TC Heartland May Not Affect Many Cases Filed in the Eastern District of Texas

The United States Supreme Court.

(Washington D.C., May 22, 2017) – Today the Supreme Court issued its TC Heartland ruling. The case, TC Heartland LLC v. Kraft Foods Group Brands LLC was summarized by many in the media as significantly impacting venue, but ultimately cannot impact much at all. The question spoke to 28 U.S. Code § 1400(b), which says:

  • (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.

In TC Heartland, petitioner argued that it did not “resid[e]” in Delaware under the first clause of §1400(b). It further argued “that it had no ‘regular and established place of business’ in Delaware under the second clause of §1400(b).” TC Heartland, 581 U. S. ____ (2017), 3. Once the Court decided that in Section 1400(b) the word “reside” referred to where a company is incorporated, and here the petitioner was incorporated in Indiana, not Delaware, it reversed and remanded. But the Court did not reach the second prong of Section 1400(b), which allows a civil action to be brought where defendant “has a regular and established place of business.” A “regular and established place of business” is not the same as a principal place of business. See Samsonite Corp. v. Texas Imperial Am., Inc., 1982 WL 52203, at *2 (N.D. Tex. Apr. 15, 1982) (suggesting that a “regular and established place of business” is “a permanent establishment from which [the party] regularly conduct[s] business”). Further, the line of cases the Court referenced in its ruling suggests that it seemed to include districts where companies have an established business location.

So the court reaffirmed the first prong of the statute in the face of other more recent statutes, but did not address the second prong of Section 1400(b)which still relates to patent infringement cases for domestic companies. Also, the Court did not have before it, and thus did not address, proper venue for a foreign defendant. Foreign defendants will still be sued in any U.S. District Court in the United States.  And note that all these pertain to corporations, with the ruling making no mention of unincorporated businesses, which comprise nearly 80% of businesses in the United States.

Over the last two years, the number of patent infringement cases filed across the U.S. decreased, including in the Eastern District of Texas. There is a large influx of companies into Northeastern Texas for its tax incentives, its central U.S. location, and its skilled employment pool, and it does not appear that this Supreme Court ruling will have much impact on the docket for the Eastern District of Texas nor in any way stymie the growth of the Eastern District’s 43 counties, including and stretching from parts of the Dallas Metroplex to the Houston Metroplex.

Read the full order here.




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