Posts Tagged: "TC Heartland"

In its TC Heartland decision in 2017, the Supreme Court rejected the Federal Circuit’s interpretation of the patent venue law, and held that in order to bring a patent infringement lawsuit against a company in a given district, that company must either reside in that district or have a “regular and established place of business” and have committed an act of alleged infringement there. As expected, this has led to a decrease in the number of patent cases being filed in the Eastern District of Texas, and an increase in the number of cases being brought in other districts, including in the District of Delaware, where many companies are incorporated. The TC Heartland decision was welcome news to many companies that regarded the Eastern District of Texas as being pro-plaintiff. However, the TC Heartland decision has not stopped plaintiffs from seeking to push the envelope as to the meaning of a “regular and established place of business” in order to seek to establish venue in a more favorable venue. Indeed, according to the Q1 2020 Patent Dispute Report, the Western District of Texas has now apparently become the venue of choice for filing patent infringement actions and it is forecasted to surpass the District of Delaware for the most new filings in 2020. The report also included that this district has become the “preferred venue” for non-practicing entities to bring infringement actions and is on pace to have over 600 patent related cases, with NPEs comprising approximately 80% of all cases. While it is too soon to know if this part of a long-term trend, it does highlight the unsettled nature of patent venue law, and the likelihood that the Federal Circuit, and perhaps the Supreme Court, will have to provide additional guidance on this issue, and especially how technology may impact this review

On April 15, U.S. District Judge William Conley of the Western District of Wisconsin issued an opinion and order in Raytheon Company v. Cray, Inc. granting summary judgment of non-infringement to defendant Cray on two supercomputer patents that had been asserted by Raytheon. The order is the likely conclusion to a case that became an important part of the debate on proper venue in patent cases after the U.S. Supreme Court’s decision in TC Heartland, and aspects of how this case played out after venue was transferred point to the importance of that particular decision on U.S. patent litigation.

The cost of obtaining a U.S. patent has not significantly changed for the past 10 years. This remarkable stability is confirmed by the AIPLA Economic Survey, our own fees, and our general knowledge of the market. The major costs for obtaining a U.S. patent include the drafting fee, the cost of responding to USPTO office actions and the USPTO fees. The first two fees have not increased in over 10 years for many firms and the government fees have increased but remain relatively low compared to the other fees. With respect to the price of issued patents, the 2018 IAM Benchmarking Survey points to a bear market for U.S. patents, which are “cheaper” year after year. A fall in prices is reported, with 24% of corporate respondents stating that patents are cheaper than a year ago; the previous year’s survey had 36% reporting a fall in prices. Such relatively stable cost and low price are disharmonious with the fact that a U.S. patent covers the largest market in the world—and a growing market. Despite a slight dip in 2009, the U.S. GDP has grown steadily for the past 20 years. Even if the recent volatility in the stock market is a sign of a difficult 2019, the long-term positive trend is likely to continue.

Legal data analytics provider Lex Machina recently published a post featuring data points regarding the filing of patent infringement cases in the year following the U.S. Supreme Court’s decision in TC Heartland v. Kraft Foods Group Brands. In that decision, the Court held that the patent venue statute (28 U.S.C. § 1400(b)) meant that domestic companies could only file patent infringement suits in the judicial district where they were incorporated. Lex Machina’s one-year data update shows that TC Heartland has toppled the Eastern District of Texas as the top forum for patent infringement filings among U.S. district courts. The decision has also affected the filing behaviors of high-volume plaintiffs (HVPs), or those entities filing 10 or more patent infringement cases in U.S. district courts within one calendar year.

On June 1, 2018, the new patent local rules went into effect in the District of Massachusetts following a substantial overhaul that began over one year ago.  In January 2017, the judges in D. Mass. formed a committee which included ten local patent litigators to advise the court on revising its practices specific to patent litigation in the district.  The final draft of the proposed rules was released for public comment from December 2017 through February 2018, giving other patent litigators in the district and interested parties a first glimpse of the new rules and the ability to weigh in on their implications.  This week the court announced its final version of the rules, which will apply to all cases for which a scheduling order as yet to issue. 

The Federal Circuit’s recent venue decisions represent important developments in the interpretation of the patent venue statute. The application of these decisions will have immediate effects on defendants in patent infringement cases, and particularly those who are often subject to suit in popular districts like the Eastern District of Texas and the District of Delaware. While many open questions remain—perhaps most notably the treatment of domestic unincorporated associations—the Federal Circuit continues to delineate the scope of the patent venue statute.

The recent Tinnus opinion further defines the meaning of “regular and established place of business.” See Tinnus Enters. v. Telebrands Corp., Case No. 6:17-CV-00170-RWS (E.D. Tex. May 1, 2018). The opinion provides additional guidance to practitioners defining “residence” under TC Heartland, Micron, and Cray: teleworking employees are not enough, but leased retail space in brick-and-mortar stores might be.

Of the many lingering issues left in TC Heartland’s wake for domestic corporations, a Federal Circuit panel resolved several of them recently. In In re ZTE (USA), No. 2018-113, the court addressed two of the most common issues dogging appeals over the application of § 1400(b): whose law governs burden, and where does that burden lie. In In re Bigcommerce, No. 2018-120, the court addressed the territorial bounds mapped by the phrase “judicial district” in § 1400(b). Judge Linn authored both. 

Q4 2017 saw a total of 981 patent infringement cases filed in district courts, the second-lowest total for any quarter in 2017 and the third-lowest total for any quarter dating to the third quarter of 2011. The 4,057 patent suits filed in district court through 2017 was the lowest total for an entire year since 2011… A week-by-week graph of patent filings shows that, while Eastern Texas saw a much greater share of patent filings than Delaware in the months leading up to the TC Heartland decision, Delaware filings have topped Eastern Texas filings in almost every week since the SCOTUS decision.

As we mark the close of yet another year, we’re provided with a perfect opportunity to look back on the previous twelve months and see what has transpired. No one could call it a good year for patent owners (except those with the largest pockets, of course) starting with the United States’ 10th-place ranking among national patent systems in the U.S. Chamber of Commerce’s IP Index, and it didn’t appear as though any weaknesses in uncertain patentability across the U.S. technological landscape were addressed in a positive manner this year. It’s inevitable that the ball will drop on New Year’s Eve and calendars everywhere will turn from 2017 to 2018. Whether the U.S. federal government will be able to stop the death knell sounding doom for our nation’s patent system, however, is still anyone’s guess and it seems far from likely.

With venue for patent infringement actions under § 1400(b) narrowed after TC Heartland and In re Cray, patent owners could use declaratory judgment (DJ) actions to secure their desired venue because venue in DJ actions is governed by § 1391. The Declaratory Judgment Act provides federal courts with the authority to “declare the rights and other legal relations of any interested party” where an “actual controversy” exists. 28 U.S.C. §§ 2201–02… The ITC offers patent owners yet another venue option outside of § 1400(b).

The U.S. Court of Appeals for the Federal Circuit recently issued its decision in In re Micron Tech., Inc., Case No. 2017-138 (Fed. Cir. Nov. 15, 2017), and resolved a question that had divided district courts and commentators throughout the United States following the U.S. Supreme Court’s ruling in TC Heartland LLC v. Kraft Foods Group Brands LLC, 137 S. Ct. 1514 (2017):  Did TC Heartland change the law of venue in patent cases such that a party’s failure to raise a venue defense in its initial responsive pleading could be excused?  The Federal Circuit held: “We conclude that TC Heartland changed the controlling law in the relevant sense: at the time of the initial motion to dismiss, before the Court decided TC Heartland, the venue defense now raised by Micron (and others) based on TC Heartland’s interpretation of the venue statute was not “available,” thus making the waiver rule . . . inapplicable.”

Unfortunately, there’s every indication that today’s event at Brookings will feature more of the same kind of misguided rhetoric on perceived issues with the patent system which don’t truly exist. The evidence for this starts with the moderator for the day’s final roundtable discussion, titled Realigning Incentives to Increase Patent Quality. The moderator for this discussion will be Tim Lee, senior reporter of tech policy for Ars Technica. Lee has written in the past on the effects of “ridiculous patent litigation” and has given space to viewpoints which want to limit patentability in certain sectors, such as in business methods. Lee has also been very critical of appellate court decisions in patent cases in recent years to the point that assertions he’s made on case law regarding the patentability of software inventions border on the ridiculously absurd. This individual, who has a clearly anti-patent viewpoint, will be controlling the discussion during the final panel roundtable on patent policy.

Arguing against Micron’s motion to dismiss, Harvard contended that TC Heartland only affirmed a previous precedent set by SCOTUS and that the improper venue challenge was available to Micron back when it filed its first motion in August 2016… The Federal Circuit concluded that the TC Heartland decision “changed controlling law in the relevant sense” and thus the Supreme Court’s interpretation of the patent venue statute was not available to Micron at the time of its August 2016 motion to dismiss.concluded that the TC Heartland decision “changed controlling law in the relevant sense” and thus the Supreme Court’s interpretation of the patent venue statute was not available to Micron at the time of its August 2016 motion to dismiss.