Beyond Biglaw: Leaving The Heartland?
A pending Supreme Court case could have significant implications for patent litigation.
Patent litigation is a big deal. Litigants can include everyone from solo inventors up to the world’s largest technology and pharmaceutical companies. The patent litigation ecosystem includes law firms of all sizes, armies of experts to assist with both technical and damages issues, and the typical litigation support infrastructure that services commercial litigators in federal courts. Patent cases are heard in a variety of forums, from proceedings at the United States Patent and Trademark Office (USPTO), to the International Trade Commission, to federal district courts around the country. For patent holders seeking damages, district court is where they are available, and where the majority of proceedings occur.
One of the pressing strategic questions at the outset of every patent case is in which district court to file in. It does not matter whether you are a patentee seeking to enforce your patent rights, or an alleged infringer seeking a declaratory judgment of non-infringement and invalidity; choosing the right court for your dispute is crucial. Many factors currently go into the analysis, but the calculus may soon be changing quite drastically. There is a pending Supreme Court case, TC Heartland v. Kraft Food Brands Group (good short intro at SCOTUSblog), with the potential to disrupt business as usual for patent lawyers and litigants in a significant way. More importantly, a Supreme Court decision that changes the current state of the law could have significant flow-through for the dockets of various district courts around the country, particularly those that already hear a lot of patent cases.
A little background will be helpful. For many years, the most popular district court for patent cases in the United States has been the Eastern District of Texas (“EDTX”). Patent owners flock there, motivated by a sense (and statistics showing) that the EDTX is the most patent-owner-friendly district in the country. Friendly judges, favorable local patent rules, a hospitable infrastructure for patent trials, and profligate juries all contribute to the EDTX’s appeal. While patentees perennially choose the EDTX as their favorite venue, many frequent patent defendants (primarily tech companies like Google, Apple, etc.) have expressed frustration with how they are treated in the EDTX, and have searched for ways to restrict being sued there. Up until now, doing so has been a challenge, in no small part due to the Federal Circuit (patent law’s exclusive appeals court) having taking an expansive view of venue in patent cases. For its part, the EDTX has never made it easy to transfer out to a more convenient district court either.
Navigating Financial Success by Avoiding Common Pitfalls and Maximizing Firm Performance
According to the Federal Circuit, patent cases fall under the general venue statute, which means that defendants can be sued wherever a district court can exercise personal jurisdiction over that defendant. For large companies that sell products nationwide, the consequence is that they can potentially be sued in any district court. Put another way, patentees that can show the availability of infringing products or services in the EDTX have been able to file there, often by setting up their own (what some consider sham) offices in the EDTX. If the Supreme Court decides to overrule the Federal Circuit’s longstanding approach, however, things can change very quickly.
By accepting the case, the Supreme Court has already indicated it is willing to consider the question of whether the Federal Circuit has taken too expansive a view of venue in patent cases. If the Supreme Court decides that restrictive language in the patent venue statute controls, then patent cases will be permitted only in districts where either the defendant is incorporated or has a physical place of business. Since relatively few regular patent defendants meet either criteria in the EDTX, the thought is that the EDTX’s patent litigation well will quickly dry up. Which may be a boon to technology companies located on either coast, many of which would not miss the EDTX one iota. At the same time, the robust infrastructure that has arisen to support patent litigation in the EDTX would be adversely affected, likely to the economic detriment of the region.
Change may not come overnight, even if the Supreme Court overrules the Federal Circuit. Savvy plaintiffs will try a variety of strategies to hale defendants into the EDTX, and it may take some time for the new system to sort itself out. There will be some immediate changes, however, with many of the cases that would have been filed in the EDTX filed instead in districts like Delaware (where many large companies are incorporated) or near the physical headquarters of frequent defendants such as the Northern District of California (Silicon Valley/San Francisco) or the Southern District of New York (Manhattan). Perhaps more importantly, one of the major strategic considerations for patent litigators may become a whole lot simpler, with fewer choices available.
There is obviously a lot of uncertainty as to how this case will turn out, even as the consensus is leaning towards a change in the law that will adversely affect the EDTX. The impact will be significant either way, and the Supreme Court has shown a willingness for at least a decade to overrule the Federal Circuit in various areas of patent law. If the same happens here, then firms will robust patent capabilities in the district courts that may see more patent cases will be very happy. On the flip side, those firms located in or near the EDTX may face real challenges if the cases filed down there dry up. Small firms that can do local counsel work or handle smaller matters may be in a position to benefit, particularly if they are located close to or have significant experience in those district courts that will see more patent cases being filed there. Ultimately, change is constant, and when the Supreme Court speaks, things can definitely change. For patent litigators, the “where to file” question may become a lot easier because of TC Heartland. One certainty is that they will want to remain where the action is, even if patent cases start leaving the heartland.
Sponsored
Navigating Financial Success by Avoiding Common Pitfalls and Maximizing Firm Performance
Legal AI: 3 Steps Law Firms Should Take Now
The Business Case For AI At Your Law Firm
Early Adopters Of Legal AI Gaining Competitive Edge In Marketplace
Please feel free to send comments or questions to me at gkroub@kskiplaw.com or via Twitter: @gkroub. Any topic suggestions or thoughts are most welcome.
Gaston Kroub lives in Brooklyn and is a founding partner of Kroub, Silbersher & Kolmykov PLLC, an intellectual property litigation boutique. The firm’s practice focuses on intellectual property litigation and related counseling, with a strong focus on patent matters. You can reach him at gkroub@kskiplaw.com or follow him on Twitter: @gkroub.
Sponsored
Early Adopters Of Legal AI Gaining Competitive Edge In Marketplace
