This column appeared Aug. 9 on The Journal Record.
In June the Supreme Court issued a decision in TC Heartland v. Kraft Food Group Brands that might lead one to believe that the Eastern District of Texas will no longer be the go-to district for patent infringement claims, and companies facing what they believe to be frivolous claims against them will not be forced to defend themselves outside of their home state.
But the long-term effect of TC Heartland is still unclear. In TC Heartland, the Supreme Court held that “[residence]” under 28 U.S.C. § 1400(b), the patent specific venue statute that determines where a suit can be filed, refers only to the state of incorporation for domestic corporations.
In response defendants have been quick to file motions to dismiss and requesting transfers to move their cases back to their home state. Yet TC Heartland left open an alternative route for plaintiffs to reach their desired district.
A patent infringement suit is not absolutely limited to a corporation’s district of residency. Instead the statute also provides for an alternative route, “where the defendant has committed acts of infringement and has a regular and established place of business.”
The Supreme Court did not define “regular and established place of business.” The Federal Circuit in In re Cordis had previously held that this required a corporation to have a “permanent and continuous presence there,” but left it open to interpretation. Without more uniform guidance on the issue the holding in TC Heartland could either have less impact than originally thought or simply create a patchwork of divergent opinions across the country.
Recognizing the importance of this issue, the Eastern District of Texas in Raytheon Co. v. Cray Inc. recently issued an opinion in an effort to clarify and define what constitutes a “regular and established place of business” by creating a four-factor test. The factors include: physical presence (property, inventory, or employees), representations by the defendant, benefits received from presence in the district such as sales revenue, and targeted interactions with the district. However, in July the defendant in the Raytheon case filed a petition for writ of mandamus with the Federal Circuit with respect to this decision which is currently pending.
Until the Federal Circuit directly addresses this issue, it is still unclear whether the Raytheon interpretation will last.
Kim Tran is an attorney at Fellers Snider law firm.