Following the U.S. Supreme Court's seminal ruling in TC Heartland LLC v. Kraft Foods Group Brands LLC, the District of Delaware has recently issued two decisions which reinforce the requirement that companies must have permanent ties to the state in order to face patent lawsuits there. 

In his recent decisions, Chief Judge Leonard Stark, who handles a large portion of all patent cases filed nationwide, stated that his approach to determining whether Delaware is the proper venue for a patent matter will look to "whether the defendant does its business in this district through permanent and continuous presence here," noting, "some physical presence is needed," even if it is not a formal office or store.

Judge Stark also wrote that if a company is only registered to do business in Delaware, ships goods to the state or has a website that Delaware residents can access, "then this district is an improper venue for the lawsuit."

Speaking with Law360, Partner Jeffrey Snow, co-head of Pryor Cashman's patent litigation practice, discussed the takeaways of these decisions: "Judge Stark's approach is a very different result from what we saw in Texas," Snow explained. "When you look at the language, you get a sense that they're thinking about it in a different way, in terms of the level of connection to a venue."

Snow was referring to a controversial June 2017 decision handed down by Judge Rodney Gilstrap of the Eastern District of Texas, which critics have argued seems designed to keep as many cases as possible in Texas. Judge Gilstrap handles more patent suits than any other judge in the United States. His decision set forth a four-factor test for evaluating whether a company has a "place of business" within the district. Among other things, a defendant's sales revenue and "targeted interactions" with customers in the district could establish proper venue.

The new guidelines affirmed by Judge Stark could create a hurdle for transfer motions in a particular subset of cases: those involving generic-drug makers. While not definitively resolving the issue, Judge Stark suggested that a generic drug company's past patent litigation in Delaware could mean it has a place of business in the state.

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