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Kraft Foods Group sued TC Heartland in Delaware for infringement of Kraft’s patents.  Heartland is an Indiana company that is headquartered in Indiana.  Heartland is not registered to do business in Delaware, has no local presence in Delaware, has not entered into any supply contracts in Delaware or called on any accounts there to solicit sales. But Heartland admitted it ships orders of the accused products into Delaware pursuant to contracts with two national accounts (about 2% of annual sales).  Heartland moved to dismiss for lack of personal jurisdiction or to transfer to Indiana.  The Delaware district court denied Heartland’s motion.  Heartland seeks an order directing the Federal Circuit to either dismiss the case or transfer to Indiana.

With respect to venue, Heartland contends that it does not “reside” in Delaware for venue purposes according to 28 U.S.C. § 1400(b).  Heartland contends that Congress’ 2011 amendments to 28 U.S.C. § 1391 changed the statutory law, effectively overruling VE Holdings, in which the Federal Circuit held that the definition of corporate residence in the general venue statute, § 1391(c), applied to the patent venue statute, 28 U.S.C. § 1400.  The court analyzed the 2011 amendments and held that they broadened the definition of corporate residence and did not narrow it, as Heartland argues. 

With respect to personal jurisdiction, Heartland argued that the Delaware court should only have jurisdiction over the 2% of sales it makes in Delaware and should have no jurisdiction over the 98% of sales in other states.  This view, however, contradicts Beverly Hills Fan, which held that the due process requirement that a defendant have sufficient minimum contacts with the forum was met where a nonresident defendant purposefully shipped accused products into the forum through an established distribution channel and the cause of action for patent infringement was alleged to arise out of those activities.  Under that case, which controls, there is personal jurisdiction over Heartland in Delaware. 

In re: TC Heartland LLC, Case No. 2016-105 (April 29, 2016); Opinion by: Moore, joined by Lin and Wallach; Appealed From: On Petition for Writ of Mandamus from the United States District Court for the District of Delaware, Stark, J. Read the full opinion here.

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