While we are waiting for the Supreme Court to rule in Bristol-Myers Squibb Co. v. Superior Court, No. 16-466 ("BMS"), an interesting thing happened. Last week in TC Heartland LLC v. Kraft Foods Grp. Brands LLC, ___ S.Ct. ___, 2017 WL 2216934 (U.S. May 22, 2017), the Court interpreted the federal venue statute peculiar to patent litigation, 28 U.S.C. §1400(b), to restrict the ability of patent plaintiffs to bring their cases anywhere in the country. 2017 WL 2216934, at *7. Reaffirming the viability of a 60-year- old decision, Fourco Glass Co. v. Transmirra Products Corp., 353 U.S. 222 (1957), the Court held that patent infringement actions could only be brought where the defendant "resides," which in the case of corporations meant only where they were incorporated. 2017 WL 2216934, at *7.
A lot has been written already about how TC Heartland means the demise of the Eastern District of Texas as the equivalent of Madison County, Illinois for patent litigation. That is not our sandbox, and we're not here to discuss that. For our purposes, we're intrigued by the Court unanimously restricting – albeit under a federal venue statute, not the Due Process Clause of the Constitution – widespread plaintiff-side forum shopping leading to suits piling up in particular magnet jurisdictions. From a policy standpoint, that's also what BMS is about.
Indeed, we tangentially encountered patent-based forum-shopping before. In this post, we discussed a decision of the Federal Circuit in a patent case, Acorda Therapeutics Inc. v. Mylan Pharmaceuticals, Inc., 817 F.3d 755 (Fed. Cir. 2016), which involved a related question of personal jurisdiction − that a defendant's "plans to market its proposed drugs" in a jurisdiction were enough to support jurisdiction under minimum contacts/specific jurisdiction analysis in patent cases. Id. at 762-63. We weren't concerned with that patent-specific proposition. Rather, we were interested in the alternative argument – ultimately avoided in Acorda – that sought to assert general jurisdiction under Delaware law simply because the defendant had registered to do business in the state and thereby supposedly "consented" to be sued there for anything by anyone. The only reason expansive personal jurisdiction arguments were being made in Acorda was to support the equally expansive notions of venue in patent cases that TC Heartland has just consigned to the dustbin of legal history.
In any event, that alternative argument in Acorda is now moot because only a month later (to the day), the Delaware Supreme Court rejected jurisdiction by consent under state law in Genuine Parts Co. v. Cepec, 137 A.3d 123, 147 (Del. 2016) (holding that Bauman "indicates that such a grasping assertion of state authority is inconsistent with principles of due process"). The Acorda situation does demonstrate, however, the relationship between the expansive notions of personal jurisdiction before the Supreme Court in BMS and the expansive notions of venue that bit the dust in TC Heartland.
There is one other interesting point that we learned reading TC Heartland. We had never had much occasion to consider the general federal venue statute, 28 U.S.C. §1391(c), that was the principal basis for the expansive venue arguments that the Court rejected in TC Heartland. The Court quoted that statute: "[f]or 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." TC Heartland, 2017 WL 2216934, at *6 (emphasis added).
Thus, the general federal venue statute – applicable to all federal question actions where (unlike the patent statute) the applicable statute does not contain its own venue provisions – is dependent on where a corporation is "subject to personal jurisdiction." That's what is before the Supreme Court in BMS. Thus an unremarked upon (at least by us) aspect of BMS is that the Court's decision will also determine the scope of available venues available to federal plaintiffs in any number of situations having nothing to do with product liability. That may be of interest to corporations, particularly if personal jurisdiction was waived in a particular case, but a motion challenging venue is still appropriate. It may also be of interest for other reasons peculiar to federal claims that we're not familiar with. In any event, we invite our readers, in-house and otherwise, to think about this possible aspect of BMS for a moment.
This article is presented for informational purposes only and is not intended to constitute legal advice.
