In Re: Tc Heartland LLC

United States Court of Appeals
for the Federal Circuit
______________________
IN RE: TC HEARTLAND LLC,
Petitioner
______________________
2016-105
______________________
On Petition for Writ of Mandamus to the United
States District Court for the District of Delaware in No.
1:14-cv-00028-LPS, Chief Judge Leonard P. Stark.
______________________
ON PETITION
______________________
JOHN F. DUFFY, Hughes Hubbard & Reed LLP, Wash-
ington, DC, argued for petitioner. Also represented by
JAMES W. DABNEY, RICHARD KOEHL, STEFANIE M.
LOPATKIN, WANDA DELORIS FRENCH-BROWN, New York,
NY.
JOHN DAVID LUKEN, Dinsmore & Shohl LLP, Cincin-
nati, OH, argued for respondent. Also represented by
JOSHUA LORENTZ.
BRIAN DAVID LEDAHL, Russ August & Kabat, Los An-
geles, CA, for amici curiae Guy Fielder, Jon D. Paul,
Network-1 Technologies, Inc., Neurografix, Paul Morin-
ville, Scientific Telecommunications, LLC, US Inventor,
Inc. Also represented by MARC AARON FENSTER.
2 IN RE: TC HEARTLAND LLC
VERA RANIERI, Electronic Frontier Foundation, San
Francisco, CA, for amici curiae Electronic Frontier Foun-
dation, Public Knowledge, Engine Advocacy. Also repre-
sented by CHARLES DUAN, Public Knowledge, Washington,
DC.
JOHN D. VANDENBERG, Klarquist Sparkman, LLP,
Portland, OR, for amici curiae Acushnet Company, Adobe
Systems Incorporated, Asus Computer International,
Demandware, Inc., Dropbox, Inc., Ebay, Inc., Google Inc.,
HP Inc., HTC America, Inc., InterActiveCorp, Intuit, Inc.,
L Brands, Inc., Lecorpio LLC, LinkedIn Corp., Macy’s,
Inc., Newegg Inc., North Carolina Chamber, North Caro-
lina Technology Association, QVC, Inc., SAP America,
Inc., SAS Institute Inc., Symmetry LLC, Vizio, Inc.,
Xilinx, Inc. Also represented by ROBERT TODD CRUZEN,
KLAUS H. HAMM.
______________________
Before MOORE, LINN, and WALLACH, Circuit Judges.
MOORE, Circuit Judge.
ORDER
TC Heartland LLC (“Heartland”) petitions for a writ
of mandamus to direct the United States District Court
for the District of Delaware to either dismiss or transfer
the patent infringement suit filed against it by Kraft
Foods Group Brands LLC (“Kraft”). We deny Heartland’s
petition.
BACKGROUND
Heartland is a limited liability company organized
and existing under Indiana law and headquartered in
Indiana. Kraft Foods Grp. Brands LLC v. TC Heartland,
LLC, No. 14-28-LPS, 2015 WL 4778828, at *1 (D. Del.
Aug. 13, 2015) (“Magistrate’s Report”). Respondent Kraft
is organized and exists under Delaware law and its prin-
IN RE: TC HEARTLAND LLC 3
cipal place of business is in Illinois. Id. Kraft filed suit
against Heartland in the United States District Court for
the District of Delaware alleging that Heartland’s liquid
water enhancer products (“accused products”) infringe
three of Kraft’s patents. Id. at *1–2. Heartland moved to
dismiss the complaint under Federal Rule of Civil Proce-
dure 12(b)(2) for lack of personal jurisdiction. Id. at *1. It
also moved to either dismiss the action or transfer venue
to the Southern District of Indiana under 28 U.S.C.
§§ 1404 and 1406. Id.Before the district court, Heartland alleged that it 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. In 2013, these shipments,
which contained 44,707 cases of the accused product that
generated at least $331,000 in revenue, were about 2% of
Heartland’s total sales of the accused products that year.
The Magistrate Judge, applying, inter alia, our precedent
from Beverly Hills Fan Co. v. Royal Sovereign Corp., 21
F.3d 1558, 1571 (Fed. Cir. 1994), determined that it had
specific personal jurisdiction over Heartland for claims
involving the accused products. He also rejected Heart-
land’s arguments that Congress’ 2011 amendments to 28
U.S.C. § 1391 changed the law governing venue for patent
infringement suits in a manner which nullified our hold-
ing in VE Holding Corp. v. Johnson Gas Appliance Co.,
917 F.2d 1574 (Fed. Cir. 1990). The district court adopted
the Magistrate Judge’s report in all respects and denied
Heartland’s motions. Kraft Foods Grp. Brands LLC v. TC
Heartland, LLC, No. 14-28-LPS, 2015 WL 5613160, at *1–
2 (D. Del. Sept. 24, 2015) (“District Court Order”). In so
doing, the district court specifically stated that the Magis-
trate Judge correctly concluded that Beverly Hills Fan
governed the personal jurisdiction analysis and that
4 IN RE: TC HEARTLAND LLC
Congress’ 2011 amendments to 28 U.S.C. § 1391 “did not
undo” our decision in VE Holding. Id. We agree.
DISCUSSION
A writ of mandamus is an extraordinary remedy ap-
propriate only in exceptional circumstances, such as those
amounting to a judicial “usurpation of power” or a clear
abuse of discretion. Cheney v. U.S. Dist. Court for the
Dist. of Columbia, 542 U.S. 367, 380 (2004). Three condi-
tions must be satisfied before issuing the writ: 1) the
petitioner must have no other adequate means to attain
the relief he desires; 2) the petitioner has the burden to
show his right to mandamus is “clear and indisputable”;
and 3) the issuing court must be satisfied that the writ is
appropriate under the circumstances. Id. at 380–81. The
parties do not address all three parts of the Cheney test in
their briefing, focusing instead on only the second part.
We likewise confine our analysis to only the second part of
the Cheney test.
Heartland argues that it is entitled to a writ of man-
damus based on two legal theories. First, it argues that it
does not “reside” in Delaware for venue purposes accord-
ing to 28 U.S.C. § 1400(b). Second, it argues that the
Delaware district court lacks specific personal jurisdiction
over it for this civil action. We conclude that a writ of
mandamus is not warranted. The arguments raised
regarding venue have been firmly resolved by VE Hold-
ing, a settled precedent for over 25 years. The arguments
raised regarding personal jurisdiction have been defini-
tively resolved by Beverly Hills Fan, a settled precedent
for over 20 years. As a panel, we are bound by the prior
decisions of this court.
A. Venue
With respect to venue, Heartland argues that Con-
gress’ 2011 amendments to 28 U.S.C. § 1391 changed the
statutory law in a manner which effectively overruled VE
IN RE: TC HEARTLAND LLC 5
Holding: “To be clear, the argument set forth here is that
this Court’s holding in VE Holding no longer applies given
the changed language in §§ 1391(a) and (c).” Pet. 9. We
do not agree. In VE Holding, this court 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 2011 amendments to the general
venue statute relevant to this appeal were minor. The
language preceding the definition of corporate residence
in § 1391 was changed from “For the purposes of venue
under this chapter . . .” to “For all venue purposes . . . .”
Compare 28 U.S.C. § 1391(c) (1988) with 28 U.S.C.
§ 1391(c) (2011). This is a broadening of the applicability
of the definition of corporate residence, not a narrowing.
This change in no manner supports Heartland’s argu-
ments.
The only other relevant 2011 amendment is the addi-
tion of the language in § 1391(a), “Applicability of sec-
tion.--Except as otherwise provided by law.” Heartland
argues that the “law” otherwise defined corporate resi-
dence for patent cases and therefore the statutory defini-
tion found in § 1391(c) is no longer applicable to patent
cases. As Heartland itself acknowledges, “most special
venue statutes have not been held to encompass particu-
lar rules about residency, and thus subsection (c) can
apply to such statutes wherever they are found in the
U.S. Code.” Pet. 7–8. The patent venue statute, 28
U.S.C. § 1400(b), provides in its entirety: “Any civil action
for patent infringement may be brought in the judicial
district where the defendant resides, or where the defend-
ant has committed acts of infringement and has a regular
and established place of business.” It is undisputed that
the patent venue statute itself does not define corporate
residence and thus there is no statutory “law” that would
satisfy Heartland’s claim that Congress intended in 2011
to render § 1391(c)’s definition of corporate residence
inapplicable to venue for patent cases. However, Heart-
6 IN RE: TC HEARTLAND LLC
land argues that Congress intended to include federal
common law limited to Supreme Court precedent in the
law which could otherwise define corporate residence and
thus render the statutory definition of § 1391(c) inappli-
cable. 1 Accepting without deciding whether Heartland is
correct that “except as otherwise provided by law” in-
cludes such federal common law, Heartland has not
established that federal common law actually supports its
position. Heartland asks us to presume that in the 2011
amendments Congress codified the Supreme Court’s
decision in Fourco Glass Co. v. Transmirra Products
Corp., 353 U.S. 222 (1957) regarding the patent venue
statute that was in effect prior to the 1988 amendments.
We find this argument to be utterly without merit or logic.
The venue statute was amended in 1988 and in VE Hold-
ing, this court held that those amendments rendered the
statutory definition of corporate residence found in § 1391
applicable to patent cases. In VE Holding, we found that
the Supreme Court’s decision in Fourco with regard to the
appropriate definition of corporate residence for patent
cases in the absence of an applicable statute to be no
longer the law because in the 1988 amendments Congress
had made the definition of corporate residence applicable
to patent cases. 28 U.S.C. § 1391(c) (1988) (“For the
purposes of venue under this chapter”). In 1988, the
common law definition of corporate residence for patent
cases was superseded by a Congressional one. Thus, in
2011, there was no established governing Supreme Court
common law ruling which Congress could even arguably
1 Dubitante: Heartland’s briefs cite nothing to sup-
port its idea that the general statement “except as other-
wise provided by law” was meant to codify Supreme Court
common law. And the briefs do not cite a single case
holding that Congress codified Supreme Court common
law into a statute using such general language like that
at issue here.
IN RE: TC HEARTLAND LLC 7
have been codifying in the language “except otherwise
provided by law.”
Heartland cites to a single sentence in a footnote in
the Supreme Court’s decision in Atlantic Marine Con-
struction Co. v. United States District Court for the West-
ern District of Texas, 134 S. Ct. 568, 577 n.2 (2013), to
argue “the Supreme Court showed its belief that § 1391 is
not applicable to patent cases, and § 1400 is.” Reply 9.
Heartland’s argument misses its mark. The Supreme
Court’s footnote states in its entirety: “Section 1391
governs ‘venue generally,’ that is, in cases where a more
specific venue provision does not apply. Cf., e.g., § 1400
(identifying proper venue for copyright and patent suits).”
Atl. Marine Constr. Co., 134 S. Ct. at 577 n.2. It is un-
disputed that § 1400 is a specific venue provision pertain-
ing to patent infringement suits. But what Heartland
overlooks, and what Atlantic Marine does not address, is
that § 1400(b) states that venue is appropriate for a
patent infringement suit “where the defendant resides”
without defining what “resides” means when the defend-
ant is a corporation. The general statement in this foot-
note is completely accurate, but cannot be transmogrified
into the argument made by Heartland. “[T]he general
statute, § 1391(c), expressly reads itself into the specific
statute, § 1400(b),” “only operates to define a term in
§ 1400(b),” and does not “conflict with § 1400(b).” VE
Holding, 917 F.2d at 1580.
Heartland has presented no evidence which supports
its view that Congress intended to codify Fourco in its
2011 amendments. In fact, before and after these
amendments, in the context of considering amending the
patent venue statute, Congressional reports have repeat-
edly recognized that VE Holding is the prevailing law.
See H.R. Rep. No. 110–314, at 39–40 (2007); S. Rep. No.
110–259, at 25 (2008); H.R. Rep. No. 114–235, at 34
(2015) (stating that “Congress must correct” our holding
in VE Holding by amending § 1400); cf. Venue Equity and
8 IN RE: TC HEARTLAND LLC
Non-Uniformity Elimination Act of 2016, S. 2733, 114th
Cong. § 2(a) (2016). 2 Even if Congress’ 2011 amendments
were meant to capture existing federal common law, as
Heartland argues, regarding the definition of corporate
residence for venue in patent suits, Fourco was not and is
not the prevailing law that would have been captured.
We reject Heartland’s argument that in 2011 Congress
codified the common law regarding venue in patent suits
as described in Fourco.
B. Personal Jurisdiction
Heartland’s argument regarding personal jurisdiction
in this case is, as the Magistrate Judge noted, difficult to
follow. 3 Heartland appears to be arguing that 1) the
Supreme Court’s recent decision in Walden v. Fiore, 134
S. Ct. 1115, 1121 n.6 (2014), makes clear that specific
personal jurisdiction can only arise from activities or
occurrences taking place in the forum state, and
2) Federal Circuit case law makes clear that each act of
patent infringement gives rise to a separate cause of
action, such that 3) the logical combination of these two
points of law means that the Delaware district court has
specific personal jurisdiction over Heartland for allegedly
infringing acts that occurred in Delaware only, not those
2 In fact, the 2007 House Report indicates that the
House Judiciary Committee “believes that simply return-
ing to the 1948 venue framework [i.e., that described in
Fourco] would be too strict for modern patterns of tech-
nology development and global commerce.” H.R. Rep. No.
110–314, at 40 (2007).
3 It appears that Heartland does not contest juris-
diction under Delaware’s long-arm statute. As such, we,
like the district court, interpret Heartland’s argument to
be that the Delaware district court lacks specific personal
jurisdiction under the Due Process Clause of the Four-
teenth Amendment.
IN RE: TC HEARTLAND LLC 9
occurring in other states. 4 Applied to the facts of record,
under Heartland’s argument, the Delaware district court
would only have specific personal jurisdiction over the
approximately 2% of Heartland’s 2013 sales of the ac-
cused product (i.e., 44,707 cases of the accused product
that generated at least $331,000 in revenue) that Heart-
land shipped into Delaware. Thus, to resolve nationwide
the same issues as in this Delaware infringement suit,
Kraft would have to bring separate suits in all other
states in which Heartland’s allegedly infringing products
are found. Alternatively, under Heartland’s argument,
Kraft could opt to bring one suit against Heartland in
Heartland’s state of incorporation. 5
4 Heartland argues even for the 2% of products it
shipped to Delaware it did not “purposefully avail” itself
of the privilege of conducting activities in Delaware and
thus the due process requirement for specific personal
jurisdiction is not met. Heartland has not established
that it is clearly and indisputably entitled to relief on this
point.
5 In its Reply and its rebuttal at oral argument,
Heartland made a new argument that it asserts is a
“complete answer:” that Kraft would be able to bring a
single suit in a jurisdiction other than where Heartland is
incorporated because “[u]nder Federal Rule of Civil Pro-
cedure 4(k)(1)(C), a patentee can obtain personal [jurisdic-
tion] by serving process under [28 U.S.C.] § 1694 and
thereby obtain complete relief in any district where a
defendant ‘has committed acts of infringement and has a
regular and established place of business.’” Reply 1
(quoting 28 U.S.C. § 1400(b)). Heartland did not raise
this argument before the district court. In fact, Heartland
made a contradictory argument before the district court,
stating in its opening brief to the Magistrate Judge that
“[t]here is no federal statute that authorizes service of
10 IN RE: TC HEARTLAND LLC
Heartland’s arguments are foreclosed by our decision
in Beverly Hills Fan. In that case, we held that the due
process requirement that a defendant have sufficient
minimum contacts with the forum was met where a non-
resident defendant purposefully shipped accused products
into the forum through an established distribution chan-
nel and the cause of action for patent infringement was
alleged to arise out of those activities. Beverly Hills Fan,
21 F.3d at 1565; see also Acorda Therapeutics Inc. v.
Mylan Pharm. Inc., Nos. 2015-1456, 2015-1460, 2016 WL
1077048, at *7 (Fed. Cir. Mar. 18, 2016) (determining that
the minimum contacts requirement was met where a
defendant contracted with a network of independent
wholesalers and distributors to market the accused prod-
uct in Delaware, the forum state). Such is the case here.
Heartland admits that it shipped orders of the accused
products directly to Delaware under contracts with what
it characterizes as “two national accounts” that are head-
quartered outside of Delaware. And Heartland does not
dispute that Kraft’s patent infringement claims arise out
of or relate to these shipments. This is sufficient for
minimum contacts.
originating process in patent cases, so Federal Rule of
Civil Procedure 4(k)(1)(C) does not apply.” Heartland’s
Opening Br. at 5, Kraft Foods Grp. Brands LLC v. TC
Heartland, LLC, No. 14-28-LPS (D. Del. June 23, 2014),
ECF No. 8. And Heartland did not raise this argument in
its petition for a writ of mandamus. Thus, Kraft did not
have an opportunity to respond to Heartland’s new argu-
ment, and, based on Heartland’s arguments before the
district court, it would not have expected to face such an
argument. Heartland’s belated raising of this new argu-
ment is especially inappropriate in the context of a peti-
tion for a writ of mandamus.
IN RE: TC HEARTLAND LLC 11
We also held in Beverly Hills Fan that, even where
there are sufficient minimum contacts under a stream of
commerce theory or otherwise, due process also requires
that a forum’s assertion of jurisdiction be reasonable,
considering all the facts and circumstances of a case.
Beverly Hills Fan, 21 F.3d at 1568; see also Int’l Shoe Co.
v. Washington, 326 U.S. 310, 316 (1947) (explaining that
due process requires that “maintenance of the suit does
not offend ‘traditional notions of fair play and substantial
justice’”). We explained that the forum state had signifi-
cant interests in discouraging injuries that occur within
the state, such as patent infringement, and in cooperating
with other states to provide a forum for efficiently litigat-
ing a plaintiff’s cause of action. Beverly Hills Fan, 21 F.3d
at 1568. We further explained that the plaintiff could
seek redress in the forum state for sales of the accused
product in other states, thereby sparing other states the
burden of also having to provide such a forum and pro-
tecting defendants from being harassed with multiple
infringement suits. Id. And we explained that the bur-
den on the defendant did not appear particularly signifi-
cant and was not sufficiently compelling to outweigh the
plaintiff’s and the forum state’s interests. Id. at 1569.
Heartland does not argue that the district court’s exercise
of jurisdiction is unreasonable, nor does it dispute that
the balance of the plaintiff’s and forum state’s interests
against the burdens imposed on it is any different than
those in Beverly Hills Fan. Instead, it argues that our
statement in Beverly Hills Fan that a forum state could
hear claims for infringing acts occurring outside of the
forum state was dictum. We do not agree. Heartland also
argues that we ought to be guided by the Supreme Court’s
footnote in Walden. We are bound by Beverly Hills Fan
and the Supreme Court’s general statement in Footnote 6
of Walden cannot be read to overturn sub silentio Beverly
Hills Fan.
12 IN RE: TC HEARTLAND LLC
CONCLUSION
Heartland’s arguments are foreclosed by our long
standing precedent. Heartland has thus failed to show
that its right to mandamus is clear and indisputable.
Accordingly,
IT IS ORDERED THAT:
The petition for a writ of mandamus is denied.
FOR THE COURT
April 29, 2016 /s/ Daniel E. O’Toole
Date Daniel E. O’Toole
Clerk of Court