View source for TC Heartland LLC v. Kraft Foods Group Brands LLC

{{Infobox SCOTUS case
  |Litigants=TC Heartland LLC v. Kraft Foods Group Brands LLC
  |ArgueDate=March 27
  |ArgueYear=2017
  |DecideDate=May 22
  |DecideYear=2017
  |FullName=TC Heartland LLC v. Kraft Foods Group Brands LLC
  |USVol=581
  |USPage=___
  |Docket=16-341
  |ParallelCitations=137 S. Ct. 1514; 197 [[L. Ed. 2d]] 816; 122 [[U.S.P.Q.2d]] 1553
  |Prior=''In re TC Heartland LLC'', 821 [[F.3d]] [https://www.leagle.com/decision/infco20160429170 1338], 118 U.S.P.Q.2d 1591 ([[Fed. Cir.]] 2016); [[Certiorari|cert]]. granted, 137 S. Ct. 614 (2016).
  |Subsequent=
  |Holding=For patent infringement cases, a corporate defendant is considered to "reside" in their state of incorporation.
  |Majority=Thomas
  |JoinMajority= Roberts, Kennedy, Ginsburg, Breyer, Alito, Sotomayor, Kagan
  |NotParticipating=Gorsuch
  |LawsApplied={{USC|28|1391}}, {{USC|28|1400|notitle=1}} 
}}

'''''TC Heartland LLC v. Kraft Foods Group Brands LLC''''', 581 U.S. ___ (2017), was a [[Supreme Court of the United States|United States Supreme Court]] case concerning the [[venue (law)|venue]] in [[patent infringement under United States law|patent infringement]] lawsuits.<ref name=opinion>{{ussc|name=TC Heartland LLC v. Kraft Foods Group Brands LLC|volume=581|year=2017|docket=16-341}}.</ref> 

While a 1957 Supreme Court ruling had determined that patent infringement cases were to be tried in the state within which the defendant was incorporated, subsequent changes to [[Title 28 of the United States Code|Judiciary and Judicial Procedure]] implemented by Congress had led courts to rule that infringement cases could be brought anywhere the defendant conducted business considered infringing. This enabled plaintiffs to [[forum shopping|forum shop]] for courts favorable to them. The [[United States District Court for the Eastern District of Texas]] had become the most popular court for such cases, encouraging many non-practicing entities—so-called "[[patent troll]]s"—to use this court to seek litigation and settlements from larger companies.

The Court ruled unanimously in favor of the petitioner, upholding its 1957 decision that patent infringement cases must be heard in the district within which the defendant is incorporated.

==Background==
United States law under [[Title 28 of the United States Code]] (U.S.C.) covering judiciary procedure states that [[Patent infringement under United States law|patent infringement]] lawsuits are to be held in the [[United States district court|district court]] where the defendant (the party charged with patent infringement) "resides", under 28 U.S.C. § 1400(b).<ref name=USC1400>{{USC|28|1400}}.</ref> Congress added clarifying language in 1988 to the general statute related to civil cases, 28 U.S.C. § 1391(c)(2), stating that for a corporation, its place of residence is "in any judicial district in which such defendant is subject to the court’s personal jurisdiction with respect to the civil action in question".<ref name=USC1391>{{usc|28|1391}}.</ref> Subsequent rulings by federal courts effectively allowed plaintiffs in patent infringement cases to select any district court in whose jurisdiction the defendant did business, e.g., where it sold its products. This determination had been most recently affirmed in a 1990 case ''VE Holding Corporation v. Johnson Gas Appliance Company'' in the [[United States Court of Appeals for the Federal Circuit]].<ref name="nytimes oral">{{cite web | url = https://www.nytimes.com/2017/03/27/business/supreme-court-patent-trolls-tc-heartland-kraft.html | title = Supreme Court Considers Why Patent Trolls Love Texas | first=  Adam | last = Liptak | date = March 27, 2017  | accessdate = April 25, 2018 | work = [[The New York Times]] }}</ref> Congress amended 28 U.S.C. § 1391 again in 2011, but did not change how courts interpreted the venue system.<ref name="yahoo finance">{{cite web | url = https://finance.yahoo.com/news/tc-heartland-v-kraft-foods-125940843.html | title = The Supreme Court could fundamentally change America's broken patent system | first = Roger | last = Parloff | date = March 23, 2017 | accessdate = April 25, 2018 | work = [[Yahoo!]] }}</ref>

This effectively allowed plaintiffs to file suit in nearly any district court of their choosing, arguing that defendants that sold products anywhere in the United States were doing business in that court's jurisdiction, creating a type of [[forum shopping]]. This led to a large number of patent infringement cases being filed in the [[United States District Court for the Eastern District of Texas]]. The Eastern District of Texas was considered to be favorable to plaintiffs: trials were resolved quickly and plaintiffs prevailed in 75% of cases. The speedy resolution of cases was in part due to procedures set up by Judge [[T. John Ward]], appointed to the court in 1999, that kept patent infringement cases to a strict time table.<ref>{{cite web | url = https://www.nytimes.com/2006/09/24/business/24ward.html | title = So Small a Town, So Many Patent Suits | first= Julie | last = Creswell | date=  September 24, 2006 | accessdate = April 25, 2018 | work = [[The New York Times]] }}</ref> In 2017, the Eastern District of Texas saw the most patent infringement cases of any district court, with one judge overseeing 25% of all such cases in the nation.<ref name="nytimes oral"/><ref>{{cite web | url = https://www.theverge.com/2017/5/22/15676206/supreme-court-patent-venue-ruling | title = The US Supreme Court just made life much harder for patent trolls | date = May 22, 2017 | access-date = May 22, 2017 | work = [[The Verge]] }}</ref> The [[United States District Court for the District of Delaware]] also sees a large number of such cases, partly because of the many businesses [[incorporated in Delaware]].<ref name="bloomberg decision">{{cite web | url = https://www.bloomberg.com/news/articles/2017-05-22/u-s-supreme-court-puts-new-curbs-on-locations-of-patent-suits | title = U.S. Supreme Court Puts New Curbs on Locations of Patent Suits | first1 = Greg | last1 = Stohr | first2 = Susan | last2= Decker | date = May 22, 2017 | accessdate = April 25, 2018 | work = [[Bloomberg Businessweek]] }}</ref>

The Eastern District of Texas attracted a large number of non-practicing entities, derogatorily known as "[[Patent troll|patent trolls]]", in addition to other patent infringement complaints. These are individuals or companies that do not actually do business but who have gained ownership of patents which most others would see as low-quality patents that are either overly broad or lack inventiveness. These entities file suit against other companies for patent infringement, typically as means to coerce settlement prior to trial or anticipating a victory in the district court of their choosing.<ref>{{Cite web | url = https://www.bloomberg.com/view/articles/2017-05-25/the-texas-town-that-patent-trolls-built-j34rlmjc | title = The Town That Trolls Built | first = Joe | last =Nocera | date = May 25, 2017 | accessdate = April 25, 2018 | work = [[Bloomberg Businessweek]] }}</ref> A study found that since 2014, more than 90% of the patent infringement cases heard in the Eastern District of Texas were from such non-practicing entities.<ref name="yahoo finance"/><ref>{{cite journal |last1=Love |first1=Brian |last2=Yoon |first2=James |date=January 3, 2017 |title= Predictably Expensive: A Critical Look at Patent Litigation in the Eastern District of Texas |journal=Stanford Technology Law Review |volume=20 |issue=1 |pages=1–37 |doi= 10.2139/ssrn.2835799 |ssrn=2835799 |url=https://digitalcommons.law.scu.edu/facpubs/939 }}</ref>

==Case background==
[[Kraft Foods]] sued TC Heartland, another food manufacturer, of patent infringement related to one of its low-calorie sweeteners. Kraft Foods sought legal action in the [[United States District Court for the District of Delaware|District of Delaware]] despite the fact that TC Heartland, an Indiana-based company, had no physical presence in Delaware. TC Heartland sought to change the venue to the [[United States District Court for the Southern District of Indiana|Southern District of Indiana]], citing the Supreme Court decision in ''Fourco Glass Co. v. Transmirra Products Corp.'' {{ussc|353|222–226|1957|el=no}} that for purposes of patent infringement suits, a corporation "resides" in the state within which it was incorporated. The District Court, and subsequently the [[United States Court of Appeals for the Federal Circuit]], rejected TC Heartland's argument, stating that the amended language of 28 U.S.C. § 1391<ref name=USC1391/> since the decision of ''Fourco'' clarified how to determine where a company resides and that past cases at the District and Appeals Court have relied on this interpretation.<ref name="nytimes oral"/>

==Supreme Court==
TC Heartland filed a writ of certiorari to the Supreme Court in September 2016, specifically addressing whether the interpretation of "resides" in 28 U.S.C. § 1400 can be affected by the amendments made to 28 U.S.C. § 1391;<ref name=USC1391/> the Court granted certiorari in December 2016. Supporting TC Heartland via [[amicus brief]]s included a number of computer, technology, banking, and retail companies such as Apple, eBay, IBM, Microsoft, Intel, and Walmart that sought to eliminate the means that their patents are challenged by non-practicing entities, as well as seventeen states.<ref name="yahoo finance"/> Amicus briefs in opposition to TC Heartland included a number of pharmaceutical companies, including Allergan, Merck, and Genentech, who stated the ability to decide the venue helped to fend themselves against generic drug manufacturers, and older companies like Ericsson and Whirlpool which have thousands of patents in their portfolio and having the choice of venue making it easy for them to deal with large number of patent infractions in a single location.<ref name="yahoo finance"/>

Oral arguments were heard before the eight-member court on March 27, 2017. Justice [[Neil Gorsuch]] had yet to be appointed at this time and did not participate in the decision.<ref name="nytimes oral"/> The petitioner, TC Heartland, was represented by [[James W. Dabney]] and patent law academic [[John F. Duffy]]. [[William F. Jay]] argued on behalf of the respondent, Kraft.  Observers noted that the justices focused on their previous decision from ''Fourco'' and argued the Federal Circuit had been "ignoring our decision", as stated by Justice [[Elena Kagan]].<ref name="nytimes oral"/> The question of the impact of a decision in favor of TC Heartland was raised, noting that a decision favoring TC Heartland would cause other District Courts, particularly Delaware's, to be loaded with patent infringement cases.<ref name="nytimes oral"/>

The Court issued its decision on June 26, 2017, ruling unanimously that the definition of "reside" in 28 U.S.C. § 1400<ref name=USC1400/> remains as determined by the Court in ''Fourco'' to be the state of incorporation for a company. Justice [[Clarence Thomas]], writing the opinion, found that the 2011 updates to 28 U.S.C. § 1391<ref name=USC1391/> did not contradict the ''Fourco'' decision, nor incorporated elements of the ruling from ''VE Holdings'', and thus, their decision of ''Fourco'' still holds. The Court reversed the decision of the Appeals Court and remanded the case back to them.<ref name=opinion/><ref name="bloomberg decision"/>

==Impact==
A separate patent infringement case, ''Raytheon Co. v. Cray, Inc.'', brought to the Eastern District of Texas during the Supreme Court case. [[Cray]] argued for a change of venue claiming it did not have a place of business in the district. Chief Judge [[James Rodney Gilstrap|James Gilstrap]] for the District Court initially ruled in April 2017 prior to the Supreme Court decision that Raytheon could seek action against Cray in the district. Following the Supreme Court's decision in ''TC Heartland'' in May 2017, Cray requested Gilstrap to re-evaluate the case under this ruling. Gilstrap did issue a new ruling, though still denying the change of venue. Gilstrap created a four-point test to evaluate whether a defendant had "regular and established place of business" in the district, and as Cray had a single sales representative living within the district, he denied the motion to change venue.<ref>{{cite web | url = https://arstechnica.com/tech-policy/2017/07/will-east-texas-be-able-to-keep-patent-cases-despite-the-supreme-court/ | title= Will East Texas be able to keep patent cases despite the Supreme Court? | first = Joe | last = Mullin | date = July 30, 2017 | accessdate = April 25, 2018 | work = [[Ars Technica]] }}</ref> Cray appealed to the Federal Circuit, which was heard after the ''TC Heartland'' decision. The Federal Circuit applied the Supreme Court's reasoning to reverse Gilstrap's ruling and allowed Cray's motion to transfer the case to proceed. Coupled with the ''TC Heartland'' ruling, this decision was seen to prevent further attempts by plaintiffs to forum shop for a desired court.<ref>{{cite web | url = https://arstechnica.com/tech-policy/2017/09/appeals-court-east-texas-cant-keep-patent-case-because-of-one-local-salesman/ | title = Appeals court: East Texas can't keep patent case because of one local salesman | first = Joe | last = Mullin | date = September 21, 2017 | accessdate = April 25, 2018 | work = [[Ars Technica]] }}</ref>

The filing of such cases in the Eastern District of Texas, formerly the leader in such suits, dropped after this decision. Meanwhile, the filing of such cases in the District of Delaware increased.<ref>[http://www.abajournal.com/news/article/patent_lawsuits_drop_21_percent_in_the_eastern_district_of_texas_as_scotus Patent lawsuits drop 21 percent in the Eastern District of Texas as SCOTUS ruling brings new era], ''ABA Journal,'' July 19, 2017</ref>

==References==
{{Reflist}}

==External links==
* {{caselaw source
 | case = ''TC Heartland LLC v. Kraft Foods Group Brands LLC'', {{ussc|581|___|2017|el=no}}
 | justia =https://supreme.justia.com/cases/federal/us/581/16-341/
 | oyez =https://www.oyez.org/cases/2016/16-341
 | other_source1 = Supreme Court (slip opinion)
 | other_url1 =https://www.supremecourt.gov/opinions/16pdf/16-341_8n59.pdf
 }}

[[Category:2018 in United States case law]]
[[Category:United States Supreme Court patent case law]]
[[Category:United States Supreme Court cases]]
[[Category:United States Supreme Court cases of the Roberts Court]]
[[Category:Kraft Foods]]