IP Law Daily Mandamus relief denied to Heartland in patent suit by Kraft
Friday, April 29, 2016

Mandamus relief denied to Heartland in patent suit by Kraft

By Mark Engstrom, J.D.

The U.S. Court of Appeals for the Federal Circuit refused to order the District of Delaware to dismiss or transfer a patent infringement action that Kraft Foods had filed against TC Heartland (In re TC Heartland LLC, April 29, 2016, Moore, K.). Because the amendments to 35 U.S.C. §1391 in the Federal Courts Jurisdiction and Venue Clarification Act of 2011 did not codify the common law definition of “corporate residence” for venue determinations in patent cases, and because the district court could legitimately exercise personal jurisdiction over TC Heartland, the court denied Heartland’s request for a writ of mandamus.

Kraft sued Heartland for patent infringement in the U.S. District Court for the District of Delaware. According to Kraft, Heartland’s liquid sweeteners infringed three of its patents. Heartland sought dismissal for lack of personal jurisdiction or a transfer to the Southern District of Indiana. The district court denied Heartland’s motion and Heartland sought mandamus relief.

Heartland argued that mandamus was appropriate for two reasons. First, Heartland argued that it did not “reside” in Delaware, for the purpose of venue, under 28 U.S.C. §1400(b). Second, Heartland argued that the Delaware district court lacked specific personal jurisdiction over Heartland. The court concluded that mandamus relief was not warranted.

Venue. Heartland argued that the 2011 amendments to 28 U.S.C. §1391 changed the statutory law in a way that effectively overruled the Federal Circuit’s holding in VE Holding Corp. v. Johnson Gas Appliance Co., 917 F.2d 1574 (1990). The court disagreed.

In VE Holding, the court ruled that the definition of corporate residence in the general venue statute, §1391(c), applied to the patent venue statute, 28 U.S.C. §1400. However, the Federal Courts Jurisdiction and Venue Clarification Act of 2011 made minor amendments to the general venue statute. According to the court, the language preceding the definition of corporate residence in §1391 was changed from “For the purposes of venue under this chapter …” to “For all venue purposes ….” Because that change created a broadening of the definition of corporate residence, not a narrowing of it, the change did not support Heartland’s arguments.

The only other relevant change was the addition of the language in §1391(a): “Applicability of section.—Except as otherwise provided by law.” Heartland argued that the statutory definition of corporate residence in §1391(c) was no longer applicable to patent cases because the “law” otherwise defined corporate residence for patent cases.

The court noted that the venue provision in the patent statute did not define corporate residence, and further noted that no other statutory “law” supported Heartland’s assertion that Congress intended to render the definition of corporate residence in §1391(c) “inapplicable” to venue for patent cases. However, Heartland argued that Congress intended to include federal common law (limited to Supreme Court precedent) in the “law” that otherwise defined corporate residence and thereby rendered the statutory definition of §1391(c) inapplicable. The court concluded that Heartland failed to show that the federal common law supported that position.

Heartland also argued that the 2011 amendments codified the Supreme Court’s decision in Fourco Glass Co. v. Transmirra Products Corp., 353 U.S. 222 (1957), which pertained to the patent venue statute that was in effect prior to the 1988 amendments. The court found that argument to be “utterly without merit or logic.” Because the common law definition of corporate residence for patent cases had been superseded by a statutory definition in 1998, there was no “common law” Supreme Court ruling that Congress could have codified in the “except otherwise provided by law” language. Consequently, VE Holding was the prevailing law.

Personal jurisdiction. Heartland appeared to be argue that: (1) the Supreme Court’s 2014 decision in Walden v. Fiore, 134 S.Ct. 1115, made it clear that specific personal jurisdiction could only arise from activities or occurrences in the forum state; (2) case law in the Federal Circuit established that each act of patent infringement produced a separate cause of action; and (3) the combination of those two legal results logically established specific personal jurisdiction over Heartland, in the District of Delaware, for allegedly infringing acts that occurred in Delaware only, not for those that occurred in other states.

According to the court, Heartland’s arguments were foreclosed by the Federal Circuit’s decision in Beverly Hills Fan Co. v. Royal Sovereign Corp., 21 F.3d 1558 (1994). In that case, the court ruled that minimum contacts with the forum state was met when: (1) a nonresident defendant purposefully shipped accused products into the forum state through an established distribution channel and (2) the cause of action for patent infringement allegedly flowed from those activities.

Because Heartland admitted that it had shipped orders of the accused products directly to Delaware, and because Heartland did not dispute that Kraft’s infringement claims flowed from, or were related to, those shipments, Heartland had sufficient minimum contacts with the State of Delaware for the purpose of establishing specific personal jurisdiction, according to the court.

Reasonableness of jurisdiction. The court noted that the Beverly Hills Fan court also ruled that due process required the assertion of jurisdiction to be “reasonable,” considering all of the facts and circumstances of the case, even if sufficient minimum contacts were established under a stream of commerce theory or otherwise.

In this case, Heartland did not argue that the district court’s exercise of jurisdiction was unreasonable. Instead, it argued that the court’s statement in Beverly Hills Fan—that a forum state could hear claims for infringing acts that occurred outside of the forum state—was dictum. The Federal Circuit disagreed.

Conclusion. Because Heartland’s arguments were foreclosed by the Federal Circuit’s long-standing precedent, Heartland could not show that its right to mandamus was clear and indisputable.

The case is No. 2016-105.

Attorneys: John F. Duffy, James W. Dabney, Richard Koehl, Stefanie M. Lopatkin, and Wanda Deloris French-Brown (Hughes, Hubbard & Reed, LLP) for TC Heartland LLC. John David Luken and Joshua Lorentz (Dinsmore & Shohl LLP) for Kraft Foods Group Brands LLC.

Companies: TC Heartland LLC; Kraft Foods Group Brands LLC

MainStory: TopStory Patent FedCirNews

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