By Peter Estall. Full text here.
Venue in patent infringement suits is governed not by the general venue statute, 28 U.S.C. § 1391, but by its own statute, 28 U.S.C. § 1400(b). Section 1400(b) provides for venue in either the district the defendant “resides” or where it has “a regular and established place of business.” Until the Supreme Court’s decision in TC Heartland LLC v. Kraft Foods Group Brands LLC, patent venue was the same as general venue: the defendant’s residence was held to be wherever the defendant was “doing business” and subject to personal jurisdiction. TC Heartland radically changed this understanding by holding that a defendant only resided in its state of incorporation—drastically reducing the scope of venue in patent actions. Following TC Heartland, the Federal Circuit in In re Cray Inc. construed the “regular and established place of business” portion of § 1400(b) in a similarly restrictive manner.
One motivating factor behind the decisions is likely the abuse of the venue system by patent trolls, who buy the rights to patents for the sole purpose of suing others for infringement. These trolls disproportionately filed suit in districts that were highly plaintiff friendly and difficult to litigate in—the Eastern District of Texas, for example. The courts have found it impossible to balance the competing interests at stake in the patent venue battle: reading § 1400(b) too broadly leads to abuse by patent trolls; too narrow a reading unduly restricts legitimate patent plaintiffs. This Note demonstrates why the current § 1400(b) is inadequate in the modern era and proposes a potential replacement statute.