TC Heartland and the Effect on Venue Selection for Patent Litigation Cases

By: Nicholas Scoullos

Keeping up with the pace of technology, which patent law is designed to protect, the number of patent cases have consistently increased over time.[1] In 2015, 5,830 patent cases were filed, a 15% increase from the year prior.[2] Of those cases, 2,540 (43.6%) were filed in the Eastern District of Texas, more than the combined total of the next three less voluminous districts.[3] The District itself sees most of its cases from high volume plaintiffs, plaintiffs who have filed more than ten cases in a year, commonly considered as “patent trolls.”[4] Patent trolls frequently take the form of shell corporations or individuals that “generate revenue by suing over patents instead of making products.”[5]

The District is considered friendly to plaintiffs in patent litigation cases in part due to the “relatively rapid litigation timetable” which can pressure defendants to settle.[6] Furthermore, judges in the Eastern District of Texas require permission to be given before a defendant can file for summary judgment, effectively sending a case to trial despite the low likelihood of the plaintiff prevailing or the strength of the defendant’s motion.[7] Although uncommon, this is not contrary to Federal Rules of Civil Procedure Rule 56(b), which allows for a party to file a motion for summary judgment anytime within 30 days after discovery, “unless a different time is set by local rule or the court orders otherwise.”[8] Given this dynamic, cases which would otherwise be dismissed end up in costly litigation, thus prompting a settlement.[9]

On May 22nd, 2017, the Supreme Court of the United States issued its decision in TC Heartland LLC v. Kraft Food Group Brands LLC, which is anticipated to halt the forum shopping that has led to the accumulation of patent litigation cases in a handful of district courts.[10] The holding limits the definition of “residence” under the patent-specific venue statute 28 U.S.C. §1400(b) to the State in which a corporate defendant is incorporated.[11] Before TC Heartland, a plaintiff could choose “any jurisdiction where the defendant did significant business,” allowing for plaintiffs to sue large corporations, or businesses that conducted transactions over the Internet in virtually any district court.[12] Naturally, under the old regime, plaintiffs would frequently prevail on a motion to change venue, driving up litigation costs.

The effect TC Heartland has on patent litigation remains to be seen. As an indication of the complexity of the issue at hand, a diverse set of private and public entities had all entered the fray. While the ruling appears to hurt patent trolls, it also hurts research universities and individual inventors who now go against corporations in less-favorable districts. Another dichotomy arises in the pharmaceutical industry, in which generic pharmaceutical companies now find themselves in a disadvantage against suits brought by big pharma.


[1] Brian Howard, Lex Machina 2015 End-of-Year Trends, Lex Machina: Legal Trends (Jan. 7, 2016), https://lexmachina.com/lex-machina-2015-end-of-year-trends/.

[2] Id.

[3] Id.

[4] Id.; See also Daniel Nazer & Vera Ranieri, Why Do Patent Trolls Go to Texas? It’s Not for the BBQ, Elec. Frontier Found. (July 9, 2014), https://www.eff.org/deeplinks/2014/07/why-do-patent-trolls-go-texas-its-not-bbq.

[5] Andrew Chung, U.S. Top Court Tightens Patent Suit Rules in Blow to 'Patent Trolls', Reuters: U.S. Legal News (May 22, 2017, 3:59 PM), http://www.reuters.com/article/usa-court-kraft-heinz/u-s-top-court-tightens-patent-suit-rules-in-blow-to-patent-trolls-idUSL1N1IO1H4.

[6] See Nazer & Ranieri, supra note 4.

[7] Id. 

[8] Fed. R. Civ. P. 56(b).

[9] Jan Wolfe, Patent Plaintiffs See Way Around U.S. Supreme Court Ruling, Reuters: Tech. News (May 23, 2017, 4:01 PM), http://www.reuters.com/article/us-usa-court-kraft-heinz-analysis/patent-plaintiffs-see-way-around-u-s-supreme-court-ruling-idUSKBN18J2UB.

[10] Id.

[11] TC Heartland LLC v. Kraft Foods Grp. Brands LLC, 137 S. Ct. 1514, 1520 (2017).

[12] Brian Howard, SCOTUS Decides TC Heartland Case, Lex Machina: Acad. Articles (May 24, 2017), https://lexmachina.com/scotus-decides-tc-heartland/.

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