In re TC Heartland, LLC

In re TC Heartland, LLC,
821 F.3d 1338 (Fed. Cir. 2015)
Authored by Amanda Block

Statement of Facts: Kraft Foods Group Brands LLC (“Kraft”) filed suit against TC Heartland LLC, (“Heartland”) alleging that Heartland’s liquid water enhancement products infringe three of Kraft’s patents. Heartland is a limited liability company organized under Indiana law with its headquarters in Indiana. It has contracts with two national accounts, under which the company ships the accused products into Delaware. In 2013, Heartland shipped 44,707 cases of the accused product into Delaware, generating $331,000, which is about 2% of their total sales of that product for the year.

Procedural History: Kraft filed suit against Heartland in the United States District Court for the District of Delaware, alleging that Heartland infringed three patents. Heartland moved to dismiss the complaint for lack of personal jurisdiction under Federal Rule of Civil Procedure 12(b)(2). Heartland also moved to transfer venue to the Southern District of Indiana if the action was not dismissed for lack of jurisdiction. In ruling on the motions, the Magistrate Judge held that the court had specific personal jurisdiction over Heartland in regard to the accused products under Beverly Hills Fan Co. v. Royal Sovereign Corp., 21 F.3d 1558, 1571 (Fed. Cir. 1994) (“Beverly Hills Fan”). Further, the Magistrate Judge determined that Congress’s 2011 amendments to 28 U.S.C. § 1391 did not change the law governing venue for patent infringement suits in any way that invalidated the holding in VE Holding Corp. v. Johnson Gas Appliance Co., 917 F.2d 1574 (Fed. Cir. 1990) (“VE Holding”). The district court adopted the Magistrate Judge’s report and recommendation in full and denied Heartland’s motion. Heartland filed a petition for a writ of mandamus with the Federal Circuit.

Questions Presented: (1) Is the definition of corporate residence in applying the patent venue statute, 28 U.S.C. § 1400, governed by the general venue statute, 18 U.S.C. § 1391(c), or by federal common law? (2) Does the District Court of Delaware have specific personal jurisdiction over Heartland?

Holdings: The Federal Circuit held that a writ of mandamus is not warranted. (1) The court held that the definition of corporate residence in the general venue statute governs where an alleged infringer resides, rejecting Heartland’s argument that venue is governed by federal common law. (2) Further, pursuant to settled precedent in Beverly Hills Fan, Heartland had sufficient minimum contacts with Delaware to be sued in that jurisdiction.

Reasoning: A writ of mandamus is an extraordinary remedy that is only appropriate in special circumstances where there has been a judicial usurpation of power or a clear abuse of discretion, which is not the case here.

VE Holding already resolved Heartland’s venue arguments in holding that the definition of corporate residence in the general venue statute, § 1391(c), applies to the patent venue statute, 28 U.S.C. § 1400. The court rejected Heartland’s argument that the 2011 amendments to the general venue statute rendered the decision inapplicable. The amendments were minor, only changing “For the purposes of venue under this chapter . . .” to “For all venue purposes . . . .” 821 F.3d 1338, 1341 (Fed. Cir. 2015). The change in language broadens, not narrows, the applicability of the corporate residence definition.

The other 2011 amendment that Heartland referenced included the addition of language in § 1391(a), which states, “Applicability of section.—Except as otherwise provided by law.” Id. at 1341. Heartland argued that this makes § 1391(c) no longer applicable to patent cases. However, the patent venue statute does not define corporate residence, so there is no other “law” on point. The general statute defines a term in § 1400(b), and does not conflict with it.

The court also rejected Heartland’s argument that Congress intended for Supreme Court precedent to govern the definition of corporate residence, rendering § 1391(c) inapplicable, because in 2011 there was no Supreme Court ruling on the issue that the statute could have been codifying.

The holding in Beverly Hills Fan forecloses Heartland’s arguments regarding personal jurisdiction. The court held that there are sufficient minimum contacts to satisfy due process requirements when a non-resident defendant purposefully ships accused products into the forum through an established distribution channel and the cause of action arises out of those activities. Heartland admits that it directly shipped orders of the accused product into Delaware and that the claims arise out of or relate to these shipments, which satisfies the minimum contacts requirement. Delaware has a significant interest in discouraging injuries in the state and the circumstances here do not make the court’s exercise of discretion unreasonable or especially burdensome on Heartland. Heartland failed to show a clear and indisputable right to a writ of mandamus in regard to the venue and personal jurisdiction issues.

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