The Class Action Fairness Act of 2005, was intended to limit “forum shopping” of class actions lawsuits, or in a court where the law was most favorable to the plaintiff, even if the location was not connected with the underlying facts. However, the Act did not generally apply to patent infringement cases. As a result most patent infringement suits (44% in 2015) are filed in the Eastern District of Texas, which has a reputation for juries that award large verdicts. When a suit is filed there, there is much pressure on a defendant to settle even if the patent owner’s case is weak.
Carmel Indiana’s T.C. Heartland hopes to limit forum shopping. It was sued for patent infringement by Kraft Foods, and the case is now before the U.S. Supreme Court granted certiorari last month on appeal from the Federal Circuit. The dispute revolves around whether the US Court of Appeals for the Federal Circuit opened the floodgates to forum-shopping in 1990 when it adopted an ultra-liberal interpretation of where a defendant business “resides” – and in the proposed solution, which is to interpret Congress’s 2011 amendments to a general venue statute as having implicitly overruled the 1990 ruling.
The American Intellectual Property Law Association has filed an “amicus” brief arguing that the Federal Circuit correctly interpreted the general venue statute at 28 U.S.C. 1391 as providing a definition of “resides” in the patent venue statute at 28 U.S.C. 1400(b) Although the Supreme Court in Fourco Glass Co. v. Transmirra Products Corp., 353 U.S. 222 (1957), found the two statutes worked independently, Congress changed the law in 1988 by adding to the general venue statute “for purposes of venue under this chapter.” According to the brief, the deletion of that phrase in 2011 did not return the law to the Fourco rule because it was replaced with the phrase “for all venue purposes.” Nor does the added phrase “except as otherwise provided by law” adopt the Supreme Court’s Fourco rule, the brief concluded. The AIPLA’s amicus brief is below.