Supreme Court Narrows Choice of Court to File Patent Infringement Actions

The Supreme Court used a dispute over flavored drink mix to settle a question regarding the proper venue for patent infringement actions, unanimously ruling in TC Heartland LLC v. Kraft Foods Group Brands LLC, No. 16-341, that such actions, when brought in the venue where a defendant corporation “resides”, may only be brought in the judicial district where the corporation is incorporated.

The patent venue statute, 28 U.S.C. §1400(b), provides that patent infringement actions 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.”  Interpreting that law in Fourco Glass Co. v. Transmirra Prods. Corp., the Supreme Court held that a domestic corporation “resides” only in its state of incorporation for patent venue– differing from the general venue statute, 28 U.S.C. §1391(c), which provided that a corporate defendant “resides” in any state in which it is subject to personal jurisdiction, including any state in which the corporation conducts a sufficient amount of business.  A 1988 congressional amendment to the general venue statute appeared to expand its scope and undermine the holding in Fourco.  Indeed, in 1990, the Court of Appeals for the Federal Circuit held that the general venue statute had generally supplanted the patent venue statute, and that corporations could be sued for patent infringement in any venue where the corporation was subject to personal jurisdiction.

However, the Supreme Court held in TC Heartland that Congress did not intend to supplant or change the meaning of the patent venue statute as set forth in Fourco.  The Court noted, among other things, that congressional amendments to the general venue statute in 2011 clarified that it does not apply when venue is “otherwise provided by law,” and deleted statutory language broadening the scope of the law.

Although the Court’s ruling is technical in nature, it will have a real effect on where patent infringement plaintiffs can file lawsuits.  Commentators have predicted that the decision will increase litigation in Delaware, New York, and California.

For more information on intellectual property law or the implications of TC Heartland, please contact Kathleen Barnett Einhorn, Esq., Director of the firm’s Complex Commercial Litigation Group at keinhorn@genovaburns.com, or Jennifer Borek, Esq., a Partner in the Complex Commercial Litigation Group at jborek@genovaburns.com.

Share

Supreme Court Clarifies Rules on International Service by Mail

Resolving an issue that has divided state courts and the federal circuit courts, the U.S. Supreme Court ruled today in Walter Splash, Inc. v. Menon, No. 16-254, that the Hague Convention on the Service Abroad of Judicial and Extrajudicial Documents in Civil and Commercial Matters (referred to colloquially as the Hague Service Convention), permits parties to serve documents by mail so long as the recipient’s country has not objected.

At issue was Article 10(a) of the Hague Service Convention, which reads: “Provided the State of destination does not object, the present Convention shall not interfere with— (a) the freedom to send judicial documents, by postal channels, directly to persons abroad.”  Rejecting a narrower reading, the Court held that the phrase “send judicial documents” must be read broadly to include service of initial process.  The Service Convention allows for service by mail, the Court reiterated, if the recipient’s country has not objected and such service is otherwise authorized under applicable law.

Beyond resolving a previously unresolved issue, Justice Alito’s unanimous opinion for the Court is notable for another reason:  unlike other opinions interpreting domestic statutes in which Justice Alito and other Justices have refused to look at “legislative history,” the Walter Splash decision looks to various “external” sources as an aid to interpretation.  The French version of the Hague Service Convention must also be considered as “equally authentic,” Justice Alito wrote, and it includes the word addresser, which has been interpreted to mean “service or notice.”  Justice Alito also pointed to the statements and testimony of Philip Amram, member of the U.S. delegation involved in drafting Hague Service Convention, and his article written shortly after the treaty’s passage, earlier drafts of the Convention, which stated that service by mail would be allowed.  Justice Alito also pointed to the decisions of courts in other countries – Canada, the U.K., Greece, and the Court of Justice of the European Communities – that have similarly decided the issue.

For more information about the Hague Service Convention or managing litigation against a non-U.S. based entity please contact Kathleen Barnett Einhorn, Esq., Chair of the Firm’s Complex Commercial Litigation Group, at keinhorn@genovaburns.com or Jennifer Borek, Esq., Partner in the Complex Commercial Litigation Group, at jborek@genovaburns.com.

 

Share

Supreme Court to Review Whether “Offensive” Names Can Be Trademarked

The U.S. Supreme Court agreed today to review the Federal Circuit’s decision to strike down the Lanham Act’s ban on “disparaging” trademarks.  The case, Lee v. Tam, No. 15-1293, involved an Asian American dance-rock band’s attempt to trademark their name THE SLANTS. The U.S Patent and Trademark Office (USPTO) refused, citing the Lanham Act’s prohibition on “disparaging” trademarks. The Federal Circuit held that this prohibition violated trademark applicants’ First Amendment Rights. (See Litigation Law Blog’s previous post about the Federal Circuit’s decision from December 23, 2015.)

The Supreme Court’s decision could impact the more famous battle over an attempt to cancel the trademark registration for the NFL’s Washington Redskins as disparaging to Native Americans.

In the Washington Redskins case, a federal district court had ruled that the football team’s trademark disparaged Native Americans.  The team had appealed the case to the Fourth Circuit Court of Appeals, which was scheduled to hold oral argument in December.  On October 18, 2016, the Fourth Circuit agreed to stay consideration of the appeal until the Supreme Court decides Lee v. Tam.

For more information on the Lanham Act or the Supreme Court’s grant of certiorari in Lee v. Tam, please contact Kathleen Barnett Einhorn, Esq., Chair of the Firm’s Complex Commercial Litigation Group, at keinhorn@genovaburns.com or Jennifer Borek, Esq., Partner in the Complex Commercial Litigation Group, at jborek@genovaburns.com.

Share

Supreme Court Reiterates the FAA’s Preemptive Authority

On Monday, the United States Supreme Court in DIRECTV, Inc. v. Imburgia, 577 U.S. ___, No. 14-462, slip op. at 1 (Dec. 14, 2015), doubled down on its previous holdings that the Federal Arbitration Act (“FAA”) preempts state law judicial interpretations that do not place arbitration contracts “on an equal footing with all other contracts.” Imburgia is the Supreme Court’s latest rebuke of state courts that are hostile to arbitration clauses and class-arbitration waivers, and signals to lower courts that they may not utilize state contract law principles to interpret arbitration provisions so as to end-run the mandates of the FAA.

In 2005, the California Court of Appeal held in Discover Bank v. Superior Court that class-arbitration waivers were unenforceable in “consumer contract[s] of adhesion” that “predictably involve[d] small amount of damages” and met certain other criteria (known as the Discover Bank rule). In 2011, the Supreme Court decided AT&T Mobility LLC v. Concepcion, which held that the FAA preempts state law that bars enforcement of arbitration agreements if such agreements do not permit parties to utilize class-action procedures in arbitration or in court, thus invalidating the Discover Bank rule. The Supreme Court found that the Discover Bank rule stood as an “obstacle to the accomplishment and execution of the full purposes and objectives” of the FAA.

Compounding on its holding in Concepcion, the Supreme Court in Imburgia declared that Section 2 of the FAA preempts state law interpretation of a contract’s arbitration provision based on a rule that the state’s courts had applied only in the arbitration context, concluding that such a ruling “does not rest ‘upon such grounds as exist . . . for the revocation of any contract.’”

In Imburgia, Petitioner DIRECTV, Inc. entered into a service agreement with customers containing an arbitration provision governed by the FAA that provided for a class-arbitration waiver reading: “if the ‘law of your state’ makes the waiver of class arbitration unenforceable, then the entire arbitration provision ‘is unenforceable.’” Following a class action brought by Respondents in California state court, DIRECTV moved to compel arbitration, which was denied by the trial court. The California Court of Appeal affirmed, holding that the “law of your state” language in the arbitration provision meant that that the parties had agreed that California’s Discover Bank rule would govern, notwithstanding the holding of Concepcion.

The Supreme Court, by a 6-3 vote, reversed and remanded, finding that because such an interpretation of the arbitration clause was “unique, restricted to that field,” and because “California courts would not interpret contracts other than arbitration contracts the same way,” the interpretation was impermissible as preempted by the FAA. Going forward, the Supreme Court has made explicit that arbitration agreements, and specifically class-arbitration waivers, should be enforced by state courts—even in the face of a state’s former invalidation of such waivers. Imburgia stands as the latest in a series of pro-arbitration rulings under Chief Justice Roberts, and instructs states that its courts may not use novel interpretations of state contract law to intrude on otherwise valid arbitration agreements.

For more information on the FAA or implications of DIRECTV, Inc. v. Imburgia, please contact Kathleen Barnett Einhorn, Esq., Director of the firm’s Complex Commercial Litigation Group, at keinhorn@genovaburns.com.

Share