The Patent Venue Statute: A Dinosaur that Requires Extinction

On a beautiful sunny day, while gazing past your computer and out your window, do you ever wonder: Why is the patent venue statute narrower than the general venue statute? Am I the only one? Perhaps. But why does the patent venue statute shield accused infringers from patent litigations in states where they have registered to do business as foreign corporations?  Isn’t that part of the quid pro-quo of doing business in the district? The general venue statute does not provide such a shield; so why provide it in patent cases? Maybe the time has come to kill the patent venue statute entirely because, without it, patent cases would fall under the general venue statute and be treated like other corporate litigations.

The patent venue statute requires a litigation to be brought “in the judicial district where the defendant resides, or where the defendant has committed acts of infringement and has a regular and established place of business (28 U.S.C. § 1400(b)).” Since 2017, “where the defendant resides” has been interpreted narrowly to mean “only in its State of incorporation.” TC Heartland LLC v. Kraft Foods Grp. Brands LLC, 581 U.S. 258, 261 (2017) (emphasis added); citing Fourco Glass Co. v. Transmirra Prods. Corp., 353 U.S. 222, 226 (1957). For most other types of corporate litigation, however, the Supreme Court recently confirmed that a foreign corporation registered to do business in a state could be subject to the state’s jurisdiction. See Mallory v. Norfolk Southern Ry., 143 S. Ct. 2028 (2023).

In Mallory, a railroad employee who lived in Virginia was harmed while working in Ohio; the employee then sued the Virginia railroad in Pennsylvania. See Id. at 2032. The defendant railroad, Norfolk Southern, sought dismissal of the matter because, it argued, being hauled into court in Pennsylvania would violate the Due Process Clause, even though Norfolk Southern had registered as a Pennsylvania foreign corporation. Id. at 2033. The Supreme Court disagreed. Citing its own 100-year-old precedent, the Court reiterated that “there was ‘no doubt’ [a foreign corporation who agreed to service in the state] could be sued by an out-of-state plaintiff on an out-of-state contract.” Mallory, 143 S. Ct. at 2036; citing Pennsylvania Fire Ins. Co. of Philadelphia v. Gold Issue Mining & Milling Co., 243 U.S. 93, 95 (1917). Many state statutes provide a give-and-take to foreign corporations registering to do business in the state.  For example, the Pennsylvania statute requires that, upon completing the registration process, a foreign corporation “shall enjoy the same rights and privileges as a domestic entity and shall be subject to the same liabilities, restrictions, duties and penalties … imposed on domestic entities.” 15 Pa. Cons. Stat. § 402(d); see also Mallory, 143 S. Ct. at 2037. So, as it stands today, corporations can be sued as defendants in jurisdictions where they are registered to do business, but this rule does not apply for patent infringement.  For patent infringement, defendants enjoy the benefit of the Court’s specific and narrow reading of the term “resides” — “only in its State of incorporation.” Does that make sense in today’s business environment?

Congress passed the first patent venue statute in 1897 (Act of Mar. 3, 1897, ch. 395, 29 Stat. 695 (codified as amended as 28 U.S.C. § 1400(b) (2018)). Prior to enactment of the patent-specific venue statute, the general venue statute was said to have caused confusion in patent cases as to where a corporation could be served and sued. See 29 Cong. Rec. 1990 (1897) (statement of Rep. Mitchell); see also H.R. Rep. No. 54-2905, at 1 (1897) (“This bill seeks to define the jurisdiction of the courts in patent suits and to remove the uncertainty which now arises as to such jurisdiction by reason of the conflicting decisions of the various circuit courts.”).

The Chair of the Senate Committee on Patents remarked that, prior to the patent venue statute, “it [was] very inconvenient [for a patentee] to travel across the continent to sue [an infringer in the place of incorporation] when they are infringing in a business established near the plaintiff.” 29 Cong. Rec. 2719. Thus, one of Congress’ goals was to protect the patentee and “prevent companies from escaping litigation merely because they were incorporated far from their permanent place of operation.” Farber, Alena, Harvard Journal of Law and Tech., Vol. 33, No. 2, 693, 710, Spring 2020. The patent venue statute of 1897 thus provided that suits for patent infringement may be brought “in the district of which the defendant is an inhabitant, or in any district in which the defendant … shall have committed acts of infringement and have a regular and established place of business” (Act of Mar. 3, 1897). At that time, the patent venue statute was broader than the general venue statute. The 1887 general venue statute restricted suits to where the defendant “is an inhabitant,” in other than diversity cases (Act of Mar. 3, 1887, ch. 373, 24 Stat. 552, as amended by Act of Aug. 13, 1888, ch. 866, 25 Stat. 433).

The language of the patent venue statute is virtually unchanged today from its first iteration (See 28 U.S.C. § 1400(b)), while the general venue statute has been broadened. Compare Act of Aug. 13, 1888, ch. 866, 25 Stat. 433 (where defendant “is an inhabitant”) with current 28 U.S.C. § 1391 (“where such defendant is subject to the court’s personal jurisdiction”). Over the years, three Supreme Court cases have interpreted the patent venue statute, and each one has held that it should be interpreted without reference to the general venue statute, 28 U.S.C. § 1391(a), (c). See TC Heartland, 581 U.S. at 1517; Fourco Glass, 353 U.S. at 229; Stonite Prods. Co. v. Melvin Lloyd Co., 315 U.S. 561, 563 (1942). Hence, as the general venue statute has evolved to meet the changing times, the patent venue statute has not.

Does this special patent venue rule make sense in today’s business world?  Does it have any purpose at all, other than to shield omnipresent corporations from patent litigations brought in any jurisdiction other than their home state.  On its face, the language of patent venue statute seems to conform to the general venue statute, but TC Heartland’s requirement that Section 1400(b)’s definition of “resides” be limited to the “State of incorporation,” is directly contrary the general venue statute’s definition of “reside” earlier in the same chapter of code. See 28 U.S. C. Chapter 87 – District Courts; Venue; Compare 28 U.S.C. § 1400(b) with 28 U.S.C. § 1391(a), (c). The general venue statute specifies that a corporation “shall be deemed to reside … in any judicial district in which such defendant is subject to the court’s personal jurisdiction with respect to the civil action in question” 28 U.S.C. § 1391(a), (c) (emphasis added). Shouldn’t that be the end of the analysis?  However, that’s not the law.

The patent venue statute appears to be a dinosaur.  Indeed, most areas of law do not have a separate venue statute, including niches like admiralty, class actions, and shareholder disputes. Similarly, the venue subsection for copyright is already aligned with the general venue statute. Compare 28 U.S.C. § 1391(a), (c) with 28 U.S.C. § 1400(a) (venue is proper for Copyrights or mask works “in the district in which the defendant or his agent resides or may be found” (emphasis added)).

So, in this modern age, when online retail commerce amounts to over $272 billion in one quarter, our patent venue is governed by a set of rules that predate cell phones, the internet, and personal computers by decades and hails from a time before semiconductors, transistors and jet air travel. Are patent corporate defendants somehow less mobile than general corporate defendants? No. Are patent corporate defendants somehow less able to defend themselves in a jurisdiction in which they have registered to do business? No. Could it be that some large patent defendants prefer to be defendants in very specific courts and the patent venue statute, as currently construed, serves them just fine? Probably.

No one will dispute that at least some Big Tech companies, with operations all over the country, have sufficiently insulated themselves so that many times they are only amenable to patent infringement litigation in the Northern District of California or in Delaware. See, e.g., In re Netflix, 2022-1100 (Fed. Cir. 2022) (directing transfer to N.D. Cal.); In re Apple Inc., 2021-181 (Fed. Cir. 2021) (directing transfer to N.D. Cal.); In re Google LLC, 2021-171 (Fed. Cir. 2021) (directing transfer to N.D. Cal.); In re Uber Techs., Inc., 2021-150 (directing transfer to N.D. Cal.); In re Samsung Elecs. Co., 2021-139 (directing transfer to the N.D. Cal.); accord In re Apple Inc., 2020-135 (Fed. Cir. 2020); In re Google LLC, 949 F.3d 1338 (Fed. Cir. 2020) (directing transfer to the N.D. Cal., and holding Google servers located in E.D. Tex. did not constitute a “regular and established place of business,” because there was no Google employee present at the server location); but see In re Medtronic, Inc., 2022-107 (Fed. Cir. 2022) (denying mandamus requesting transfer to N.D. Cal.).

But what is the real harm to a global Big Tech defendant to litigate in the forum state of the patentee, where the defendant does business, especially when its documents are in the cloud and depositions have increasingly become virtual?  What about the harm to start-up patentees who have invested everything into their new technology, only to have that technology stolen by one of these Big Tech giants, who, even with operations in the patentee’s state, fails to satisfy the outdated patent venue requirement? TC Heartland, 581 U.S. at 267-68. The start-up patentee must now defend its life’s work, oftentimes by spending its life‘s savings, not in its home state, but in the backyard of Big Tech, and arguably the most patent unfriendly court in the country (if the patentee gets past the Patent Trial and Appeal Board, but that’s another article). It seems that the patent venue statute is having the opposite effect than was intended by the 1897 Congress. See 29 Cong. Rec. 2719; accord Farber, Alena, Harvard Journal of Law and Tech., Vol. 33, No. 2, 693, 710, Spring 2020 (noting that one goal of the patent venue statute of 1897 was to “prevent companies from escaping litigation merely because they were incorporated far from their permanent place of operation.”).

In the many, many years since patent venue was addressed by Congress, the intervening decades of technological advance and changes in the way modern companies do business warrant that Congress revisits patent venue.  This antiquated limitation on patent venue is not needed, especially in today’s highly mobile and cloud-based society. Now, 126 years after its enactment to benefit patentees, the patent venue statute works to redirect patent cases away from patentees’ home forums, undermining the original legislative intent.  This antiquated limitation on patent venue is not necessary.

Repeal of the separate patent venue statute is in order, so that corporate litigations, patent or otherwise, fall under the general corporate venue statute.  There is no business or logical reason for patent venue to be narrower, or for that reason, to exist in at all.  The patent venue statute is a dinosaur that should be long extinct.