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Recent cases highlight issue of venue selection in patent infringement disputes

We’ve previously discussed on this blog the potentially important role licensing can play in protecting a business’ patent rights. Whether or not a company has a strong approach to patent licensing, though, protection of patent rights is critical for the success of a business. This means protecting patent rights in court when a third party is infringing them.

Under federal law, a business may be sued in the district where it resides or in a district where it infringed patent rights and has a regular, established place of business. Earlier this year, though, the U.S. Supreme Court restricting that avenue of venue qualification when it ruled that a business “resides” where it is incorporated rather than where it makes a sale. 

As a result of this decision, the U.S. District Court for the Eastern District of Texas lost its standing as the most active court for patent infringement filings in the nation and the U.S. District Court for the District of Delaware rose to number one. Much of the reason for this is that many businesses choose to incorporate in Delaware due to favorable incorporation laws.

Following the Supreme Court decision, though, the Eastern District of Texas issued a ruling which took a broad view of where a business has its regular and established place of business. The court laid out a test which allows companies to be sued in a district if they have inventory, infrastructure, or employees there. Ownership of property within a district is not necessary to meet the requirement.

The effect of the Eastern District of Texas decision was essentially to limit the effect of the Supreme Court’s ruling, paving the way for more companies to be brought to court for patent infringement in the Eastern District of Texas.

In our next post, we’ll look more at this case and the importance of venue selection in patent litigation.

Source:

Oyez.org, TC Heartland LLC v. Kraft Food Brands Group LLC. (n.d.). Retrieved July 13, 2017.

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