Texas, Delaware or Good Ole North Carolina?

By Tara Muller

In a much-anticipated ruling on May 22, 2017, the U.S. Supreme Court in TC Heartland v. Kraft Foods narrowed the definition of venue for patent infringement cases. Until last week, a patent holder could sue an alleged infringer in any venue where the defendant was doing business, causing forum shopping and a very high concentration of patent cases in plaintiff-friendly venues like Eastern District of Texas. Roughly 40 percent of infringement suits, many filed by non-practicing entities, have been filed in ED TX in the last two years. Now, however, patent enforcers must file suit in the judicial district in which the corporate defendant “resides” (meaning state of incorporation) or where it has committed alleged acts of infringement AND has a regular and established place of business. Experts predict TC Heartland will increase the cost of litigation and drastically end forum shopping. They forecast a flood of litigation into other states, including Delaware, where so many companies incorporate, or tech-sector states like California and New Jersey.

Possible?  Sure, but litigators are a clever bunch when they put on their thinking caps. If they found work-arounds to the America Invents Act, they may just find creative ways to stay in their favorite jurisdiction, perhaps by shifting their focus from producers to sellers and retailers.

Plus, even if TC Heartland reduces litigation in Texas as predicted, might it also lead to a surge of patent litigation in North Carolina, which, according to the Economic Development Partnership of North Carolina, was home to more than 600 life science companies in 2016? North Carolina’s federal courts are sophisticated and well-equipped to handle a large docket of patent litigation, and there is no shortage of highly skilled intellectual property litigators (and mediators, of course). Selfishly, as a homebody who avoids jet-setting whenever possible, I’m crossing my fingers that plaintiffs now will litigate right here in North Carolina. What are your predictions … the end of business trips to Texas, or more of the same?