The Arkansas Lawyer Fall 2018

Page 40

Patent Litigation: Could Arkansas be Home to More Suits after TC Heartland? By Frederick H. Davis and Zachary R. Hill

This article provides a summary of the patent venue rules after the U.S. Supreme Court’s ruling in TC Heartland, explains what the newly-relevant venue defense means for Arkansas companies, and discusses venue trends around the country and in Arkansas.

Patent litigation is a legal unicorn in Arkansas. Not only does it look different than other kinds of litigation, with unique procedural steps like infringement and invalidity contentions and claim construction, but it is rare, with few cases actually filed and litigated in the state.1 As a result, only a handful of Arkansas attorneys market themselves as patent litigators and even fewer have tried a case to verdict. One factor contributing to the scarcity of Arkansas cases has been the Federal Circuit’s liberal interpretation of the patent venue statute. In 1990, that court broadly interpreted the patent venue statute, allowing plaintiffs to sue defendants in practically any district court in the country. Under the broad reading, forum shopping created favored jurisdictions. Most notably, the Eastern District of Texas garnered a reputation as a plaintiff-friendly, modern day “rocket docket.”2 But the concentration of suits filed in preferred districts is trending down, sparked by the U.S. Supreme Court’s May 2017 decision in TC Heartland v. Kraft Food Brands.3 TC Heartland fundamentally changed patent litigation by restoring a more narrow interpretation of the patent venue statute. While patent litigation in Arkansas did not immediately increase in the year after TC Heartland, it’s too early to know its effect on the state’s patent-litigation landscape. Over time, the diversity of forums could continue to improve, and Arkansas district courts may experience an uptick in filed actions. Even with no change, TC Heartland marks a significant shift in venue law, and advisors to domestic corporate entities should familiarize themselves with the newly-potent venue defense.4 A history of venue in patent litigation5 Since 1897, a special statute has governed venue in patent actions.6 Venue was proper in either the district where the defendant was an “inhabitant” or in which the defendant maintained a “regular and es-


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tablished place of business” and committed an act of infringement. The Supreme Court had previously interpreted “inhabit” for corporate defendants to mean state of incorporation.7 For decades, the Supreme Court upheld this interpretation and reaffirmed the special statute’s exclusive province over patent actions.8 In 1948, Congress codified patent venue in its current form at 28 U.S.C. § 1400(b). A plaintiff may bring his or her action in either the district (a) “where the defendant resides” or (b) “where the defendant has committed acts of infringement and has a regular and established place of business.” At the same time, Congress established the general civil venue statute and explicitly defined “residence” for a corporate defendant in “all actions” to mean state of incorporation, licensure, or wherever it does business.9 In 1957, after lower court disagreement on the meaning of the change in verbiage to the patent statute and the specific guidance added in the general statute, the Supreme Court reaffirmed the special venue statute’s sole control over patent actions and reaffirmed that “resides” still meant a corporate defendant’s state of incorporation.10

Fred Davis is an attorney at Kutak Rock LLP whose practice includes business and complex litigation, including patent litigation and the defense of class actions, and advising companies on privacy and data security. Zachary Hill is a law student at the University of Arkansas. Mr. Hill has a Bachelor’s degree in Mechanical Engineering from the University of Arkansas and is interested in a career in patent litigation.