CAFC Declines to Change Venue Standard

Declined Rubber StampThe Federal Circuit panel today rejected TC Heartland’s Petition for Mandamus to direct the United States District Court for the District of Delaware to either dismiss or transfer the patent infringement suit filed against it by Kraft. Heartland had argued that the 2011 amendments to the venue statute have changed the patent venue standard to permitting venue only where a defendant resides or where the defendant allegedly infringes the patent and has a place of business. In rejecting Heartland’s petition, the broad availability of venue under VE Holding stands.

Title 28 U.S.C. chapter 87 governs venue in the district courts: Section 1391 addresses venue generally, and §1400(b) addresses venue for patent infringement, i.e., “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.”  In Fourco Glass Co. v. Transmirra Products Corp., 353 US 222 (1957), the Supreme Court concluded that 1400(b) was the “sole and exclusive provision governing venue in patent infringement actions.” When §1391 was amended in 1988, to add “for purposes of venue under this chapter, the Federal Circuit in VE Holding Corp. v. Johnson Gas Appliance Co., 917 F.2d 1574 (Fed. Cir. 1990), cert. denied, 111 S. Ct. 1315 (1991) held that the plain meaning of the statute required that §1391(c) should be applied to §1400(b), thereby broadening venue to any state in which the corporation had sales.

The third and current iteration of §1391 was enacted in 2011. It was amended to replace “for purposes of venue” with “except as otherwise provided by law (1) this section shall govern the venue of all civil actions.” The distinction was noted by Heartland, which opened its oral argument with the statement: “This case turns on the meaning of six words: ‘except as otherwise provided by law.’” Heartland argued that the Federal Circuit’s holding in VE Holding no longer applies. In its petition, and in oral argument, Heartland argued that Congress intended to include federal common law limited to Supreme Court precedent, i.e., Fourco, to render the statutory definition of §1391(c) inapplicable.

The Court rejected Heartland’s argument, stating that “Heartland has not established that federal common law actually supports its position. Heartland asks us to presume that in the 2011 amendments Congress codified the Supreme Court’s decision in Fourco regarding the patent venue statute that was in effect prior to the 1988 amendments. We find this argument to be utterly without merit or logic.”

The Court stated that under its binding precedent, VE Holding, it had previously found that the Supreme Court’s decision in Fourco to be no longer the law because in the 1988 amendments Congress had made the definition of corporate residence applicable to patent cases. Accordingly, “in 1988, the common law definition of corporate residence for patent cases was superseded by a Congressional one. Thus, in 2011, there was no established governing Supreme Court common law ruling which Congress could even arguably have been codifying in the language ‘except [as] otherwise provided by law.’”

Regarding Congressional intent, the Court explained, “Heartland has presented no evidence which supports its view that Congress intended to codify Fourco in its 2011 amendments, in the context of considering amending the patent venue statute, Congressional reports have repeatedly recognized that VE Holding is the prevailing law.”

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