Earlier today Whirlpool Corporation filed an amicus brief with the United States Supreme Court in TC Heartland, LLC v. Kraft Foods Group Brands, LLC. Not surprisingly, Whirlpool filed in support of the Respondent, Kraft Foods.
Whirlpool is the leading appliance manufacturer in the world, and has 70 manufacturing and technology research centers worldwide. They engage in research and development, and they bring tangible, innovative products to market. Even in an age where so much manufacturing has gone overseas, Whirlpool continues to employ 15,000 manufacturing employees in the United States. The patent system is not just built for the Silicon Valley giants of the world, the patent system has historically provided the incentive for individuals and the many innovative companies like Whirlpool that simply could not justify investing into R&D without strong protection.
Innovative companies like Whirlpool depend upon intellectual property protection, particularly patents, in order to justify the time, money and expense of innovating and bringing new products into the marketplace. The interests of companies like Whirlpool, who have a tangible real world profile, are decidedly different from the several dozen Silicon Valley companies that constantly lobby Congress and push courts to weaken the patent system. A weaker patent system is simply not an option for the vast majority of innovators, and specifically not for companies like Whirlpool.
The largest looming issue on the patent reform horizon in 2017 relates to patent venue. The Supreme Court will decide whether 28 U.S.C. § 1400(b) is the only proper venue statue for patent infringement lawsuits, or whether 28 U.S.C. § 1391(c) also allows for the establishment of venue. Pursuant to § 1400(b), a “patent infringement 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.” Pursuant to § 1391(c), a corporation is deemed to be a resident of “any judicial district in which such defendant is subject to the court’s personal jurisdiction…”
In Fourco Glass Co. v. Transmirra Products Corp., 353 U.S. 222 (1957), the Supreme Court held that § 1400(b) is not to be supplemented by § 1391(c) and that “§ 1400(b) is the sole and exclusive provision controlling venue in patent infringement actions…” But the Federal Circuit has for the last three decades believed that 1988 amendments to the statute by Congress “rendered the statutory definition of corporate residence found in § 1391 applicable to patent cases.” Why the Supreme Court decided to take this case is really a legal mystery. Procedurally it has come up through the appellate chain as a petition for writ of mandamus, which is supposed to be an extraordinary remedy. Of course, the Supreme Court is not confined to taking cases that are legally, or procedurally, rational.
The reason the Supreme Court took TC Heartland is undoubtedly because the Court wants to interject itself into the ongoing political discussions regarding patent reform, and specifically the discussion of patent trolls. Indeed, the Supreme Court has repeatedly brought up the issue of patent trolls during oral arguments and opinions in a variety of patent cases despite the fact that no patent troll or patent trolling issue has ever been before the Court. The Supreme Court seems to want to be hip and cool in a relevant way, and that mandates discussing patent trolls even when the patent owner is one of America’s largest, most recognizable brands who filed a patent infringement action in the State where they are incorporated.
Generally when the Supreme Court takes a Federal Circuit case they do so to reverse in one way or another. If the Supreme Court were to reverse the Federal Circuit and revert back to Fourco Glass, that would make it difficult for patent owners, including Whirlpool and others like them, to reasonably seek redress for patent infringement. Essentially, a reversion back to Fourco Glass would mean that patent infringement cases brought by corporations like Whirlpool would have to literally be brought in the home court of the patent infringer, or perhaps in Delaware where so many entities are incorporated. It would also necessitate a multiplicity of lawsuits, as Whirlpool explained in its amicus filing.
There is a lot at stake for patent owners who over the last 11 years have been under siege, and I have very little hope that the Supreme Court will do the right thing. Had they done the right thing they would have refused this case. Anything short of dismissing the appeal as having granted certiorari improvidently will only make things worse.
What follows is taken from the Summary of the Argument in Whirlpool’s amicus filing. I’ve taken the liberty of providing my thoughts in the format of comments from the peanut gallery, or perhaps as a patent law equivalent to Mystery Science Theater 3000, which I like to do from time to time. In order to differentiate my thoughts/comments from Whirlpool’s amicus, my comments are italicized, colored, indented and tagged with the IPWatchdog logo.
WHIRLPOOL AMICUS: “Venue rules reflect a balancing of policy considerations, and the responsibility for making these policy judgments rests with Congress. For patent cases, Congress established the venue rules in 28 U.S.C. § 1400(b) and 28 U.S.C. § 1391(c), which dictate the relatively broad choice of venue afforded to patent plaintiffs that has been recognized by the Federal Circuit for over thirty years. Petitioner and its amici are free to make their case to Congress that the current approach to venue should be changed. But Congress’s existing framework is supported by countervailing policy considerations that favor providing patent owners with more expansive venue options, particularly when compared to the restrictive approach advocated by Petitioner.”
MY TAKE: Whirlpool makes an excellent point — the venue rules the Supreme Court will consider have been this way for three decades! Patents are about business and business law is best when it is certain and predictable. Several years ago in Kimble v. Marvel Entertainment the Supreme Court acknowledged that the rule being challenged had been criticized by absolutely everyone, but still applied stare decisis because the right rule isn’t as important as a certain rule in a business context. We know the Supreme Court only follows stare decisis when it is convenient, and generally they relish changing well-established law in the patent context (e.g., KSR v. Teleflex, Mayo v. Prometheus, and AMP v. Myriad). If only the Supreme Court would recognize that patents are business assets and business law sensibilities must apply. Whirlpool is also correct to note that Congress is the right place to have this debate, not the Courts.
WHIRLPOOL AMICUS: “In instances of infringement by multiple unaffiliated parties, for example, Petitioner’s approach would require patent owners to file isolated suits in numerous jurisdictions across the United States. Below, Whirlpool describes its experience enforcing its patents relating to refrigerator water filters against a multitude of infringers. Under prevailing law, Whirlpool is able to bring all of its patent lawsuits in one district. Whirlpool is concerned that Petitioner’s approach may require it to file lawsuits in dozens of jurisdictions, if not more, which would dramatically increase the costs to enforce a patent, and would result in judicial inefficiencies.”
MY TAKE: The problem with patent reform is that it really does nothing other than change the system. Reform implies making something better, but for patent owners the changes have been unambiguously bad. In what universe does it make any sense to force a patent owner to multiply litigation and waste precious judicial resources of multiple district court judges? Chief Justice Roberts always sounds concerned about the administration of justice, judicial resources and inefficiency. Now would be a good time to reach a decision that doesn’t make things worse.
WHIRLPOOL AMICUS: “Notwithstanding that the present case was filed in Delaware, amicus briefs supporting Petitioner have devoted significant effort to making a case against patent practice in the Eastern District of Texas. Whirlpool urges the Court to reject their invitation to let concerns about practice in one district drive the construction of statutory provisions that establish venue in many districts across the country. While irrelevant to the statutory question, Whirlpool is also concerned that the briefing before the Court has presented an unbalanced picture of the Eastern District of Texas.”
MY TAKE: There are many ironies in life, but I find this one particularly interesting. This case is really about whether patent trolls are engaging in abusive litigation in the Eastern District of Texas. That may or may not be an interesting question to discuss, but it is downright inappropriate in this case. The case that will decide the fate of patent trolls in Eastern Texas has nothing to do with patent trolls or Eastern Texas. The patent owner here is Kraft Foods for crying out loud, a Delaware company that filed a patent infringement lawsuit against an infringer in Delaware. Kraft did not go to some exotic location, they sued where they are located and are being harmed. Further, this is on a writ of mandamus! The Supreme Court has really jumped the shark this time!
WHIRLPOOL AMICUS: “Whirlpool has been sued in the Eastern District of Texas for patent infringement by multiple entities that could be called ‘patent trolls.’ It has also filed many of its water filter patent infringement lawsuits there. Whirlpool’s experience as both a plaintiff and a defendant is that patent practice in the Eastern District of Texas is neither abusive nor unreasonable. While ‘patent trolls’ seeking nuisance value settlements no doubt file cases there, it is also an attractive venue for serious litigants looking to resolve meritorious claims. The reasons are not abusive: the judges are experienced with patent law, the local patent rules are predictable, and cases proceed to trial without undue delay. Whirlpool’s water filter patent litigation does not display any of the hallmarks of abuse emphasized in the briefing before this Court, yet Whirlpool has benefited from the experience, predictability, and speed offered by the Eastern District of Texas. A result-driven statutory interpretation that would limit filings in the Eastern District of Texas would not alleviate the problem of ‘patent trolls’; it would simply relocate those lawsuits to other districts.”
MY TAKE: While it no doubt comes as a shock to those who only read the popular press, Whirlpool correctly notes that there are many legitimate reasons why a patent owner might want to file a patent infringement lawsuit in the Eastern District of Texas. Not all patent owners are patent trolls, and not all patent owners who file patent infringement lawsuits in the Eastern District of Texas are patent trolls.
WHIRLPOOL AMICUS: “Whirlpool respectfully submits that if the venue provisions are to be revised in response to ‘patent trolls’ or concern about the Eastern District of Texas, that revision should come from Congress after a full and careful weighing of the facts and policy considerations on each side of the debate.”
MY TAKE: Whatever the Supreme Court decides in TC Heartland will likely be nothing more than an advisory opinion. Senator Orrin Hatch (R-UT) has already said that regardless of what the Supreme Court does Congress will take up the issue of venue reform. If the Supreme Court reverts to Fourco Glass it seems likely that venue reform will move forward to overrule such a decision. If the Supreme Court says the Federal Circuit was correct (which seems unlikely) then the calls for relief from the Eastern District of Texas will become very, very loud. So why did the Supreme Court take this case? That is a good question. Mandamus is supposed to be an extraordinary remedy, and whatever the outcome it may be short lived.
Still, Whirlpool is correct. These issues require more thoughtful contemplation than the Supreme Court seems capable of providing, particularly given their preoccupation with the issue of patent trolls when they still have never had a single case involving a patent troll to date.