If you don't closely follow the world of patent law, you would be very surprised to learn that in 2015, out of 5,819 patent cases filed throughout the country, 1,686 were filed in a small town in east Texas. Judge Rodney Gilstrap, U.S. District Court Judge in Marshall, Texas, holds nearly 30% of all patent cases in the country on his docket. This is becasue over time, the Eastern District of Texas has been perceived to be very friendly to patent owners in their infringement suits.
However, this could change very soon. On Wednesday, December 14, the Supreme Court granted certiorari in TC Heartland LLC v. Kraft Food Brands Group LLC, in which it will determine whether 28 U.S.C. § 1400(b) should be the exclusive section to govern venue issues in cases involving patent infringement. This ruling will either encourage or silence the current cries for patent venue shopping reform.
There are two statutes to be considered: § 1400(b) states a "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" whereas § 1391(c) states a corporation may be deemed a resident of "any judicial district in which such defendant is subject to the court's personal jurisdiction..." Way back in 1957, long before the patent world was on the forefront of the national stage, the Supreme Court ruled § 1391(c) should not supplement § 1400(b), because "§ 1400(b) is the sole and exclusive provision controlling venue in patent infringement actions." However, Congress amended the sections in 1988 and "rendered the statutory definition of corporate residence found in § 1391 applicable to patent cases."
It is interesting that this is the case the Supreme Court has chosen to use to decide this issue. For one thing, Heartland is an LLC organized under Indiana law. The case originated in Delaware, where Heartland argues it has no contacts, beyond shipping orders of products to two customers in Delaware, and thus is not subject to personal jurisdiction. This case is actually not related to the Eastern District of Texas in any way, but is in effect going to decide the issue of forum shopping in east Texas.
This decision has already faced significant criticism: Gene Quinn of IPWatchdog has declared it "unconscionable" that the Supreme Court would grant cert and play such a significant part in a "macabre judicial protest." While I would not go that far, I do think it would have been more appropriate for the Court to have chosen a case that seems more related to the actual elephant in the room: the disproportionate amount of patent infringement cases filed in Marshall, Texas.