The Supreme Court caused a shakeup in the patent litigation world. Its recent opinion TC Heartland LLC v. Kraft Foods Grp. Brands, LLC, 581 U.S. __ (2017) looks designed to cut the legs from patent plaintiffs by severely limiting one of their primary weapons: venue shopping. Based on a review of the conduct of litigants in the two weeks since its issuance, the opinion already appears to have the effect of pushing litigation from remote and rural courthouses to the major technology hubs throughout the country.
TC Heartland Undoes Twenty-Seven Years of Patent Venue Law
The Supreme Court had the opportunity to address the patent venue statute in TC Heartland. The statute places venue in patent infringement where a corporation “resides” or where the defendant infringed and had a regular place of business. The prevailing thought at the Federal Circuit for the last quarter century was that the patent venue statute, 28 USC §1400, worked in tandem with the general venue statute, 28 USC §1391, such that when Section 1400 stated that a defendant could be sued where it “resides,” it incorporated Section 1391’s statement that a corporation resides where it “is subject to the court’s personal jurisdiction.”
The Supreme Court disagreed with the Federal Circuit. It reached back to a 1957 case to note that at the time Section 1400 was passed, a corporation was understood to reside only where it is incorporated. The Supreme Court traced the amendments to statutes since that time and concluded that despite the general venue statute’s facial application to “all” venue purposes, it did not fix venue in patent cases. The Supreme Court reaffirmed the 1957 understanding that a corporation resides in patent cases where it is incorporated and overruled the 1990 Federal Circuit opinion VE Holding Corp. holding otherwise.
Venue Shopping Is On the Ropes
Practically speaking under VE Holding Corp., patent venue was circumscribed only by the “minimum contacts” test of International Shoe. In a mass economy with nationwide distribution channels, the minimum contacts test for a particular defendant could be satisfied in scores of federal districts. Defendants had little say where they could be hauled into court and had little ability to fight venue in jurisdictions that had slim relationship with the underlying companies or products.
This framework gave life to patent venue shopping, which has been an oft-discussed part of patent litigation strategy in recent years. In the pre-TC Heartland patent environment, cases were often filed in perceived plaintiff-friendly forums, including the Eastern District of Texas, despite it being home to few technology businesses. Conversely, potential infringers have often raced to file declaratory judgment actions in venues perceived to be friendly to defendants. Because of TC Heartland, plaintiffs can now only point to 28 U.S.C. §1400 without the widening language of 28 U.S.C. §1391. Venue can now be reduced to (1) the district where the defendant has a regular and established place of business and commits acts of infringement or (2) the state of incorporation. This cuts off venue shopping against a wide range of potential infringers.
Remote Forums’ Loss is Technology Hubs’ Gain
In the two short weeks since the ruling was handed down, a picture is beginning to form showing that patent litigants are taking to heart the Supreme Court’s ruling. Targets of infringement suits with nationwide distribution but limited places of business are finding themselves sued in their home district more often than before. From a broad perspective, technology hubs have seen a jump in litigation. From the May 22, 2017, ruling to the date of this article, twelve patent infringement cases have been filed in the Northern District of California (home to tech-heavy Silicon Valley) compared with two in the two weeks before. Conversely, the Eastern District of Texas saw seventy-five patent cases filed in the two weeks prior to TC Heartland and twelve in the two weeks since. The increase of filings in courthouses near Silicon Valley at the expense of those in rural Marshall and Tyler, Texas, seems to be a nod toward suing defendants at their principal place of business. The District of Delaware, being the home to an outsized number of corporate registrations, has seen a slight uptick in patent cases, perhaps indicating that litigants are also relying on the standby venue statute of filing suit in the state of incorporation.
Anecdotal evidence can be found elsewhere. Frequent patent plaintiff Realtime Data LLC finds its litigation shifting westward. It is involved in three new patents suits in the Northern District of California – two as plaintiff and one as a declaratory judgment defendant — after filing twelve different suits in the Eastern District of Texas in 2017 alone. In fact, the declaratory judgment complaint notes that it was filed in that district specifically because of TC Heartland, and that the suit is an attempt to upend Realtime Data’s venue in a prior Eastern District of Texas suit. Other examples include Muto Technologies, an Austin-based semiconductor support company, and Abbott Laboratories. Muto, despite having a nationwide customer base, finds itself as defendant in its home district the Western District of Texas and Abbott Laboratories, with division heads throughout the country, finds itself as a defendant in the district of its corporate headquarters.
It seems apparent that TC Heartland will have the greatest effect on patent infringement filings against businesses with a nationwide customer base but without nationwide storefronts. In addition to the Northern District of California, the Western District of Texas is home to technology companies with large distribution but few established places of business (AMD, Intel, ARM, Freescale, Silicon Labs, Cirrus Logic, National Instruments, HomeAway, RetailMeNot, Dell). Similarly, the Southern District of California (Qualcomm, Semantic, Nokia) will likely see a rise in patent litigation. The Districts of Delaware and Nevada will likely see a jump in filings based on those states serving as places of registration for a disproportionate number of corporations. While those courts should see an increase in the filings, an equal reduction is expected in the Eastern District of Texas and other venues where there appears to be no unique connection between the alleged infringement and the lawsuit.
Mr. Tepera is a patent litigator and patent prosecutor for Reed & Scardino, an Austin-based law firm with an extensive IP litigation group. Email Mr. Tepera at firstname.lastname@example.org.
 28 U.S.C. §1400(b).
 Slip Op. at 6-7 (citing VE Holding Corp. v. Johnson Gas Appliance Co., 917 F. 2d 1574 (1990) and 28 U.S.C. §1391(c)(2)).
 Slip Op. at 7-8.
 Slip Op. at 8.
 VE Holding Corp. v. Johnson Gas Appliance Co., 917 F. 2d 1574 (1990).
 Slip Op. at 10.
 International Shoe Co. v. Washington, 326 U.S. 310 (1945).
 28 U.S.C. §1400(b).
 Riverbed Technology, Inc. v. Realtime Data LLC, 3:2017cv03182 (N.D. Cal.); Realtime Data LLC v. Silver Peak Systems, Inc., 3:2017cv02373 (N.D. Cal.); Realtime Data LLC v. Fujitsu America, Inc. et al, 3:2017cv02109 (N.D. Cal.).
 Riverbed Technology, Inc. v. Realtime Data LLC, 3:2017cv03182 (N.D. Cal.), D.I. 1 at ¶¶14-16 (arguing that “TC Heartland [held] that as applied to domestic corporations, residence . . . refers only to the State of incorporation. . . . Riverbed is not incorporated in the State of Texas. . . . Consequently, venue in [the Eastern District of Texas suit] is improper.”).
 Applied Materials, Inc. v. Muto Technology, 1:2017cv00519 (W.D. Tex.).
 Internet Media Interactive Corporation v. Abbott Laboratories, 1:2017cv04022 (N.D. Ill.).