When 30 Years of Practice Goes Against You: Patent Venue Ruling 'Ignores' Supreme Court Precedent
Date | 01 May 2018 |
Author |
Published in Landslide® magazine, Volume 10, Number 5 , a publication of the ABA Section of Intellectual Property Law (ABA-IPL), ©2018 by the American Bar Association. Reproduced with permission. All rights reserved.
This information or any portion thereof may not be copied or disseminated in any form or by any means or stored in an electronic database or retrieval system without the express written consent of the American Bar Association.
When 30 Years
of Practice Goes
Against You
By James W. Dabney
On March27, 2017, the Supreme Court of the United States heard the TC Heartland LLC v.
Kraft Foods Group Brands LLC1 oral arguments. On the surface, the TC Heartland case raised
a straightforward question of statutory interpretation: the proper construction of the phrase
“the judicial district where the defendant resides,” found in 28 U.S.C. §1400(b). Beneath the
surface lay a fundamental question, which was whether preexisting Supreme Court precedent
construing that very phrase was “law” that lower federal courts were bound to respect.
In Fourco Glass Co. v. Transmirra Products Corp., the Supreme Court held that “28 U.S.C.
§1400(b) is the sole and exclusive provision controlling venue in patent infringement actions” and
that its descriptive phrase “the judicial district where the defendant resides” denotes the judicial dis-
trict where a defendant is domiciled.2 The Court adhered to this interpretation of 28 U.S.C. §1400(b)
in a series of subsequent decisions handed down between 1961 and 2000.3 TC Heartland, an Indiana
LLC, was not domiciled in the forum district and had no place of business there. Thus, if Fourco was
law, the TC Heartland case was subject to dismissal for an improper venue. Furthermore, the impro-
priety of venue was sufciently “clear and indisputable”4 that the district court’s failure to dismiss or
transfer venue under 28 U.S.C. §1406(a) was subject to immediate appellate review by way of man-
damus. Under Federal Circuit precedent, in contrast, Fourco’s interpretation of 28 U.S.C. §1400(b)
Patent Venue Ruling “Ignores”
Supreme Court Precedent
JamesW. Dabney is a partner in Hughes Hubbard & Reed LLP and an adjunct professor of law at Cornell
Law School. The author thanks John Duffy, Richard Koehl, Emma Baratta, David Lansky, Stefanie Lopatkin, and
Michael Polka for their helpful comments on drafts of this article.
Published in Landslide® magazine, Volume 10, Number 5, a publication of the ABA Section of Intellectual Property Law (ABA-IPL), ©2018 by the American Bar Association. Reproduced with permission. All rights reserved.
This information or any portion thereof may not be copied or disseminated in any form or by any means or stored in an electronic database or retrieval system without the express written consent of the American Bar Association.
Image: iStockphoto
Published in Landslide® magazine, Volume 10, Number 5 , a publication of the ABA Section of Intellectual Property Law (ABA-IPL), ©2018 by the American Bar Association. Reproduced with permission. All rights reserved.
This information or any portion thereof may not be copied or disseminated in any form or by any means or stored in an electronic database or retrieval system without the express written consent of the American Bar Association.
had not been treated as law since 1990. In denying mandamus
in TC Heartland, the Federal Circuit stated: “The arguments
raised regarding venue have been rmly resolved by VE
Holding, a settled precedent for over 25 years.”5
How could TC Heartland’s claimed right to relief have
been “clear and indisputable” if its assertion was contrary to
“a settled precedent for over 25 years”? Part of the answer
was, under Supreme Court precedent, “[a] question arising
in regard to the construction of a statute of the United States
concerning patents for inventions cannot be regarded as judi-
cially settled when it has not been so settled by the highest
judicial authority which can pass upon the question.”6 Equally
important, the Federal Circuit’s reasoning to not follow the
Fourco decision could be challenged as inadequate.
In its petition for a writ of certiorari,7 TC Heartland drew
the Court’s attention to ABA House of Delegates Resolu-
tion 108C adopted August8, 2016, and to the accompanying
Report of the ABA Section of Intellectual Property Law. The
latter stated that the Federal Circuit’s decisions in VE Hold-
ing and TC Heartland “misinterpret the venue statutes and
do not follow Supreme Court precedent.”8 The general venue
statute, 28 U.S.C. §1391, was amended in 2011 to include
a new subsection (a) “Applicability of Section,” which pro-
vides: “Except as otherwise provided by law—(1)this section
shall govern the venue of all civil actions brought in district
courts of the United States....”9 Section 1391(a)’s new tex-
tual reference to “law” made unavoidable the question of
whether the Supreme Court’s decision in Fourco had the sta-
tus of “law” or something else.
When TC Heartland argued to the Federal Circuit that
Fourco was “law” within the meaning of current 28 U.S.C.
§1391(a), the court’s response was articulated in unusually
harsh language: “We nd this argument to be utterly without
merit or logic.”10 Undaunted, TC Heartland pressed its argu-
ment before the Supreme Court where the reception was quite
different. Right out of the gate Chief Justice Roberts memo-
rably asked the respondent’s counsel, “is our Fourco decision
law?”11 It soon became clear that this was no mere rhetori-
cal question. Referring to amended 28 U.S.C. §1391(a), the
chief justice continued, “Well, the current statute says ‘except
as otherwise provided by law.’ And I would have thought that
excluded overturning the Fourco decision.”12 In further dis-
cussion of whether the word “law” in 28 U.S.C. §1391(a)
encompassed the Fourco decision, Justice Kagan commented:
“for 30 years the Federal Circuit has been ignoring our
decision and the law has effectively been otherwise.”13 Distin-
guishing between “law” and “practice,” Justice Kagan asked,
“When 30 years of practice goes against you, what happens?
(Laughter.)”14
The response to Justice Kagan’s question brought to mind
the oral argument in KSR International Co. v. Teleex Inc.,15
which the author also argued, during which Justice Souter
asked a similar question concerning the Federal Circuit’s then
existing interpretation of 35 U.S.C. §103 (“Conditions for
patentability; non-obvious subject matter”):
I heard Justice Souter say something like that in the KSR
case, you know, the teaching-suggestion-motivation test has
been around so long that, at some point, the mistake becomes
the law. And—and this Court has again and again and again
stood up for its authority to declare what the law is.16
In its decision issued May22, 2017, the Supreme Court
decisively rejected any notion that “30 years of practice” in
lower federal courts was a basis for treating Supreme Court
precedent as lacking the force of law. Speaking for a unani-
mous Court, Justice Thomas stated, “We reverse the Federal
Circuit. In Fourco, this Court denitively and unambiguously
held that the word ‘reside[nce]’ in §1400(b) has a particular
meaning as applied to domestic corporations: It refers only
to the State of incorporation.”17 The Court’s analysis began
with its precedent, Fourco, and inquired whether interven-
ing legislation was sufciently clear to support a conclusion
that Fourco’s construction of 28 U.S.C. §1400(b) had been
changed. “When Congress intends to effect a change of
that kind,” the Court stated, “it ordinarily provides a rela-
tively clear indication of its intent in the text of the amended
provision.”18 “[T]he modication by implication of the set-
tled construction of an earlier and different section is not
favored.”19 In TC Heartland, the “settled construction” of 28
U.S.C. §1400(b) was taken as being the construction that the
Supreme Court had given the statute in Fourco, not the con-
struction that lower courts had placed on the statute for more
than a quarter century. The Court has often stated, “it is this
Court’s prerogative alone to overrule one of its precedents.”20
The TC Heartland decision illustrates both the force of
Supreme Court precedent and the weakness of assertions that
legislation has impliedly overruled Supreme Court precedent
without explicitly saying so. In this respect, the TC Heartland
decision resembles KSR, in which the Court reafrmed that
35 U.S.C. §103 “codied” pre-1952 Supreme Court prec-
edent.21 TC Heartland won its case in the Supreme Court,
and thereafter was able to reach a prompt settlement with the
plaintiff/respondent. This happened because TC Heartland
recognized the conict between Supreme Court and Federal
Circuit precedent. Thus, TC Heartland effectively raised the
controlling law in the district court, and TC Heartland effec-
tively preserved the point for appellate review. Defendants
that did not raise the venue issues TC Heartland raised were
found to have waived this argument.22 However, the Federal
Circuit gave some of those litigants a potential reprieve.23
The TC Heartland decision also illustrates that giving
voice to Supreme Court precedent—or deliberately choos-
ing not to do so—is an important tool in a practical litigator’s
toolbox. This is especially true if conict between Supreme
Court and lower court precedent has not been previously
acknowledged. The Federal Circuit has noted, “A decision
that fails to consider Supreme Court precedent does not con-
trol if the court determines that the prior panel would have
reached a different conclusion if it had considered control-
ling precedent.”24 The Federal Circuit has similarly stated that
where “a decision does not ‘squarely address[] [an] issue,’
a court remains ‘free to address the issue on the merits’ in a
subsequent case.”25
The Supreme Court has construed and applied many
provisions of the current Patent Act. The Supreme Court
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