TC Heartland

Background

• Kraft Foods filed a patent infringement suit against TC Heartland (an Indiana LLC, a sweetener company) in the District of Delaware
• TC Heartland was incorporated in Indiana and had no regular physical presence in Delaware
• TC Heartland argued Delaware was improper venue under § 1400(b)

Lower Court History

• The District of Delaware found venue proper based on Federal Circuit precedent under VE Holding Corp. v. Johnson Gas Appliance Co. (Fed. Cir. 1990)
• The Federal Circuit affirmed
• TC Heartland sought certiorari

The Question Presented

• Does 28 U.S.C. § 1400(b) apply to the exclusion of 28 U.S.C. § 1391 in patent infringement cases, and for § 1400(b), does a corporation 'reside' only in its state of incorporation?
• SUPREME COURT'S HOLDING (8-0 decision, Justice Thomas): § 1400(b) is the sole and exclusive provision governing venue in patent infringement actions
• § 1391 (the general venue statute) does not apply to patent infringement cases
• 'resides' under § 1400(b) for domestic corporations means only the state of incorporation
• The Fourteenth Judicial Act of the First Congress established this meaning
• Congress's 1988 amendment to § 1391 did not change § 1400(b)'s specialized meaning

Ve Holding Overruled

• The Federal Circuit's 1990 decision was wrong
• § 1391(c)(1) ('resides' = subject to personal jurisdiction) does not expand § 1400(b)
• The Court relied on Fourco Glass Co. v. Transmirra Products Corp. (S.Ct. 1957), which had previously held the same thing.

Ve Holding's Holding

• § 1391(c) (general venue statute's definition of corporate residence as any district where subject to personal jurisdiction) applies to § 1400(b)'s 'resides' language
• Because a corporation is subject to personal jurisdiction wherever it does business in the US, venue was proper in virtually any federal district

Practical Effect

• Patent holders could file wherever they wanted
• Forum shopping became widespread
• The Eastern District of Texas emerged as the dominant patent venue: Marshall, TX (Judge Gilstrap)
• Local patent rules favoring plaintiffs
• Fast case management
• Pro-plaintiff jury pool
• Difficult to transfer cases

Why Edtx Became Dominant

• Plaintiff-friendly local rules
• Quick trial dates (2-3 years)
• Low chance of transfer even to more convenient forums
• Historically high damage awards
• Proximity to Dallas for attorneys
• Small community = consistent, predictable judges

Scale of Edtx Dominance

• At peak, EDTX handled ~40-45% of all US patent cases
• More patent filings than all other districts combined in some years
• Judge Gilstrap alone had a larger patent docket than any other individual judge in US history

Criticism

• Judicial inefficiency (one district handling 40%+ of national patent docket)
• No connection between cases and the district (product never sold in Marshall, TX)
• 'patent tourist' phenomenon

Tc Heartland's Impact

• EDTX filing share dropped significantly
• Cases moved to Delaware, NDCA, WDTX
• WDTX/Waco under Judge Albright attracted plaintiff-side filers post-2017 with efficient case management.

Three Requirements

• (1) there must be a physical place in the district — a building, storage facility, or fixed physical location
• (2) it must be a regular and established place — not merely temporary, sporadic, or transient
• Ongoing presence, not a one-time visit
• (3) it must be the defendant's place of business — not merely an employee's home
• The defendant must ratify the use of the employee's location as a place of business

What Qualifies

• Manufacturing plants
• Distribution centers
• Data centers in the district
• Server farms
• Offices leased by the defendant
• Retail stores
• Warehouses

What Does not Qualify

• Employee's home office (even if employee has worked there for years)
• Hotel rooms during a trade show
• Temporary pop-up locations
• Third-party offices visited by defendant's employees
• Cloud computing nodes (no physical presence of defendant)

Factors Courts Consider

• Whether the defendant owns or leases the space
• Whether the defendant stores inventory there
• Whether the defendant's name appears on the location
• Whether customers interact with the defendant at that location
• Whether the defendant advertises the location

Remote Work Era

• Cray's three-part test is difficult to satisfy for purely remote workers
• Many tech companies have employees distributed nationally but few physical offices
• This limits patent venue for defendants with WFH workforces.

Immediate Post-tc Heartland Shifts (2017-2019)

• EDTX filing share dropped from ~40% to ~20-25%
• Delaware rose to become the leading patent district (most corps incorporated in Delaware)
• NDCA increased due to tech company HQs

District of Delaware

• Consistently high filing volume
• Routine cases
• Experienced patent judges (Judges Andrews, Burke, Connolly, Williams, Noreika)
• Multidistrict patent cases
• Efficient management

Western District of Texas (WDTX) — Waco

• Judge Alan Albright specialized his Waco division docket in patents (2019-present)
• Plaintiff-friendly efficient management
• Set aggressive trial dates
• WDTX became #1 or #2 in patent filings 2020-2022
• Federal Circuit mandamus orders forced transfer of some cases (In re: Apple 2021)
• Some judges in Austin added to patent cases to reduce Albright's backlog
• Post-Albright appointment changes: other WDTX judges now share patent cases

Eastern District of Texas

• Still significant
• Defendants' logistics operations (warehouses, distribution centers) create venue in EDTX
• 'acts of infringement' requirement met by sales in any district with a physical presence

Northern District of California

• Apple, Google, Meta, Salesforce, Oracle HQs
• Appropriate venue for major tech companies
• Slower docket but patent judges experienced

District of New Jersey

• Pharma company HQs
• Hatch-Waxman ANDA cases clustered here

ITC Filings not Affected

• ITC § 337 investigations have no venue requirement
• ITC filings increased post-TC Heartland as litigants added ITC to their strategy against foreign defendants.

Identify Proper Venues

• For each defendant, determine state of incorporation
• Identify any regular and established places of business in desirable districts

Delaware Strategy

• Sue in Delaware if defendant is a Delaware corporation (most are)
• Delaware is plaintiff-friendly with experienced patent courts

Use of Multiple Defendants

• Multiple defendants in the same case may be in different proper venues
• Careful coordination required

Watch Wdtx

• Judge Albright's Waco division remains attractive for patent plaintiffs despite mandamus exposure
• Fast trial dates put pressure on defendants to settle

Venue Challenge is Mandatory

• Must challenge improper venue in first responsive pleading (FRCP 12(h)) or it is waived
• Timely § 1406(a) motion to dismiss or transfer

Declaratory Judgment Preemption

• If litigation is anticipated, file a DJ action in the defendant's home district
• Establishes proper venue
• May deny plaintiff choice of forum
• CONVENIENCE TRANSFER (§ 1404(a)): even in proper venues (e.g., WDTX) where convenience factors favor transfer, file § 1404(a) motion
• Mandamus if denied

Track Corporate Structure

• Domestic subsidiaries may create local venues
• Operating in a district through a wholly-owned subsidiary may create venue against the parent (contested; circuit-specific)

Work-from-home Analysis

• Employees working remotely from within a district generally do not create venue
• But if the company formally designates them as a local presence (advertises the address, ships inventory there), Cray factors may be satisfied.