Posts Tagged: "Eastern District of Texas"

In re Cray, Inc., the Federal Circuit applied the recent Supreme Court’s TC Heartland decision to grant a writ of mandamus, directing the Eastern District of Texas to transfer Raytheon’s patent case to a proper venue. The district court refused the transfer based on notions of targeting the district for a benefit, according to a four-part test it adapted from In re Cordis Corp. The Federal Circuit disagreed, holding that the listed criteria were not sufficiently tethered to the relevant statute, 28 U.S.C. § 1400(b)… In determining venue in a patent infringement case, the location of defendant’s employees who work from home is not a regular and established place of defendant’s business when the defendant corporation has no material connection to that place, as by rent, inventory, conditioning employment based on the location, or other relevant facts.

After briefly parsing the statutory language of §1400(b) critical to the decision the Federal Circuit concluded that Judge Gilstrap’s four-factor test was not compliant with the statutory language. Judge Lourie simply concluded: “The district court’s four-factor test is not sufficiently tethered to this statutory language and thus it fails to inform each of the necessary requirements of the statute.”… “The fact that Cray allowed its employees to work from the Eastern District of Texas is insufficient,” wrote Judge Lourie as he shifted to the specifics of the case before the Court.

Unfortunately, the answer may be not as much as many expected. Right after the decision there were 350 motions to transfer or dismiss in the EDTX. But the limitations imposed by TC Heartland have been called into question by a ruling from EDTX Judge Rodney Gilstrap in Raytheon Co. v. Cray Inc. In his decision, Gilstrap denied a motion by Cray seeking to transfer the case to another district in light of TC Heartland. Gilstrap found that the existence of a single employee in the district constituted “regular and established place of business,” and he established a four-factor test to decide whether newer cases belong in the district… As hopeful as some folks were about TC Heartland, it certainly hasn’t stopped NPEs. The IP community must acknowledge this and adjust accordingly – it’s still the wild west out there, for now.

Raytheon, Nokia and Ericsson all filed briefs with the Federal Circuit encouraging the court to decline the Cray mandamus on a motion to transfer from EDTX… Cray is asking the Federal Circuit to decide two issues: did the Eastern Texas court err in holding that a “regular and established place of business” need not be a physical presence; and did the district court err in determining that the residence of a single work-from-home employee constitutes a “regular and established place of business” of his employer.

During the second quarter of 2017, a total of 1,138 patent cases were filed at the U.S. district court level, an increase of 18 percent when compared to first quarter filings. However, that uptick in patent suits between the first and second quarters of 2017 repeats a trend which has played out since 2013. Compared to the second quarter of 2016, patent case filings were actually down 7 percent on a year-over-year basis. From the beginning of 2016 through the end of 2017, U.S. district courts have seen some of the lowest levels of patent litigation in district courts on a quarterly basis. Interestingly, the Lex Machina update shows a significant decline in case filings in the Eastern District of Texas (E.D. Tex.) correlating strongly with the Supreme Court’s recent decision in TC Heartland LLC v. Kraft Foods Group Brands LLC, a case which restricted the statute on proper venue for patent infringement cases.

Issa decried Judge Gilstrap’s “overreach” in denying a motion to transfer venue in a case coming after the U.S. Supreme Court’s decision in TC Heartland LLC v. Kraft Foods Group Brands LLC, a decision which restricted the venue statute for patent infringement cases. “It is, in fact, an act that I find reprehensible by that judge,” Issa said… American Board of Trial Advocates (ABOTA) noted that Issa’s further assertion that Judge Gilstrap was motivated by personal bias to promote community interests “extended beyond a challenge of the legal precedent to a personal attack on Judge Gilstrap and his integrity as a jurist.”

Under the Federal Rules of Civil Procedure, a party waives its right to assert a defense of improper venue when it fails to raise the defense in a pleading or with other Rule 12 motions.  Importantly, however, that waiver only takes effect if the defense was “available” to the party at the time of filing either the pleading or motion.  Many circuits, including the Federal Circuit, interpret that requirement by recognizing an intervening law exception to the waiver of a defense, whereby an intervening change in law makes available a defense that had not previously been available.  Does the Supreme Court’s decision in TC Heartland constitute a change in the law?  Was the defense of improper venue unavailable until May 22, 2017?

Venadium LLC filed a series of five patent infringement suits against well-known entities in the insurance, hotel accommodation and industrial supply space. The suits, which have been filed in the U.S. District Court for the Northern District of Illinois (N.D. Ill.), feature the assertion of a single patent techniques to combat online software privacy by protecting executable computer programs from unauthorized use.

After TC Heartland, patent infringement filings by patent trolls should be greatly reduced because they can no longer simply file and maintain cases against domestic corporations in plaintiff-friendly districts such as the Eastern District of Texas. Unfortunately for Marshall, Tyler and other East Texas towns, the torrent of lucrative patent litigation-related business traffic may slow to a trickle.

The TC Heartland decision strikes me as more anti-business than it is anti-patent. In the wake of the Supreme Court’s decision all patent owners will now be forced to seek remedy for patent infringement where the defendant is incorporated or where the infringing defendant has a significant place of business. In other words, all patent owners will in theory have to fight patent infringement disputes against domestic corporations on the home turf of the infringer… It also seems unlikely that TC Heartland will do anything about any lingering patent troll problem. As long as America’s technology companies continue to pay extortion there will be bad actors. Trolls will be trolls whether it is in the Eastern District of Texas or somewhere else, and it is recklessly naïve for anyone to think otherwise.

We believe that the fallout from the Court’s ruling last week will be less dire for patent owners than most commentators predict. The conventional wisdom is that TC Heartland will cause a mass exodus of patent filings from the Eastern District of Texas and other supposedly plaintiff-friendly venues to Delaware, the Northern District of California and, to a lesser extent, the other states. The assumption underlying this view is that all those plaintiffs will be forced to file in the state where the defendant is incorporated. Yet even post-TC Heartland, patent owners have options and can continue to be strategic about how and where they proceed.

The Eastern District of Texas granted a preliminary injunction against Aurobindo in favor of Mylan in the case of Mylan Institutional LLC v. Aurobindo Pharma Ltd. On appeal at the Federal Ciruit, Aurobindo challenged three district court findings: 1) it was likely that Aurobindo infringed; 2) Aurobindo failed to raise a substantial question of validity; and 3) there was irreparable harm to Mylan. The Federal Circuit found that, while the district court made some errors, it correctly analyzed one of the three Mylan patents, and the preliminary injunction was affirmed.

What follows is reaction from a distinguished panel of industry insiders who have been following this case. Each have offered their own instant analysis, several pointing out that important questions remain about what this Supreme Court decision will mean for the many thousands of patent cases already filed, many that are now in inappropriate venues. It is probably fair to say that the ruling did not surprise most of our panel, although several point to the Supreme Court’s decision as more in a decade-plus line of cases that have continually eroded the rights of patent owners.

About 5,100 patent infringement cases were filed in the U.S. during 2016, according to the PwC litigation study. This represents a 9 percent drop in lawsuits from 2015’s totals and the third straight year of decline since 2013, when more than 6,000 patent suits were filed. As the PwC study notes, this decline stands in stark contrast to the 6 percent compound annual growth rate (CAGR) for patent case filings since 1991. It’s also the largest deviation between the rate of case filings and the rate of U.S. patent grants since that time.

One of the key findings is that only 938 patent infringement actions were filed in district courts during the recent quarter, a total which is the lowest for a single quarter since the third quarter of 2011 when only 921 such cases were filed… The U.S. District Court for the Eastern District of Texas (E.D. Tex.) remains the most active court for patent infringement suits, receiving one-third of all patent infringement cases filed in 2017’s first quarter.