TC Heartland v. Kraft Foods Group Brands LLC

ORIGINAL MEANING OF THE PATENT VENUE STATUTE

TC Heartland argues that the patent venue statute was originally enacted to restrict venue in patent infringement suits, specifically to protect defendants from being sued wherever they could be served. It notes that, as originally enacted, the statute contained two methods of establishing venue: the district “where the defendant is an inhabitant” or the district “where the defendant has committed acts of infringement and has a regular and established place of business.” TC Heartland argues that, at the time of enactment, corporate inhabitancy was synonymous with domicile or residency—meaning the state of incorporation. This meaning is supported, TC Heartland elaborates, by the statute’s use of the singular article “the,” which implies that at any given time a corporation can only “inhabit” a single district.

Kraft, on the other hand, claims that TC Heartland’s extensive focus on the previous versions of the patent venue statute is misplaced because what matters today is only the meaning of the 2011 amendments and not any of the preceding statutes. Kraft maintains that the meaning of the 2011 amendments is clear from the text and structure, and that meaning is supported by the legislative history. Kraft argues the 2011 amendments – the Federal Courts Jurisdiction and Venue Clarification Act – were intended to unify the federal venue provisions and resolve several ambiguities. Kraft notes there are multiple references in the legislative history to the fact § 1391(c) would apply “[u]niversally” to all other venue statutes.

CANONS OF STATUTORY CONSTRUCTION

TC Heartland claims that the Federal Circuit’s interpretation of the patent venue statute violates three canons of statutory construction. First, TC Heartland argues, VE Holding violates the principle that subsequently enacted general provisions do not override conflicting specific provisions absent a clear Congressional intention to displace that specific provision. TC Heartland contends that the Federal Circuit violated this principle by interpreting the general venue provision, § 1391(c), to override the meaning of “residence” that the Court in Fourco attributed to the specific provision, § 1400(b). Second, TC Heartland argues, VE Holding violates the principle that that judicially-settled interpretations of statutes are not overruled or called into question every time that statute is subsequently revised by Congress. TC Heartland maintains that the Federal Circuit violated this principle by effectively overruling multiple Supreme Court decisions, including Fourco, based solely upon the change in § 1391(c)’s text from “for venue purposes” to “[f]or purposes of venue under this chapter.” TC Heartland maintains that such a significant departure from Supreme Court case law is unjustified based on the relatively minor change in statutory language and the lack of any corroborating evidence in the legislative history. Third and finally, TC Heartland argues that VE Holding violates the principle that Congress “does not hide elephants in mouseholes,” or in other words, Congress does not use vague or miscellaneous provisions to make fundamental changes to the meaning of statutes. TC Heartland notes that the Federal Circuit’s decision relies upon concluding that Congress hid a significant expansion in the scope of the patent venue statute in an amendment to a different statute despite the lack of legislative history to support this conclusion.

Kraft counters that none of the canons that TC Heartland invokes support a return to Fourco, and also claims that TC Heartland’s interpretation violates the most important canon of construction – that the plain and unambiguous language of a statute controls its meaning. First, Kraft argues the principle that general provisions do not override specific provisions is not violated because § 1391(c) does not “override” § 1400(b), but rather provides a definition to the statutorily undefined term “resides.” Second, the Federal Circuit was justified in disregarding Fourco, Kraft argues, because the Supreme Court’s reasoning in that case was dependent upon the unique legislative history of the 1948 recodification of the Judicial Code. Kraft maintains that the 1988 and 2011 amendments made substantive textual changes to § 1391(c), and the legislative history to the 2011 amendments demonstrates a congressional intention to expand § 1391(c)’s definition of “residency” to apply to all venue provisions. Third, the Federal Circuit did not “find an elephant in a mousehole,” Kraft argues, because regardless of the 1988 amendments, the 2011 amendments clearly purported to, and did, substantively reshape the statutory venue provisions of Title 28.

TEXT AND STRUCTURE OF THE 2011 AMENDMENTS

TC Heartland argues that even if VE Holding was a permissible interpretation of the 1988 amendments to § 1391(c), that interpretation is foreclosed by the text and structure of the 2011 amendments. TC Heartland maintains that the new § 1391 governs venue in all civil actions “except as otherwise provided by law.” TC Heartland maintains that the Supreme Court’s holding in Fourco, that § 1400(b) is the “sole and exclusive” venue provision in patent infringement actions, is case law interpreting a statute, and is therefore a type of “law” referred to in § 1391(a). As a result, TC Heartland contends that § 1391(a)’s carve-out is triggered, and § 1391(c)’s definition of “resides” does not extend to § 1400(b). TC Heartland further argues that Fourco, and not VE Holding, is the controlling case law on the subject of § 1400(b) because a lower court cannot “judicially settle” statutory questions in patent cases. In addition, TC Heartland maintains that VE Holding undermines the structure of the patent venue statute. TC Heartland argues that the Federal Circuit’s interpretation renders the second half of § 1400(b) irrelevant because “where the defendant has committed acts of infringement and has a regular and established place of business” will, by definition, always be a district where the defendant is subject to personal jurisdiction.

Kraft takes the inverse position, arguing that even if VE Holding was an impermissible interpretation of the 1988 amendments to § 1391(c), that interpretation is now required by the text and structure of the 2011 amendments. The new § 1391(c) specifies that the provision applies “[f]or all venue purposes,” which includes patent venue purposes. This interpretation, Kraft argues, is supported by § 1390(a), which defines “venue” to mean the geographically proper court for litigating a civil action, excluding grants or restrictions of subject-matter jurisdiction. Section § 1400(b), Kraft continues, provides for civil actions and does not grant or restrict subject-matter jurisdiction, and therefore under § 1390(a) it has a “venue purpose” and is subject to § 1391(c)’s definition of “resides.” Kraft also disputes TC Heartland’s argument that the Federal Circuit’s interpretation renders the second half of § 1400(b) irrelevant. Kraft counters that the provision retains some residual purpose because the personal-jurisdiction-based residency definition found in § 1391(c)(2) only applies to business organizations. Residency for natural individuals continues to be defined as domicile under § 1391(c)(1), and therefore the second half of § 1400(b) still applies with full force to non-corporate patent infringement defendants.