TC Heartland LLC v. Kraft Foods Group Brands LLC

TC Heartland v. Kraft Foods Group Brands, decided May 22nd, 2017. The Supreme Court, in an opinion by Justice Thomas, reversed the Federal Circuit and held that under the patent venue statute, section 1400(b), a domestic corporation resides only in its State of incorporation. The vote was eight to nothing; Justice Gorsuch took no part. Here's the brief.

Kraft Foods Group Brands sued TC Heartland for patent infringement in the District Court for the District of Delaware. TC Heartland is organized under Indiana law and headquartered in Indiana, where it makes flavored drink mixes; Kraft is organized under Delaware law with its principal place of business in Illinois. TC Heartland was not registered to do business in Delaware and had no meaningful presence there, but it did ship the accused products into the State.

TC Heartland moved to dismiss or to transfer venue to the Southern District of Indiana, arguing that venue in Delaware was improper. Citing Fourco Glass, it argued that it did not reside in Delaware under the first clause of section 1400(b), and that it had no regular and established place of business there under the second. The District Court rejected those arguments, and the Federal Circuit denied a petition for a writ of mandamus. Relying on its own decision in VE Holding, the Federal Circuit held that section 1391(c) supplies the definition of "resides" in section 1400(b) — so that TC Heartland, being subject to personal jurisdiction in Delaware, resided there. The Supreme Court granted certiorari.

The question: did the amendments to the general venue statute change the meaning of "resides" in the patent venue statute?

Section 1400(b) provides that a patent infringement action may be brought where the defendant resides, or where it has committed acts of infringement and has a regular and established place of business. Sixty years earlier, in Fourco Glass, the Court had held that for purposes of section 1400(b) a domestic corporation resides only in its State of incorporation — and that the patent venue statute is not supplemented by the general venue statute, section 1391. But Congress later amended section 1391 twice: in 1988, to apply "for purposes of venue under this chapter," and in 2011, to apply "for all venue purposes." The Federal Circuit read those amendments to redefine "resides" in section 1400(b) as well.

The Court reversed. Fourco, it explained, had definitively and unambiguously held that "residence" in section 1400(b) refers only to a domestic corporation's State of incorporation. Congress had not amended section 1400(b) since, and neither party asked the Court to reconsider Fourco. So the only question was whether Congress changed section 1400(b)'s meaning when it amended section 1391 — and when Congress intends a change of that kind, it ordinarily gives a relatively clear indication in the amended provision's text.

It found none. The current section 1391(c) applies "for all venue purposes," but the version in Fourco applied "for venue purposes," and the Court saw no material difference; adding "all" to an already comprehensive provision did not signal an intent to revisit Fourco. If anything, the argument was weaker now: the current section 1391 contains a saving clause — "except as otherwise provided by law" — that makes explicit the qualification Fourco had found implicit. And nothing indicated that Congress in 2011 ratified VE Holding; by deleting "under this chapter," it returned the language nearly to its original form. The Court expressly reserved the question of venue for foreign corporations.

TC Heartland restored the rule of Fourco and displaced the Federal Circuit's decades-long practice under VE Holding. For domestic corporations, patent venue is again limited to the State of incorporation, or to a district where the defendant has committed acts of infringement and has a regular and established place of business. The decision sharply narrowed where patent suits may be brought, and curtailed the concentration of patent litigation in the Eastern District of Texas.

TC Heartland LLC v. Kraft Foods Group Brands LLC, 581 U.S. 258, decided May 22nd, 2017. I'm Kyle Coleman. Thanks for watching.