Supreme Court Clarifies Venue Rules for Patent Infringement Suits

During the course of my career, there have been numerous advances in both medical and surgical care. In fact, some of my own research has been used to change the management of some disease entities and has been used by others to make new medical devices. When I was a resident, I was advised by several of my attendings to never “make up” a new operation unless absolutely necessary. I have followed this advice but there were some extreme occasions where I had to think outside the box to save a a patient. These new ideas led to some basic research and then, as warranted, clinical studies.

During the early parts of my career, it never dawned on me to patent any new application and/or device; I was glad that something new that I had worked on could be used to help others. However, many medical schools, recognizing there may be economic reasons to patent new ideas, began to form groups to lay claim to intellectual property emanating from their employee’s research. It turns out that patent law is now a pretty big deal in medicine.

In law school, I took a course dealing with intellectual property. The topics covered included Trademark, Copyright, and Patent law. My undergraduate training in biomedical engineering made for a good foundation for this type of law as I was able to understand the science and math that were the underpinnings for Patent Law.

As for Copyright, I was surprised to learn that you could claim an ownership interest for anything you may have written and published in a “tangible medium of expression.” However, you should still register your work in case you ever need to bring a lawsuit for infringement since a registration within five years of the publication is considered prima facie evidence that the work is yours.

We are all familiar with the recent lawsuits emanating from the various “dot coms” suing each other for patent infringement. The financial stakes in this litigation can be astronomical. Previously, the location of the suits was critical as it could sway the outcome one way or another. A recent Supreme Court decision has changed this “forum” issue in hopes of leading to more uniformity in decision-making and cut back on the strategy of “forum shopping” by the interested parties.

In TC Heartland v. Kraft Foods Group Brands, the United States Supreme Court held, that as applied to domestic corporations, the residence of the corporation will be the State of incorporation, for the purposes of the patent venue statute. In this case, the petitioner, TC Heartland was a company that was organized under Indiana law. They made flavored fruit drink mixes. The respondent, Kraft Foods, was a competitor in the same market and this company was incorporated under Delaware law even though its primary place of business was in Illinois.

The issue in Heartland v. Kraft was whether the plaintiff (Kraft) could bring a patent infringement lawsuit against another corporation in any district where the defendant corporation is subject to the court’s personal jurisdiction with respect to the civil action. There is a general venue statute, 28 U.S.C. section 1391(c), which states that , “[e]xcept as otherwise provided by law” and “[f]or all venue purposes,” a corporation “shall be deemed to reside, if a defendant, in any judicial district in which such defendant is subject to the court’s personal jurisdiction with respect to the civil action in question.”

However, there is another law that deals specifically with patents. In 28 U.S.C. section 1400(b), “[a]ny civil action for patent infringement may be brought in the judicial district where the defendant resides, or where the defendant has committed acts of infringement and has a regular and established place of business.” In a previous Supreme Court ruling (see below), the Court held that for purposes of section 1400(b), a domestic corporation “resides” only its State of incorporation.

In this case, Kraft sued TC Heartland for patent infringement and brought the case to the District Court of Delaware even though TC Heartland was not registered to conduct business in Delaware and had no meaningful local presence in that state. However, it did ship the allegedly infringing products to that state. Kraft felt it would be better to have the suit heard in Delaware rather than the home state of TC Heartland. Of course, Heartland preferred to have the case transferred to the Southern District of Indiana where it felt it would have a more favorable court.

Heartland argued that it did not reside in Delaware under the first clause of section 1400(b), and it also argued that it did not have a regular place of business in Delaware under the second clause of section 1400(b). The District Court rejected these arguments holding that the definition of “resides” will be that found in section 1391(c). Under this definition, Delaware could excercise personal jurisdiction over TC Heartland. On appeal, the Federal Circuit agreed with the District Court.

The Supreme Court agreed to hear the case as to the venue issue and ended up reversing the holding of the Court of Appeals. In a previous decision, the Supreme Court held that the word “reside[nce] in section 1400(b) has a particular meaning as applied to domestic corporations: for patent purposes, it refers only to the State of incorporation.” (Fourco Glass Co. v. Transmirra Products Corp., 353 U.D. 222, 226) In a complex legal argument, the Court stated that subsequent laws did not change the venue statute as it applied to patent infringement cases.

Heartland wins on the venue issue and it looks like the case will now be heard in the courts of Indiana; unless a settlement is reached beforehand. This holding will probably lead to more patent infringement cases being heard in Delaware where many corporations “reside” and where the courts are more favorable to the companies incorporated there. It should lead to fewer cases being heard in courts which have a history of being more favorable to plaintiffs such as in the Eastern District of Texas.

One issue that has not yet been addressed is whether the courts will adapt the “established place of business” clause to include the internet which is being used by many companies to conduct business especially in retail sales. If the internet is deemed to be an “established place of business,” then we are likely to see a return to forum shopping by plaintiffs in patent infringement cases.

by Darryl S. Weiman, M.D., J.D.

Professor, Cardiothoracic Surgery, University of Tennessee Health Science Center and Chief of Surgery, VAMC Memphis, TN

MORE ABOUT THE AUTHOR: Darryl Weiman is a featured expert in on February 17, 2016. 

The Residency Match

Becoming a physician is a long and difficult process. Although most people are aware of the competitive nature of getting into medical school and the long hours of study, class work, and laboratories that must be successfully navigated in order to graduate, they are not aware of the necessity of getting into and finishing a residency in order to get a medical license.

Graduating from medical school allows one to be called “Doctor” with all of the privileges associated with that degree, but there is more to do if one is to be licensed to practice medicine. The states require at least one more year after medical school whereby the graduate acts as a resident in a formal resident training program. Even those who want to be a general practitioner (GP) must go through a year of training and then must pass the third part of the United States Medical Licensing Exam (USMLE) in order to get a license. Most residencies require more than one year; for surgeons, most have to go through a five year program before they become “Board eligible” in their surgical specialty. In my case, I did five years in general surgey and later, two more years for cardiothoracic. So I was “boarded” in two specialties.

Senior medical students go through a matching process in order to get into a residency. First they must choose the type of residency they want, e.g., surgery, medicine, psychiatry, Ob-Gyn, pediatrics. They must then apply to a place that has a training program in their chosen field. Eventually, a computer will match the applicant to a program.

Based on the advice of Val Willman, then the Chairman of Surgery at Saint Louis University (my medical school), I did senior rotations at the University of Chicago and Northwestern University. I was hoping to increase my chances of getting accepted to those programs by letting them see what I could do in a hospital setting. I wanted to get back to Chicago, my home town, and these were good programs for surgery training. I also applied to Baylor in Houston, Rush, Loyola University, the University of Illinois, the Medical College of Wisconsin, and, of course, Saint Louis University.

I ranked the University of Chicago number one but felt my chances of getting into such a high-powered, prestigious place were very slim. Most of the residents I had met during my rotation there were from from very well-known medical schools such as Harvard, Hopkins, Yale, and the University of Chicago. I wasn’t sure they would give a slot to someone from Saint Louis University, but, I was advised to aim high and that’s exactly what I did.

I had a great set of interviews at Baylor and I felt that was where I would match. They seemed to be impressed with my undergraduate degree in Biomedical Engineering and they knew Dr. Willman who had written me a strong letter of recommendation. The Baylor program was run by Michael Debakey, a world renown surgeon. It was known as a demanding program. Residents rotating on the cardiac surgery service spent 2-3 months in the hospital and were not allowed to leave. In fact, there was a story told of a resident who went down to the parking lot to see his wife. He was fired the next day for exiting the hospital. I felt I could do well in that environment since I was not married. I ranked Baylor #2.

The day that the senior medical student learns where he will be doing his residency training is called “Match Day.” Usually there a few days before the match where students that have not matched are informed as is their medical school. The national residency slots that are still open become available for these unmatched students and a scramble ensues whereby the programs that have open slots are able to contact available students that they are interested in. If the student accepts the offer, that slot disappears. Slots that are still available undergo the same process in a precisely timed order and, again, available students are given offers. The process continues until all slots are filled and, hopefully, all medical students have a job lined up for the next year, at least.

The original matching is done with a national computer match. The students make a ranked list of their residency choices and the various programs make a rank list of the students they would like for their programs. The computer, through some mathematical magic, will link the students with a program in such a way as to get the best match for the student and the programs.

We all knew what day the unmatched students would be notified so those of us who did not hear anything at least knew we were going to some program that was on our rank list. On the day of the match, the senior class all met in one large room and envelopes were handed out in alphabetical order. Since my last name began with a “W”, I had to wait till near the end to get my envelope. I opened the envelope and found that I had matched to my first choice—the University of Chicago. I was going back home to Chicago, hopefully for five or six years—the time required to complete the surgery program.

“…immune to ‘paper’ achievements; it was the process that held my interest.

…I was taught to think and act as a surgeon, to be open, empathetic, to handle very stressful situations no matter how exhausted I may have been. I am the result of what my mentors trained me to be.”

In becoming a physician, there are many memorable dates that stand out. Getting the first letter of acceptance to medical school, the day of medical school graduation where we all took the Hippocratic oath, match day when we learned where we would do our residency, the day we learned that we had passed our Boards. In order to become an independent practicing surgeon, all of these tickets had to be punched. All of the hard work, sacrifices, and hopes would not matter unless these requirements were successfully met.

In my case, passing the Bar Exam many years later was also important but by then I had become pretty much immune to “paper” achievements; it was the process that held my interest.

For me, my match day was 39 years ago. Having been subsequently successful on those other noted critical days, I never had to consider alternatives and for that I am thankful. I often have time for reflection where I remember those who directed me to medical school, those who helped me get into the residency program where several mentors helped to mold me both professionally and personally. I was taught to think and act as a surgeon, to be open, empathetic, to handle very stressful situations no matter how exhausted I may have been. I am the result of what my mentors trained me to be.

I hope that the young medical school graduates who have recently gone through the match have the same types of career and life satisfactions I have been fortunate to experience. Young doctors, go forth and make us proud.

by Darryl S. Weiman, M.D., J.D.

Professor, Cardiothoracic Surgery, University of Tennessee Health Science Center and Chief of Surgery, VAMC Memphis, TN

MORE ABOUT THE AUTHOR: Darryl Weiman is a featured expert in on February 17, 2016.