Posts Tagged: "venue"

In two recent decisions following T. C. Heartland, district courts have applied two different methodologies in resolving motions to change venue… In the first decision a trial judge in the Eastern District of Virginia denied the venue motion, filed three days after T.C. Heartland but also on the eve of trial.  Cobalt Boats, LLC v. Sea Ray Boats, Inc. (June 7, 2017)… In the second decision, a district court in the Southern District of Ohio applied the standards in § 1400(b) and transferred the action because neither of two defendants resided in the district and neither had a permanent and continuous presence in Ohio.

Some analysts have concluded that the Supreme Court’s recent decision in TC Heartland will make it more difficult for patent owners to enforce their patents. Generally, they assert that patent infringement litigation will become more costly for patent owners because they may have to assert their rights in multiple jurisdictions throughout the country. They also contend that concurrent litigation in multiple courts will lead to inconsistent outcomes. One response to these concerns is multidistrict litigation under 28 U.S.C. § 1407. Congress authorized the formation of a Judicial Panel on Multidistrict Litigation to transfer “civil actions involving one or more common questions of fact” to a single “district for coordinated or consolidated pretrial proceedings.” The Judicial Panel on Multidistrict Litigation has authority to transfer patent cases as it does any other “civil actions.” Indeed, Congress predicted that patent cases would be particularly appropriate for multidistrict litigation.

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.

Joint-defense groups lower costs and increase efficiencies for all defendants in the groups. Certain prominent patent litigation boutiques and Big Law departments have skillfully made a business of being retained by many of the accused infringers in a single multi-defendant case. Even if counsel is not shared among defendants, the benefits of joint-defense groups inure greatly to small- and medium-sized companies that gain the benefit of top-notch defense teams retained by larger tech companies, without having to pay for them. Joint-defense groups also leverage economies of scale to accomplish more at lower costs for everyone. For instance, filing four or five IPR petitions may be feasible when those costs are spread around a group, but prohibitive for any individual defendant. In short, the pre-TC Heartland framework provided significant cost-savings and efficiencies to defendants, and in particular, small- and medium-sized companies.

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.

On Tuesday, May 30th, online legal news outlet Law360 reported that a trio of major automakers filed a motion asking a federal judge in the U.S. District Court for the Eastern District of Texas (E.D. Tex.) to toss a patent infringement suit filed last May by Longview, TX-based patent licensing firm Stragent LLC. Reportedly, the automaker defendants argue that the U.S. Supreme Court’s recent decision in TC Heartland v. Kraft Foods Group forecloses the case from being decided in E.D. Tex.

“What we do know is that motion practice will heat up and courts must determine how they want to handle the influx of motions to dismiss and related challenges with no clear instruction from TC Heartland,” Storm said. “Many defendants will likely move to dismiss or transfer venue, and for the latter, may take the step to proactively file in their chosen jurisdiction and then request transfer to such jurisdiction.”

Due to the death of the patent troll narrative, venue reform would never have made it through Congress, but the infringer lobby doesn’t need Congress when they have a Supreme Court. They just need to make it sound like Congress may pass it and the Supreme Court will just do it for them, as if the Court can’t help themselves but to meddle in patent politics as they continue to disrupt generations of well settled patent law with practically every decision. However, this mode of lawmaking comes with very serious consequences. A group of nine liberal art majors who have never started up a company with the sole asset of a patent need a lot of information in order to understand the effects of their decisions. It is clearly evident from eBay, Alice and virtually all of the Supreme Court’s major patent decisions in the last decade that they do not understand the consequences of their decisions.

In the U.S. Supreme Court case of TC Heartland LLC v. Kraft Foods Grp. Brands LLC, venue in patent infringement cases are governed by 28 U.S.C. § 1400(b), which states that patent infringement suits can be brought in the district where the defendant “resides” or where the defendant has committed acts of infringement and has a regular and established place of business.

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.

The Supreme Court reversed the Federal Circuit and ruled that 28 U.S.C. 1400(b) remains the only applicable patent venue statute, that 28 U.S.C. 1391(c) did not modify or amend 1400(b) or the Court’s 1957 ruling in Fourco Glass Co. v. Transmirra Products Corp., and that the term “residence” in 28 U.S.C. 1400(b) means only the state in which a company is incorporated. The importance of this ruling should be immediately felt on patent litigation in the United States. No longer will a patent owner be able to sue an infringing defendant in a district court where the defendant is subject to personal jurisdiction. Instead, patent infringement lawsuits will only be able to be filed in districts within states where the infringing defendant is incorporated, or in districts where there has been an act of infringement and the defendant has a regular and established place of business.

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!… 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.

Justices Kagan and Ginsburg seemed skeptical. Indeed, Congress has already passed a general venue statute that defined residency “for all venue places – all venue purposes,” as Justice Ginsburg put it. Justice Kagan chimed in, questioning the propriety of overturning the broader rule, which she called “the decision that the practice has conformed to” and the “practical backdrop” against which Congress was legislating. Next, Justice Breyer noted the many arguments and briefs discussing the Eastern District of Texas, but which he felt were not relevant.

On Monday, March 27th, the U.S. Supreme Court heard oral arguments in TC Heartland LLC v. Kraft Food Group Brands LLC. The case, arising from allegations of patent infringement over liquid water enhancement products, will ask the court to decide whether 28 U.S.C. Section 1400(b), the patent venue statute which provides that judicial actions for patent suits take place in the district within which the defendant resides, is supplemented by 28 U.S.C. Section 1391(c), which provides that an entity may reside in multiple districts.