{"id":2996,"date":"2016-03-22T13:16:26","date_gmt":"2016-03-22T17:16:26","guid":{"rendered":"http:\/\/cpip.gmu.edu\/?p=2996"},"modified":"2026-02-03T21:12:26","modified_gmt":"2026-02-03T21:12:26","slug":"changes-to-patent-venue-rules-risk-collateral-damage-to-innovators","status":"publish","type":"post","link":"https:\/\/blogs.uakron.edu\/ualawip\/2016\/03\/22\/changes-to-patent-venue-rules-risk-collateral-damage-to-innovators\/","title":{"rendered":"[Archived Post] Changes to Patent Venue Rules Risk Collateral Damage to Innovators"},"content":{"rendered":"

\"dictionaryAdvocates for changing the patent venue rules, which dictate where patent owners can sue alleged infringers, have been arguing that their remedy will cure the supposed disease of abusive \u201ctrolls\u201d filing suit after suit in the Eastern District of Texas. This is certainly true, but it\u2019s only true in the sense that cyanide cures the common cold. What these advocates don\u2019t mention is that their proposed changes will weaken patent rights across the board by severely limiting where all<\/em> patent owners\u2014even honest patentees that no one thinks are \u201ctrolls\u201d\u2014can sue for infringement. Instead of acknowledging the broad collateral damage their changes would cause to all patent owners, venue revision advocates invoke the talismanic \u201ctroll\u201d narrative and hope that nobody will look closely at the details. The problem with their take on venue revision is that it\u2019s neither fair nor balanced, and it continues the disheartening trend of equating \u201creform\u201d with taking more sticks out every patent owner\u2019s bundle of rights.<\/p>\n

Those pushing for venue revision are working on two fronts, one judicial and the other legislative. On the judicial side, advocates have injected themselves into the TC Heartland<\/em><\/a> case currently before the Federal Circuit. Though it has no direct connection to the Eastern District of Texas, advocates see it as a chance to shut plaintiffs out of that venue. Their argument in that case is so broad that it would drastically restrict where all patentees can sue for infringement\u2014even making it impossible<\/em> to sue infringing foreign defendants. Yet they don\u2019t mention this collateral damage as they sell the \u201ctroll\u201d narrative. On the legislative side, advocates have gotten behind the VENUE Act<\/a> (S.2733<\/a>), introduced in the Senate last Thursday. This bill leaves open a few more venues than TC Heartland<\/em>, though it still significantly limits where all patent owners can sue. Advocates here also repeat the \u201ctroll\u201d mantra instead of offering a single reason why it\u2019s fair to change the rules for everyone else.<\/p>\n

With both TC Heartland<\/em> and the VENUE Act, venue revision advocates want to change the meaning of one word: \u201cresides.\u201d The specific patent venue statute, found in Section 1400(b) of Title 28<\/a>, provides that patent infringement suits may be brought either (1) \u201cin the judicial district where the defendant resides\u201d or (2) \u201cwhere the defendant has committed acts of infringement and has a regular and established place of business.\u201d On its face, this seems fairly limited, but the key is the definition of the word \u201cresides.\u201d The general venue statute, found in Section 1391(c)(2) of Title 28<\/a>, defines residency broadly: Any juridical entity, such as a corporation, \u201cshall be deemed to reside, if a defendant, in any judicial district in which such defendant is subject to the court\u2019s personal jurisdiction with respect to the civil action in question.\u201d Taken together, these venue statutes mean that patent owners can sue juridical entities for infringement anywhere the court has personal jurisdiction over the defendant.<\/p>\n

The plaintiff in TC Heartland<\/em> is Kraft Foods, a large manufacturer incorporated in Delaware and headquartered in Illinois that runs facilities and sells products in Delaware. The defendant is TC Heartland, a large manufacturer incorporated and headquartered in Indiana. TC Heartland manufactured the allegedly-infringing products in Indiana and then knowingly shipped a large number of them directly into Delaware. Kraft Foods sued TC Heartland in Delaware on the theory that these shipments established personal jurisdiction\u2014and thus venue\u2014in that district. TC Heartland argued that venue was improper in Delaware, but the district court rejected that argument (see here<\/a> and here<\/a>). TC Heartland has now petitioned<\/a> the Federal Circuit for a writ of mandamus, arguing that the broad definition of \u201creside\u201d in Section 1391(c)(2) does not apply to the word \u201cresides\u201d in Section 1400(b). On this reading, venue would not lie in Delaware simply because TC Heartland did business there.<\/p>\n

TC Heartland mentions in passing that its narrow read of Section 1400(b) is favorable as a policy matter because it would prevent venue shopping \u201cabuses,\u201d such as those allegedly occurring in the Eastern District of Texas. Noticeably, TC Heartland doesn\u2019t suggest any policy reasons why Kraft Foods should not be permitted to bring an infringement suit in Delaware, and neither do any of the amici<\/em> supporting TC Heartland. The amicus<\/em> brief<\/a> by the Electronic Frontier Foundation (EFF) et al<\/em>. argues that Congress could not have intended \u201cto permit venue in just about any court of the patent owner\u2019s choosing.\u201d But why is this hard to believe? The rule generally for all juridical entities is that they can be sued in any district where they chose to do business over matters relating to that business. This rule has long been regarded as perfectly fair and reasonable since these entities get both the benefits and the burdens of the law wherever they do business.<\/p>\n

The EFF brief goes on for pages bemoaning the perceived ills of forum shopping in the Eastern District of Texas without once explaining the relevancy to Kraft Foods. It asks the Federal Circuit to \u201crestore balance in patent litigation,\u201d but its vision of \u201cbalance\u201d fails to account for the myriad honest patent owners like Kraft Foods that nobody considers to be \u201ctrolls.\u201d The same holds true for the amicus<\/em> brief<\/a> filed by Google et al.<\/em> that discusses the \u201charm forum shopping causes\u201d without elucidating how it has anything to do with Kraft Foods. Worse still, the position being urged by these amici<\/em> would leave no place for patent owners to sue foreign defendants. If the residency definitions in Section 1391(c) don’t apply to Section 1400(b), as they argue, then a foreign defendant that doesn’t reside or have a regular place of business in the United States can never be sued for patent infringement\u2014an absurd result. But rather than acknowledge this collateral damage, the amici<\/em> simply sweep it under the rug.<\/p>\n

The simple fact is that there\u2019s nothing untoward about Kraft Foods filing suit in Delaware. That\u2019s where TC Heartland purposefully directed its conduct when it knowingly shipped the allegedly-infringing products there. It\u2019s quite telling that venue revision advocates are using TC Heartland<\/em> as a platform for changing the rules generally when they can\u2019t even explain why the rules should be changed in that very case. And this is the problem: If there\u2019s no good reason for keeping Kraft Foods out of Delaware, then they shouldn\u2019t be advocating for changes that would do just that. Keeping patent owners from suing in the Eastern District of Texas is no reason to keep Kraft Foods out of Delaware, and it\u2019s certainly no reason to make it impossible for all patent owners to sue foreign-based defendants that infringe in the United States. Advocates of venue revision tacitly admit as much when they say nothing about this collateral damage. This isn\u2019t fair and balanced; it\u2019s another huge turn of the anti-patent ratchet disguised as \u201creform.\u201d<\/p>\n

The same is true with the VENUE Act<\/a>, which copies almost verbatim the venue provisions of the Innovation Act<\/a>. This bill would also severely restrict where all patent owners can sue by making it so that a defendant doesn\u2019t \u201creside\u201d wherever a district court has personal jurisdiction arising from its allegedly-infringing conduct. To its credit, the VENUE Act does include new provisions allowing suit where an inventor conducted R&D that led to the application for the patent at issue. It also allows suit wherever either party \u201chas a regular and established physical facility\u201d and has engaged in R&D of the invention at issue, \u201cmanufactured a tangible product\u201d that embodies that invention, or \u201cimplemented a manufacturing process for a tangible good\u201d in which the claimed process is embodied. Furthermore, the bill makes the same venue rules applicable to patent owners suing for infringement and accused infringers filing for a declaratory judgment, and it solves the problem of foreign-based defendants by stating that the residency definition in Section 1391(c)(3) applies in that situation.<\/p>\n

While the proposed changes in the VENUE Act aren\u2019t as severe as those sought by venue revision advocates in TC Heartland<\/em>, they nevertheless take numerous venues off of the table for patentees and accused infringers alike. But rather than acknowlede these wide-sweeping changes and offer reasons for implementing them, advocates of the VENUE Act simply harp on the narrative of \u201ctrolls\u201d in Texas. For example, Julie Samuels at Engine<\/em> argues<\/a> that the \u201ccurrent situation in the Eastern District of Texas makes it exceedingly difficult for defendants\u201d to enforce their rights and that we need to \u201clevel the playing field.\u201d Likewise, Elliot Harmon at the EFF Blog<\/em> suggests<\/a> that the VENUE Act will \u201cfinally address the egregious forum shopping that dominates patent litigation\u201d and \u201cbring a modicum of fairness to a broken patent system.\u201d Yet neither Samuels nor Harmon explains why we should change the rules for all patent owners and accused infringers\u2014especially the ones that aren\u2019t forum shopping in Texas.<\/p>\n

The VENUE Act would simply take a system that is perceived to favor plaintiffs and replace it with one that definitely favors defendants. For instance, an alleged infringer with continuous and systematic contacts in the Eastern District of Virginia can currently be sued there, but the VENUE Act would take away this option since it\u2019s based on mere general jurisdiction. Likewise, the current venue rules allow suits anywhere the court has specific jurisdiction over the defendant\u2014potentially in every<\/em> venue for a nationwide enterprise\u2014yet the VENUE Act would make dozens of these venues improper. Furthermore, patentees can now bring suits against multiple defendants in a single forum, saving time and money for all involved, but the VENUE Act would make this possibility much less likely to occur.<\/p>\n

The \u201ctroll\u201d narrative employed by venue revision advocates may sound appealing on the surface, but it quickly becomes clear that they either haven\u2019t considered or don\u2019t care about how their proposed changes would affect everyone else. If we\u2019re going to talk about abusive litigation practices in need of revision, we should talk about where they\u2019re occurring across the entire patent system. This discussion should include the practices of both patent owners and alleged infringers, and we should directly confront the systemic collateral damage that any proposed changes would cause. As it stands, there\u2019s little hope that the current myopic focus on \u201ctrolls\u201d will lead to any true reform that\u2019s fair and balanced for everyone.<\/p>\n","protected":false},"excerpt":{"rendered":"

Advocates for changing the patent venue rules, which dictate where patent owners can sue alleged infringers, have been arguing that their remedy will cure the supposed disease of abusive \u201ctrolls\u201d filing suit after suit in the Eastern District of Texas. This is certainly true, but it\u2019s only true in the sense that cyanide cures the […]<\/p>\n","protected":false},"author":3627,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_monsterinsights_skip_tracking":false,"_monsterinsights_sitenote_active":false,"_monsterinsights_sitenote_note":"","_monsterinsights_sitenote_category":0,"_jetpack_memberships_contains_paid_content":false,"footnotes":""},"categories":[26,30,34,35,37,1],"tags":[57,233,471,486,497,551,569,594,625,703,815,854,1091,1106,1126,1310,1312,1432,1537,1538],"class_list":["post-2996","post","type-post","status-publish","format-standard","hentry","category-innovation-2","category-inventors","category-legislation","category-patent-law","category-patent-litigation","category-uncategorized","tag-patent-trolls","tag-broken-patent-system","tag-eastern-district-of-texas","tag-eff","tag-elliot-harmon","tag-federal-circuit","tag-forum-shopping","tag-general-jurisdiction","tag-google","tag-innovation-act","tag-julie-samuels","tag-kraft-foods","tag-patent-reform","tag-patents","tag-personal-jurisdiction","tag-section-1391c","tag-section-1400b","tag-tc-heartland","tag-venue","tag-venue-act"],"jetpack_featured_media_url":"","jetpack_sharing_enabled":true,"_links":{"self":[{"href":"https:\/\/blogs.uakron.edu\/ualawip\/wp-json\/wp\/v2\/posts\/2996","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/blogs.uakron.edu\/ualawip\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/blogs.uakron.edu\/ualawip\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/blogs.uakron.edu\/ualawip\/wp-json\/wp\/v2\/users\/3627"}],"replies":[{"embeddable":true,"href":"https:\/\/blogs.uakron.edu\/ualawip\/wp-json\/wp\/v2\/comments?post=2996"}],"version-history":[{"count":1,"href":"https:\/\/blogs.uakron.edu\/ualawip\/wp-json\/wp\/v2\/posts\/2996\/revisions"}],"predecessor-version":[{"id":15876,"href":"https:\/\/blogs.uakron.edu\/ualawip\/wp-json\/wp\/v2\/posts\/2996\/revisions\/15876"}],"wp:attachment":[{"href":"https:\/\/blogs.uakron.edu\/ualawip\/wp-json\/wp\/v2\/media?parent=2996"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/blogs.uakron.edu\/ualawip\/wp-json\/wp\/v2\/categories?post=2996"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/blogs.uakron.edu\/ualawip\/wp-json\/wp\/v2\/tags?post=2996"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}