May 22, 2017

Supreme Court Decides TC Heartland LLC v. Kraft Foods Group Brands LLC

On May 22, 2017, the U.S. Supreme Court decided TC Heartland LLC v. Kraft Foods Group Brands LLC, No. 16-341, holding that, for purposes of the patent venue statute, 28 U.S.C. § 1400(b), a domestic corporation resides only in its state of incorporation.

Kraft Foods Group Brands LLC had filed a patent infringement lawsuit in the District of Delaware against Heartland LLC. Heartland is incorporated and headquartered in Indiana but had shipped some allegedly infringing products to Delaware. Heartland moved to dismiss Kraft’s case or transfer venue, arguing that venue in Delaware was improper under § 1400(b) and the Supreme Court’s decision in Fourco Glass Co. v. Transmirra Products Corp., 353 U.S. 222 (1957), which limited residence for purposes of § 1400(b) to the state of incorporation. The District Court denied the motion to dismiss, and the Federal Circuit affirmed.

The Supreme Court reversed. Reviewing the history of the venue statutes at issue and the arguments in Fourco, the Court noted that it had squarely rejected the argument that the broad definition of residence in the general venue statute, 28 U.S.C. § 1391(c), controlled the interpretation of “resides” in the patent venue statute, § 1400(b). The Court in Fourco had concluded that Congress designed § 1400(b) as an independent venue provision. In 1988, Congress amended § 1391(c) to provide “[f]or purposes of venue under this chapter,” and the Federal Circuit thereafter concluded that § 1391(c) redefined the meaning of “resides” in § 1400(b). The Court rejected the Federal Circuit’s analysis. It concluded that Congress had not changed the meaning of § 1400(b) when it amended § 1391(c). The Court reasoned that its prior interpretation in Fourco was on even stronger grounds after the 2011 addition to § 1391(c) of a saving clause stating that the section does not apply when “otherwise provided by law.” The Court further noted that there is “no indication” that Congress ratified the Federal Circuit’s contrary interpretation in its 2011 amendments to § 1391.

The Court reversed and remanded for further proceedings consistent with the instruction that “reside[nce]” in § 1400(b) refers only to the State of incorporation.

Justice Thomas delivered the opinion, joined by all other Members of the Court except Justice Gorsuch, who took no part in the consideration or decision of the case.

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