Choice of venue for patent litigation in the United States
Disclaimer: The information provided in this factsheet is meant as an educational resource only and should not be construed as legal advice.
- While litigation in your home country is preferred to proceedings abroad, Canadian companies in legal disputes regarding United States (US) patents with US entities will be required to accept a US venue.
- Historically, US plaintiffs would select venues more likely conducive to success based on items such as tests for infringement and awarding damages. The Eastern District of Texas was a popular choice of venue, considered favourable to plaintiffs, and represented almost half of all Intellectual Property (IP) infringement suits in the mid-2010’s up until 2017.
- In 2017, the US Supreme Court case TC Heartland LLC v. Kraft Foods Group Brands LLC resulted in a major change: Defendants could be sued only in districts where they are incorporated (“reside”) or have established business.
- The TC Heartland case, however, specifically does not mention what affect or change this would have for foreign companies.
- Since TC Heartland, cases have shifted to districts where corporations are commonly registered, such as Delaware and Northern California (e.g., SF/Silicon Valley companies). Eastern Texas has seen a decline in cases, but Western Texas is seeing an increase, especially among non-practicing entities (NPE’s).
- Delaware is especially popular and is considered more neutral to both parties as there are no unique local patent procedures in litigation. The districts of Northern & Central California are considered more favourable to defendants.
- In many scenarios, Canadian companies can still be sued in any US district for patent infringement.
- If a Canadian company is sued for infringement and has no US business presence, the Canadian company may be cornered into the venue of the plaintiff’s choosing. The plaintiff may even establish operations in a plaintiff-friendly district in advance of the suit.
- If, however, the Canadian company opens a US subsidiary, the plaintiff may be (but not necessarily*) forced to litigate in that district instead.
*“US law is still murky when it comes to US subsidiaries of foreign companies as it relates to venues in infringement cases. A Canadian company that just registered an empty US subsidiary yesterday very well could be denied a motion of transfer to their preferred venue based on a lack of proof of established business or residence in the district. It is better to plan ahead and consult a patent litigation expert in your desired district.” says Jordan Pynn, Vice President at Stratford Intellectual Property.
Example 1: CanuckHoser Inc. is an Ontario based widget maker, who exclusively operates in Ontario.
USTroll Inc., a non-practicing entity based in Western Texas that owns several widget-related patents, believes that CanuckHoser is infringing on said patents, and decides to sue.
Since CanuckHoser has no US presence, USTroll has chosen to file their suit in the Western District of Texas where they expect a favourable outcome.
CanuckHoser registers a second corporate entity, this one in San Francisco, California. Now, if USTroll wishes to sue they may be required to file in the Northern District of California. Since NDCA is considered more favorable to defendants, USTroll may give extra thought on whether it is prudent to move forward with the case, subject to caveat above.
Key considerations for Canadian companies:
- When opening US operations, consider doing so in a manner that would be considered sufficient to establish residence, keeping in mind how this might impact other business considerations.
- Consider the location of the new US entity and how it relates to district courts and their local patent rules.
- Consider locations that are historically more favourable to defendants.
- Consider researching IP litigators in your desired US district to find one best suited to your case and who is familiar with navigating the local patent procedures.
- If you are the plaintiff, give consideration to the defendant’s location and how that may affect venue choice and likelihood of success.
Additional information:
- For information about IP protection in the US, please see the Canadian Intellectual Property Office’s publication on Doing business abroad: Protecting your IP in the United States
- For more material relating to the export of goods to the US, please see the Doing Business in the United States page
- For more information on going global with your IP, visit Canada.ca/export-ip
