Regardless of Changes to Patent Venue, Trolls will still be Trolls

By Gene Quinn
April 20, 2017

Three weeks ago the United States Supreme Court heard oral arguments in TC Heartland LLC v. Kraft Food Group Brands LLC. In deciding to hear this patent venue case the Supreme Court has agreed to decide whether 28 U.S.C. § 1400(b) is the sole and exclusive provision governing venue in patent infringement actions. 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.”

This specific, if not somewhat archaic, issue has tremendous ramifications for the future of how patent litigation will be handled in America. Or so the conventional thinking goes. It is also believed that the Supreme Court resolution of the issue has great significance for patent reform. Indeed, 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. What that reform will look like will depend greatly on how the Supreme Court resolves the venue question surrounding § 1400(b).

The real reason the Supreme Court took TC Heartland is because the Court wants to interject itself into the ongoing political discussions regarding patent reform, and more specifically the discussion of patent trolls. Indeed, the Supreme Court has repeatedly brought up the issue of patent trolls during oral arguments and in their written opinions in a variety of patent cases despite the fact that no patent troll or patent trolling issue has ever been before the Court. It is hard not to notice the Supreme Court’s unhealthy fascination with patent trolls, which almost seems to border on obsession.

TC Heartland is really about whether patent trolls are engaging in abusive litigation in the Eastern District of Texas, which may or may not be an interesting question to discuss but is downright inappropriate in this case. The case that will ostensibly decide the fate of patent trolls in Eastern Texas has nothing to do with patent trolls or Eastern Texas. The patent owner is Kraft Foods, a Delaware company that filed a patent infringement lawsuit against an infringer in Delaware. Kraft did not go to some exotic location, but instead they sued where they are located and are being harmed. Even Justice Stephen Breyer surprised many during oral arguments asking why the Eastern District of Texas is at all relevant in this case that has nothing to do with Texas or patent trolls. He probably should have mentioned that earlier before the Court jumped the shark and took the case seeking a writ of mandamus, which is an extraordinary remedy for the Supreme Court to concern themselves with.

Of course, Justice Breyer has like so many other judges been known from time to time to fake interest in one position or another when he will ultimately decide in an entirely different manner. This is what makes predicting the outcome of any Supreme Court ruling, or the ruling of any appeals court, very difficult based only on the oral argument. We do know that the Supreme Court generally does not take cases from the Federal Circuit to affirm both the holding and the legal justification for the holding, so smart money is generally bet on the Supreme Court overruling the Federal Circuit. In this case that would mean that § 1400(b) would be the sole and exclusive provision governing patent venue, as the Supreme Court decided in Fourco Glass Co. v. Transmirra Products Corp., 353 U.S. 222 (1957).

Because patent trolls prefer filing in the Eastern District of Texas, the thinking goes that it will be a significant blow to patent trolls if the Supreme Court does not agree with the Federal Circuit.  In other words, the days will be numbered for patent trolls if the Supreme Court determines that Congress did not expanded patent venue with the 1988 amendment that made the statutory definition of corporate residence found in § 1391 applicable to patent cases.

That conventional wisdom is wrong!

While those who constantly push for ever more patent reform and the dismantling of the patent system grossly over define who is a patent troll, one such entity that is frequently labeled a patent troll is Reflection Code, LLC, a limited liability company with a place of business in Plano, Texas. It is certainly true that Reflection Code has brought patent infringement actions in the Eastern District of Texas, but on March 31, 2017, Reflection Code brought two separate patent infringement lawsuits in the Eastern District of Michigan — one against Bissell, Inc. and the other against Mattel, Inc. So if the Supreme Court thinks that they will be addressing the patent troll not in the room that they are so often preoccupied with, they better think again before they render their decision in TC Heartland.

Patent trolls will be patent trolls. Patent litigation is going to continue regardless of what the Supreme Court decides in TC Heartland. In fact, there is a real chance that those who are so often the targets of patent infringement lawsuits will regret the day patent owners were forced to leave the confines of the Eastern District of Texas.

While the popular press and Members of Congress both fail to appreciate the reality of litigating in the Eastern District of Texas, the venue is not nearly as patent owner friendly as it is made out to be. Yes, juries in the Eastern District of Texas are comfortable handing out very large verdicts against infringers, but they are equally (if not more) comfortable handing out very little or absolutely nothing to patent owners. What makes the Eastern District of Texas a choice venue from the standpoint of patent owners is the judges understand patent law, they actually like patent cases (unlike many judges who hate patent litigation and dispose of it as soon as they can), and patent owners get a fair procedural chance to prove their case. Indeed, cases are much more likely to get past procedural motions to dismiss and for summary judgment and to a settlement or trial in the Eastern District of Texas, thereby giving patent owner gets their day in front of a jury. So the Eastern District of Texas is a patent owner friendly venue, just not for any of the reasons reflected in the misleading popular narrative you’ll read about in mainstream publications or hear about on Capitol Hill.

Truthfully, it is sad when a venue becomes vilified by infringers because patent owners actually get to have their day in court in front of a jury — a jury that is as likely to award little or nothing as they are to award any meaningful damages. But that is another story for another day. In the meantime, hopefully someone will tell the Supreme Court that nothing they do in TC Heartland will stop patent trolls. The only thing that will stop a patent troll is a defendant standing up to the extortion and stop to paying, because all paying a patent troll does is paint a target on your back that says “sue me because I pay.” Of course this has been true for years, fighting patent trolls almost never happens and you’d be foolish to think that large corporate infringers will wake up and engage a strategy likely to put a stop to patent trolls. They need patent trolls and the narrative of evil patent owners far too much, at least until they get the unilateral disarmament of the U.S. patent system.

 

The Author

Gene Quinn

Gene Quinn is a Patent Attorney and Editor and founder of IPWatchdog.com. Gene is also a principal lecturer in the PLI Patent Bar Review Course and an attorney with Widerman Malek. Gene’s specialty is in the area of strategic patent consulting, patent application drafting and patent prosecution. He consults with attorneys facing peculiar procedural issues at the Patent Office, advises investors and executives on patent law changes and pending litigation matters, and works with start-up businesses throughout the United States and around the world, primarily dealing with software and computer related innovations. is admitted to practice law in New Hampshire, is a Registered Patent Attorney and is also admitted to practice before the United States Court of Appeals for the Federal Circuit. CLICK HERE to send Gene a message.

Warning & Disclaimer: The pages, articles and comments on IPWatchdog.com do not constitute legal advice, nor do they create any attorney-client relationship. The articles published express the personal opinion and views of the author and should not be attributed to the author’s employer, clients or the sponsors of IPWatchdog.com. Read more.

Discuss this

There are currently 7 Comments comments.

  1. Curious April 20, 2017 11:23 am

    Truthfully, it is sad when a venue becomes vilified by infringers because patent owners actually get to have their day in court in front of a jury — a jury that is as likely to award little or nothing as they are to award any meaningful damages.
    That’s it in a nutshell. Judges in EDTX like to give patent owners their day in court. However, many other judges (because of their distaste for patents in general and/or their distaste for highly specialized patent law) in other jurisdictions try to find ways to get those cases off their dockets, which means finding ways to invalidate them on summary judgment. Needless to say, patent infringers like the latter.

    If more jurisdictions were not so anti-patent, patent cases would be more widely distributed among the jurisdictions.

  2. hmmmm April 20, 2017 11:56 am

    “Law360, New York (March 8, 2016, 10:11 PM EST) — The Federal Circuit affirmed decisions coming out of the patent hotbed of the Eastern District of Texas only 39 percent of the time in 2015, while the rate for other patent-heavy districts was around 70 percent, and attorneys say the disparity is the result of the Texas court’s preference for letting patent cases go to trial”

    https://www.law360.com/articles/767955/edtx-judges-love-of-patent-trials-fuels-high-reversal-rate

  3. Gene Quinn April 20, 2017 12:10 pm

    hmmmm-

    I suspect much of that in 2015 was relating to patent eligibility. After Alice and up through Enfish in May 2016, the Federal Circuit had themselves become quite anti-patent. Several of the judges on the Federal Circuit remain very radically anti-patent. So there is little doubt that the reversal rate in the EDTX was as a result of the court there allowing cases to go to trial. Now that the Federal Circuit has finally started to do more than rubber stamp the anti-patent views of district courts it would be interesting to see what the reversal rate has been over the last 12 months.

    Still, it would be hard to criticize the judges of the EDTX for allowing cases to get past a motion to dismiss or even summary judgment given that in every other area of the law prevailing on either is extraordinarily rare. With motions to dismiss all inferences are supposed to go to the patent owner, and patents are still supposed to be presumed valid (although they are not I know). With summary judgment it is only appropriate if there are no facts in dispute, which is almost never. So the real question ought to be why other district courts rely on these extraordinary procedural disposition tools with such alarming frequency in patent cases.

    -Gene

  4. staff April 21, 2017 2:54 pm

    ‘the Supreme Court’s unhealthy fascination with patent trolls’

    There can be no productive discussion about ‘trolls’ until one defines it. In our view it is simply a smear campaign by large multinational infringers (thieves) with the intent of legalizing theft of our inventions. Some in the courts, Congress and previously in the White House have been duped, blackmailed or commandeered by this propaganda or the thieves that are behind it. We need to steer this ill advised foray back to where it belongs -property rights. When government only selectively enforces them for the wealthy and politically well connected, America loses and its people in the end suffer.

    For our position and the changes we advocate (the rest of the truth) to truly reform the patent system, or to join our effort, please visit us at https://aminventorsforjustice.wordpress.com
    or, contact us at aifj@mail.com

  5. Paul F. Morgan April 21, 2017 3:35 pm

    There are good points made in this blog and in above comments, including the higher Fed. Cir. EDTX reversal rates. But there are additional reported differences in some non-EDTX D.C.s, such as requiring more specific product infringement claim reading demonstrations up front, early Markmans, and other pre-trial conduct that can significantly reduce otherwise unconstrained discovery costs.

  6. Anon April 22, 2017 8:01 am

    Would love to hear Ron Katznelson’s views here on the “Tr011” angle….

  7. Eric Berend April 22, 2017 5:42 pm

    Conventional strategy and tactics honed by centuries of ruthless warfare, along with modern game theory, says that so-called “patent trolls” are all that will be left, in this situation’s ‘endgame’.

    Consider: once all of the independent, small entity and individual inventors are driven; then, what will be left?

    So-called “trolls”.

    Including: the largest of these, that are otherwise known as efficient infringers – the TRUE trolls, which are deliberately and quite effectively driving out all other legitimate actors, in their meglomaniacal zeal.

    Thus, fulfilling the truly “Orwellian” nature of this property rights destroying scorched earth campaign. Screaming incessantly about so-called “trolls”, even as the true goal, is to ruin the whole space for precisely everyone else. In the classical times of 20th century fascistic regimes, this is a rhetoric well known as “The Big Lie”. Recently, a similar ignorance helped elect a charlatan rube to the Presidency of the United States.

    Others here, in the past, have chided me for what might appear as egoistic brandishment of intellectual prowess. If so: then don’t display such ignorance of vicious strategy and tactics, developed over a military history spanning the globe with obdurate ruthlessness. Certainly, opponents of U.S. patent protections do not shirk from such extent of determination to prevail, regardless of merit and at all costs to everyone else in our society today, Have we who are concerned for, or operate in, what has sometimes been called the “pro-patent” area, for whatever reason or motivation; responded accordingly?

    Only belatedly and with haphazard, frequently lackluster and inadequate actions. For instance, when it became apparent that a well-funded effort for pushing through the AIA was underway through ‘K Street’ and the Congress, why didn’t some of the more well-established patent trial firms organize and at least attempt to counteract that initiative? Such scale, is not the purvey of small entity inventors.. Furthermore, why didn’t some in the “pro-patent” community analyze the likely effects of the AIA and inform relevant “Big Pharma” interests and decision makers of the probability of their own essential patents being attacked? How come, such brilliance of legal analyses, only reached the pages of numerous, desperate, after-the-fact amici curae briefs, as filed in various recent post-AIA SCOTUS and CAFC cases?

    Shall I get to the “moreover” part; or, are you attorneys in our community, getting the point yet? Are you still thinking, that talking down to individual inventors, glossing over the gross errors in your own slowcoach participation against this assault and fundamental strategic mistakes, and denying the rudimentary implications of institutions such as the PTAB; are somehow, adequate responses: when the reality, is analogous to having a six-alarm fire in the house?

    And, just why: does it take a polymath inventor such as myself to explain such basic strategy, to presumably experienced and capable attorneys; such as the vast majority of the persons occupying the essential roles performed heretofore, on both “sides” of the patent space?

    So, don’t any of you dare condescend again to inventors such as myself, ‘angry dude’, etc.; those of us who have the intellectual chops to read the playbooks of both “sides”, here. It is insulting, derogatory, without merit; attempts in cowardly and pathetic manner to deflect responsibility towards inventors in bad faith; detracts from the solidarity necessary to even attempt to turn back this corrupt tide; and, fulfills the enemy’s basic strategy component of divide-and-conquer.