United States: Federal Circuit Defers Questions On Forum Shopping To Congress

Last Updated: July 7 2017
Article by Stuart V.C. Duncan Smith

Patent owners have long sought to file suit in the district court that offers the best chance of a favorable outcome, even if neither party has an established place of business in the court's district. In In re Heartland, the Federal Circuit reaffirmed its rule tolerating so-called "forum shopping" and deferred to Congress as the appropriate entity to decide whether to rewrite the rule.

What This Means to You

  • This case affirms that a patent owner may still typically sue a company for patent infringement in any judicial district where the company's goods are distributed.
  • This case may motivate Congress to act to curtail the practice of forum shopping, which has concentrated most patent litigation in a small handful of district courts.
  • This case presents a number of issues that the Supreme Court may wish to review.

Case Background

Kraft Food Group LLC filed a patent infringement lawsuit against TC Heartland LLC in the District of Delaware, one of a small handful of district courts where the  majority of patent litigation occurs. The District of Delaware is not the most natural place to sue Heartland, an Indiana company that is connected with Delaware only in that a small fraction of its accused products end up there via a third-party distributor.

The Federal Circuit has held for decades that a patent owner may typically sue in any federal district court where, as here, the defendant's products are distributed. Heartland objected to litigating in the District of Delaware, arguing that recent revisions to the statutory scheme changed the Federal Circuit's rule. The district court disagreed with this argument  and Heartland sought relief from the Federal Circuit.

Decision Analysis

Beyond the District of Delaware, this case has garnered national attention for its potential to affect patent litigation in another popular forum: the Eastern District of Texas. This district court has been the forum of choice for many patent owners, including controversial non-practicing entities.

If Heartland's argument prevailed, many patent owners would have trouble bringing cases against companies that do not have an established place of business in the court's district. However, the Federal Circuit did not see any reason to change its established rule, forcing Heartland to defend Kraft's case in the District of Delaware.

Takeaways

The result of this case does not change the rule regarding where patent owners may sue, and companies can typically be sued anywhere in the United States that their accused products are distributed. The rules for people are different, and so a company's executives, for example, are not necessarily subject to suit in the same locations as their company.

In declining to change its rules, the Federal Circuit assigned Congress the responsibility of changing the requirements for where patent cases may be filed. Congress is currently considering legislation  that would restrict patent owners in ways that could have significant ramifications for where patent cases are filed.

Even before Congress can act, the Supreme Court may review the Federal Circuit's interpretation of the requirements. At the time of this post, the window for appeal to the Supreme Court is still open. The Federal Circuit has been a magnet for Supreme Court review in recent years, and the Federal Circuit's decision in this case could give the Supreme Court reason for review.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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