction of the United States Court of Appeals for the Federal Circuit (CAFC)—a court empowered to deal with patent matters from both the USPTO & the Federal District courts under 35 USC §141(a) and 28 USC §1295—the rulings released by CAFC are typically binding law, sans Congressional action in changing patent laws. South Corp. v. United States (Fed. Cir. 1982). CAFC decisions are also not usually granted discretionary review by SCOTUS. Because of this specific scope of CAFC and its weight of authority in patent adjudication, there are often no real circuit splits that arise in patent law that are subject to SCOTUS review like in other areas of US law.

Nevertheless, internal splits do arise, and intellectual property is rife with authorities taking competing positions—particularly when IP law intertwines with other areas of law. This post highlights such a split. Let’s dive in.

WHAT’S “PATENT VENUE”?

Within the volumes of Title 28 of the United States Code are the (in)famous provisions detailing how one invokes the jurisdiction of the US Federal Court system. While the fountainheads of federal question and diversity of citizenship under §1331 & §1332(a) are certainly important (and draw the ire of your 1L author), our super-juicy bit today centers on 28 USC §1400, which deals with Patent Venues.

Under §1400(b):

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.

SCOTUS weighed in on this provision in Fourco Glass Co. v. Transmirra Products Corp. (1957), and held that §1400 is one of several special statutes not subject to the general venue provisions codified in §1391(c). Specifically,

The question is not whether §1391(c) is clear and general . . . [but] whether it supplements §1400 . . . . We think it is clear that §1391(c) is a general corporation venue statute . . . [and] the law is settled that ‘however inclusive may be the general language of a statute, it will not be held to apply to a matter specifically dealt with in another part of the same enactment’ . . . . [As such], §1400(b) is the sole and exclusive provision controlling venue in patent infringement actions, and it is not to be supplemented by the provisions of 28 USC §1391(c).

The rule from Fourco is a relatively unambiguous rule for the world of patent litigation—that as a matter of procedure, the only statute that controls patent venue considerations is codified in §1400(b).

 SOLO SPLIT: THE FEDERAL CIRCUIT, VE HOLDING & TC HEARTLAND

Despite the clarity of the venue provisions for patent litigation in §1400(b), CAFC threw a wrench into the mix with VE Holding Corp. v. Johnson Gas Appliance Co. (1990). The court deviated from SCOTUS’s bright-line test, applying some handy-dandy tools of statutory interpretation to hold that §1400(b) actually is supplemented by §1391(c). Using both the textual context given by the 1988 revisions to §1391(c), and the clear lack of any expressed Congressional intent to maintain the exclusivity of §1400(b), the court held that §1400(b) is in fact modified by §1391(c). The court reasoned that:

[§1391(c)] as it was in Fourco is [gone, and] Congress could have easily added ‘except for §1400(b)’ . . . . The language of the statute is clear and its meaning is unambiguous . . . . The general rule that a specific statute is not controlled or nullified by a general statute regardless of priority of enactment, absent a clear intention or otherwise, does not govern the present situation. [§1391(c)] expressly reads itself into §1400(b)…[ §1391(c)] only operates to define a term in §1400(b) [nor does it conflict with §1400(b)]. Furthermore, even were the rule applicable . . . the language of the statute would reveal a ‘clear intention’ that §1391(c) is to supplement §1400(b).

In Kraft Food Group Brands, LLC v. TC Heartland, LLC (2015), the District Court of Delaware affirmed the holding in VE Holding Corp. This decision was ultimately affirmed by the CAFC in In re TC Heartland, LLC (2016). In both cases, TC Heartland argued that as part of the 2011 revisions to the US Code, the language in §1391(c) that CAFC relied on in VE Holding was changed, thus no longer modifying §1400(b). CAFC dismissed this in short order on TC Heartland’s appeal from Delaware, claiming that the changes made as part of the 2011 revisions were minor, and merely was a “broadening of the applicability of corporate residence, not a narrowing.” Further, the court assuming arguendo that Congress had intended to capture the meaning of the venue provisions in §1400(b), Fourco was not the precedent that Congress would have captured.

LOOKING FORWARD

What’s the Future for Patent Venues?

Based on this ruling by the CAFC, TC Heartland has begun the process of SCOTUS review, relying on the argument that CAFC has unilaterally overturned Supreme Court precedent in neglecting the holding of Fourco. As the amici briefs churn into the SCOTUS docket for this case, it raises the question of just where the Supreme Court will fall on this.

Given other SCOTUS decisions like Alice Corp. v. CLS Bank Int’l. (2014) and the affirmation of vague understandings of technology patents by both CAFC and SCOTUS, it is more than a little hazy as to where the Justices will stand on this question of patent venue provisions.

If the court chooses to side with CAFC’s cracking of the precedent in Fourco, it might be the case that more broad venue provisions would create a windfall for patent litigants who would gain the freedom to sue patent infringers anywhere that §1391(c) can be applied. However, if SCOTUS flexes its judicial muscle and overrules CAFC in favor of its 1957 holding in Fourco, we might just get another instance of an appeals court with a bit of egg in its face. Patent cases are a HUGE source of business for firms and agencies across the world, and this case has the potential to change the face of how patent litigation will be undertaken.

For further reading, see what firms Baker Botts and White & Case have to say on the matter.