The U.S. Supreme Court’s May 22, 2017 decision in TC Heartland effectively shifts a significant number of patent litigations out of courts previously deemed acceptable to courts in other venues in which the defendant corporation is incorporated. In reaching this decision, the Supreme Court relied upon its 1957 decision in Fourco Glass interpreting the patent venue statute.
Defendant corporations in Cobalt Boats v. Sea Ray Boats and Brunswick, a patent case scheduled to start trial in Virginia federal court on June 12, 2017, sought to take advantage of the new venue decision. They moved to transfer venue back to Tennessee, citing TC Heartland for the proposition that venue is improper in Virginia. In order to succeed on the motion, the defendants had to overcome the argument that they waived their venue challenge by not timely asserting it. Defendants argued waiver did not apply because they reasonably relied on the Federal Circuit – an intermediary appellate court hearing all patent appeals — and its determination over 20 years ago that Fourco Glass was not good law. Their motion was denied: Order dated June 2, 2017 denying motion to transfer.
The ruling is of special significance to the many pending patent cases that presumably qualify under TC Heartland for transfer to another venue. It suggests that notwithstanding the Supreme Court’s decision these cases will not be transferred.
Similar to Sea Ray Boats and Brunswick, many of the defendants in these other cases have not timely challenged venue. Under the Virginia court’s analysis, they have therefore waived any right to challenge venue — while their failure to timely interpose an objection may have been reasonable in view of long-standing Federal Circuit precedent, it is not a legitimate exception to waiver.
Based on the Supreme Court’s holding in TC Heartland, Fourco has continued to be binding law since it was decided in 1957, and thus, it has been available to every defendant since 1957. Accordingly, the Court FINDS that TC Heartland does not qualify for the intervening law exception to waiver because it merely affirms the viability of Fourco. Defendant Brunswick’s assumption that Fourco was no longer good law was reasonable but wrong, and it cannot be excused from its waiver by saying there was a change in the law.