Of the 3,604 patent infringement suits filed in 2015, almost 40 percent (1,387) were brought in the Eastern District of Texas. What is so special about the Eastern District of Texas to warrant this flood of patent litigation? Is it a hotbed of innovation? Is it home to America’s largest technology companies? Is the annual Fire Ant Festival in Marshall, Texas a rip-roaring good time for families? The answers to those questions are no, no, and yes – respectively. However, the beloved local fair and music festival is not responsible for making the district a magnet for patent litigation (other than, perhaps, on the latest ant repellant technology).
Actually, the district has become a mecca for patent litigation because its plaintiff friendly characteristics make it an expensive place to defend yourself against an accusation of patent infringement. Broad local discovery rules require that you turn over pretty much every document and email you have, lengthy timelines for a summary judgment motion or a motion to transfer make the process time-consuming and the local jury pool has been historically friendly to plaintiffs by awarding outsized damages (although that is changing). The judges in the Eastern District of Texas grant summary judgment at less than one-third the rate as judges in other districts, according to a startling July 2015 study called Forum Selling by Daniel M. Klerman and Greg Reilly. The researchers also found that motions to transfer are successful only 34.5% of the time in the district versus 50% of the time in other major patent districts. Motions to stay a case pending re-examination or other proceedings are granted more than half of the time nationwide but only about one-third of the time in the district. Even its remote location can put pressure on defendants to settle rather than send their lawyers and company executives to a small courthouse along the Texas-Louisiana border – far away from their work and families, often for weeks at a time.
All this makes one thing clear: The main reason you are choosing to sue in Texas is to leverage the litigation process to achieve settlements. That is not what forum choice is supposed to be about. The US Courts have explicitly adopted a model where the choice of forum is determined by its suitability to the facts of the case, the litigants, and the court. There is no principle in American jurisprudence that the plaintiff gets to sue you wherever he or she wants. Imagine one fine morning that you opened your mailbox in Virginia and found a summons to appear from a court in Alaska, because a company in Maryland is accusing you of driving your car through their billboard off I-495. You, being a typically careful driver, are astonished. Would it be fair to make you go out to Alaska and defend yourself? Would it make any sense for the proper resolution of the case for you and your witnesses and the plaintiff and their witnesses to go to Alaska to litigate this case? Would it make any difference if the plaintiff incorporated itself in Alaska one week before it filed suit against you? And if the plaintiff then said it would drop its vandalism suit for $500, would you take that offer?
Larger companies like Adobe can defend themselves in court, even in Texas, but upstarts and mom-and-pop small businesses do not have the time or resources to defend themselves in a Texas courtroom for prolonged periods of time. Given the rampant and growing abuse, Congress must pass comprehensive patent legislation that includes critical venue reform measures. Without venue reform, patent trolls will continue to bring lawsuits against America’s leading innovators and small businesses in jurisdictions that have no connection to an alleged infringement. The choice of forum should not be outcome determinative. That’s not justice.
Thankfully, Senators Jeff Flake (R-AZ), Cory Gardner (R-CO) and Mike Lee (R-UT) introduced the Venue Equity and Non-Uniformity Elimination Act of 2016 (S. 2733) last week. While the Senate Judiciary Committee has numerous items on its agenda, including the nomination of Merrick Garland for the Supreme Court, Chairman Chairman Chuck Grassley (R-IA) and Ranking Member Patrick Leahy (D-VT) need to make patent reform a priority. The committee should not allow election year politics to get in the way of passing much-needed patent reform legislation this Congress. All of the hard work that members have put into patent reform in the 114th Congress will have been for nothing if action is not taken before the end of the year. Comprehensive packages exist in both chambers, and now a venue reform bill has been added to the mix. This is the time for members to make one final push for patent reform before it is too late.
There’s no place in the judicial system for the blatant forum shopping that is occurring in patent litigation today. Our country needs a patent system built for the 21st century innovator, and the first step to achieving that is ensuring forum shopping becomes a thing of the past.