28 USC 1400(b) is the primary patent venue statute. Under the statute, a patent infringement lawsuit may be filed in a jurisdiction (a) where the defendant resides; or (b) where the infringement occurred -- so long as the defendant has a "regular and established place of business" in that jurisdiction.
Any civil action for patent infringement may 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 USC 1400
1400(b) has been around for a long time and has (historically) been given narrow interpretation. Corporate residence was often limited to the location of the principal place of business or corporate headquarters and an established place of business did not include stores owned by others or sales-persons covering the locale. Numerous patent cases were dismissed or transferred because the defendant did not meet the requirements of the law. For instance, in the 1964 case of Sheldon v. Norbute, a Pennsylvania district court transferred the patentee's case to New York even though the infringement occurred in Pennsylvania. According to the court, the defendant did not fit under the statute because it did not "maintain, control, or pay for an establishment in the district."
In 1990, Congress took to the pen and broadened the definition of a defendant's "residence" to include any jurisdiction where the court has personal jurisdiction.
For purposes of venue under this chapter, a defendant that is a corporation shall be deemed to reside in any judicial district in which it is subject to personal jurisdiction at the time the action is commenced. 28 USC 1391
In VE Holdings (1990), the Federal Circuit interpreted the amended statute -- determining that the statute's "language is clear and its meaning is unambiguous." The appellate panel held that the new statute eviscerats the limitations of Section 1400(b) and allows for patent infringement suits in any jurisdiction where the defendant has sufficient contacts under the constitution.
This leads us to last week -- where Orion IP filed suit against 63 defendants in the sparsely populated Eastern District of Texas. It appears that only a handful of these large corporate defendants have any connection to the jurisdiction beyond a mere 'stream of commerce' analysis. Is it time to return some teeth to Section 1400?
The Senate's Patent Reform Bill of 2006 (S.3818) would have amended §1400 to, for the most part, eliminate the 1990 expansion. Under that proposal, the revised venue statute would read as follows:
(b) Any civil action arising under any Act of Congress relating to patents, other than an action for declaratory judgment ... may be brought only — (1) in the judicial district where either party resides; or (2) in the judicial district where the defendant has committed acts of infringement and has a regular and established place of business.
(c) Notwithstanding section 1391(c) of this title, for purposes of venue under subsection (b), a corporation shall be deemed to reside in the judicial district in which the corporation has its principal place of business or in the State in which the corporation is incorporated.
The proposal still goes beyond the original scope of §1400 by allowing suits in jurisdictions based on the residence of either the plaintiff or defendant.
- Full Disclosure: Several of MBHB's are defendants in the Orion case. These comments are my own and not those of MBHB or its clients.
