TC Heartland v. Kraft Foods: Patent Forum Shopping Case Currently Before SCOTUS

Sparks Law | April 26th, 2017

Earlier this month, the Supreme Court heard oral arguments for TC Heartland v. Kraft Foods, a case focused on the federal venue statute that affects the forum in which a plaintiff may bring a patent infringement lawsuit (28 U.S.C. § 1400(b)).  One of the main issues of the case is whether plaintiffs with patent infringement claims must sue a defendant corporation in the state where that corporation is headquartered or has an established place of business, or whether the plaintiff may sue in any state where the defendant has offered the infringing item for sale.  Considering the recent growth of internet commerce, this may mean that corporations that sell their products online may be sued practically anywhere.

 

The purpose of venue is to ensure that cases are brought in a convenient location, one where the defendant has sufficient connections, thus making travel to and from that location reasonable. Savvy plaintiffs sometimes use the current ambiguity in the law to their advantage by choosing to file suit in particular courts that may give the plaintiffs an advantage, a practice commonly referred to as “forum shopping.”  One Federal Court, the Eastern District of Texas, has become a popular venue for patent infringement plaintiffs due to plaintiff-favorable rules and sympathetic juries, with nearly 45% of all patent infringement cases in the U.S. filed in this one particular court, in 2015. As a result, defendant corporations are forced to spend massive sums of money to defend themselves from lawsuits in far-flung court venues, money that could be used in developing new products or hiring new employees.

 

In the case at hand, TC Heartland is the defendant corporation, a manufacturer of zero-calorie sweeteners. Kraft sued TC Heartland in Delaware even though TC Heartland is based in Indiana, does not have a place of business in Delaware, and is not even registered to do business in Delaware. Even so, the lower court found that Delaware was a proper venue for the case because a small percentage of TC Heartland’s total sales, about 2%, was purchased by a customer located in Arkansas and shipped to Delaware. In response, TC Heartland filed a motion to transfer the case to the Southern District of Indiana, where TC Heartland has its headquarters; the motion for transfer was denied, and TC Heartland appealed.

 

In TC Heartland, the Supreme Court is considering a possible conflict between a 1957 Supreme Court case, Fourco Glass Co. v. Transmirra Products Corp., 353 U.S. 222 (1957) and a 1990 Federal Circuit Court case, VE Holding Corp. v. Johnson Gas Appliance Co, 917 F.2d 1574 (Fed. Cir. 1990). In Fourco, the Supreme Court held that venue for patent infringement cases is appropriate only (a) where the defendant resides or (b) has committed acts of infringement and has a regular and established place of business.  In VE Holding, the Federal Circuit held that the federal general venue statute, U.S.C. § 1391(c), supplemented the patent venue statute, §1400(b), and determined that venue for patent cases is appropriate in any state where the corporation makes any sales.  As a result, plaintiffs in patent infringement cases have been free to select any venue in the United States if the infringing product was sold nationwide.  It is unclear if the Supreme Court will overturn 30 years of precedent set by VE Holding, and limit the available venues for patent litigants in future cases.  However, a decision is expected before the end of June.