It's Time for the Supreme Court to End the Venue Loophole

As we’ve detailed on many occasions, forum shopping is rampant in patent litigation. Last year, almost 45% of all patent cases were heard in the Eastern District of Texas, a sparsely populated region of Texas probably more well-known as the birthplace of George Foreman than for any technological industry. EFF, along with Public Knowledge, has filed an amicus brief in TC Heartland v. Kraft, urging the Supreme Court to hear a case that could end forum shopping in patent cases.

The case is one of statutory interpretation. Prior to 1990, the Supreme Court had long held that in patent cases, the statute found at 28 U.S.C. § 1400 controlled where a patent case could be filed. However, in 1990 in a case called VE Holding, the Federal Circuit held that a small technical amendment to another venue statute—28 U.S.C. § 1391—effectively overruled this long line of cases. VE Holding, together with another case called Beverly Hills Fan, means that companies that sold products nationwide can be sued in any federal court in the country on charges of patent infringement, regardless of how tenuous the connection to that court. TC Heartland first asked the Court of Appeals for the Federal Circuit to revisit its law. EFF also supported TC Heartland at that court. The Federal Circuit declined the invitation.

As discussed in the FTC's recent report on patent assertion entities, 53% of the studied cases were filed in the Eastern District of Texas. 

TC Heartland has asked the Supreme Court to review the law that allows such a high concentration of patent cases in one district. In our brief in support of TC Heartland’s petition for certiorari, we argue that the Federal Circuit’s rule is fundamentally unfair and undermines the very purpose of the venue statutes. The brief also details how the rule has significant, substantive effects on cases that, without correction, will continue to create ongoing harms. We’re not the only ones that feel the Federal Circuit law is due for review. TC Heartland has also received support from 32 Internet companies, retailers, and associations as well as the Washington Legal Foundation.

We hope the Supreme Court takes this opportunity to look closely at patent venue. However, it may be that Congress may have to step in. Regardless, although either solution wouldn’t fix all of the problems with current patent law, it would go a long way to making at least the court system a lot more fair.

Update: After this post was written, four more amicus briefs were filed urging the Supreme Court to hear the case. The briefs of 56 law professors, former Chief Judge Paul Michel of the Court of Appeals for the Federal Circuit, the American Bankers Association et al., and Dell et al. can be found at the end of this post.