Selecting a Patent Suit Venue

Selecting a Patent Suit Venue Ann G. Fort July 27, 2011

GENERALLY RECOGNIZED FACTORS IN SELECTING A VENUE FOR PATENT INFRINGEMENT LITIGATION
Venue statute
Personal jurisdiction over the defendant
Plaintiff’s “home court advantage”
“Pro-patent” jurisdiction

PATENT VENUE: 28 U.S.C. § 1400(b)
“ Any civil action for 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.” 28 U.S.C. § 1400(b).
“ For purposes of venue under this chapter , a defendant that is a corporation shall be deemed to reside in any judicial district in which it is subject to personal jurisdiction .” 28 U.S.C. § 1391(c) (emphasis added).
VE Holding Corp. v. Johnson Gas Appliance Co ., 917 F.2d 1574 (Fed. Cir. 1990), cert. den. 499 U.S. 922 (1990): patent infringement venue is proper v. a corporation wherever it is subject to personal jurisdiction.

PERSONAL JURISDICTION OVER OUT-OF-STATE DEFENDANT
Fed. Cir law controls
Test: Satisfy forum state's long-arm statute + satisfy federal due process.
Most states interpret long-arm statutes to be co-extensive with due process, so test collapses down to familiar “minimum contacts” test under Int’l Shoe, Burger King :
“ The Federal Circuit applies a three prong test to determine if specific jurisdiction exists: (1) whether the defendant purposefully directed activities at residents of the forum; (2) whether the claim arises out of or relates to those activities; and (3) whether assertion of personal jurisdiction is reasonable and fair.”
Nuance Comm. v. Abbyy Software House , 626 F.3d 1222 (Fed. Cir. 2010)

TYPICAL GROUNDS FOR PERSONAL JURISDICTION
Stream of Commerce theory – World Wide Volkswagen , Asahi Metals
Other contacts in jurisdiction – sometimes a close call (trade shows)

STREAM OF COMMERCE
Sufficient to show (1) placing a product in the stream of commerce; (2) with the expectation that it would be purchased in the forum state.
Nuance Comm. v. Abbyy Software House , 626 F.3d 1222 (Fed. Cir. 2010): Due process satisfied where foreign manufacturer contracted with in-state distributor.
Beverly Hills Fan Co. v. Royal Sovereign Corp. , 21 F.3d 1558 (Fed. Cir. 1994): Due process satisfied based on shipping 52 fans to a retailer with 6 outlets in the forum state.
NOTE: Some states’ long-arm statutes do not support this, e.g., NY Stephan v. Babysport, LLC , 499 F. Supp. 2d 279 (E.D.N.Y. 2007).

TRADE SHOW JURISDICTION
Minimum contacts shown: multiple attendance/exhibition at trade shows in forum state
Jurisdiction not unreasonable: no compelling burden on defendants; “their admitted presence at numerous trade shows in Nevada indicates that, despite their arguments to the contrary, neither company faces a particularly onerous burden in defending itself in Nevada.”
Patent Rights Protection Group, LLC v. Video Gaming Technologies, Inc., 603 F.3d 1364 (Fed. Cir. 2010).

NON-U.S. DEFENDANTS
But venue for a foreign corporation is proper “in any district.” 28 U.S.C. § 1391(d); Brunette Mach. Works Ltd. v. Kockum Indus., Inc. , 406 U.S. 706 (1972);
Fed. R. Civ. P. 4(k)(2) (jurisdiction can be based on contacts with U.S. as a whole if contacts with any single state not sufficient).

PLAINTIFF’S “HOME COURT ADVANTAGE”
Lower costs litigating at home
Well-known employer/corporate citizen may hope for a sympathetic judge/jury by suing in home city.
BUT
Public opinion is a fickle thing. A layoff or factory closing can turn that opinion against the plaintiff overnight.
Famous ≠ Beloved: The 19 Most Hated Companies in America , The Atlantic, July 3, 2011 (banks, utility/cable companies, hotels, airlines, insurance companies, Facebook/Myspace)

TRAITS OF “PRO-PATENT” VENUE
Patent owner’s goal – WIN
Injunction, damages or both

TRAITS OF A WINNING JURISDICTION
High likelihood of granting injunction
Low likelihood of defense summary judgment
Speedy trial
High damage awards

SOURCES OF INFORMATION
University of Houston Law Center Institute for Intellectual Property & Information Law: Patstats.org
Stanford Intellectual Property Litigation Clearinghouse, www.lexmachina.org
Mark A. Lemley, Where to File Your Patent Case , 38 AIPLA Quarterly Journal Fall 2010 1 (2010) (analyzing data from Stanford IPLC)
IPO, The IP Record
Legal Metric research service reports

ARE POPULAR PLAINTIFFS’ DISTRICTS REALLY “BEST” DISTRICTS?

OVERALL RESULTS IN PATENT LITIGATION, 2000-2010
Per Lemley, contested cases resulted in overall patentee win rate of 32.5%

MOST POPULAR VENUES 2000-2010
Table 1: Number of Patent Cases Litigated in Districts with 25 or More Outcomes
Source: Lemley, Where to File 519 Southern District of California 584 District of Massachusetts 600 District of Minnesota 987 District of New Jersey 1017 District of Delaware 1018 Southern District of New York 1024 Eastern District of Texas 1233 Northern District of Illinois 1424 Northern District of California 2289 Central District of California Total District

MOST POPULAR VENUES 2010
Table 2: Number of Patent Cases 2010
Source: IPO, The IP Record 2011 69 Eastern District of Virginia 78 District of Massachusetts 80 Northern District of Ohio 132 Southern District of New York 164 District of New Jersey 184 Northern District of California 231 Central District of California 249 Northern District of Illinois 273 District of Delaware 446 Eastern District of Texas Total District

MOST POPULAR VENUES 2000-2010 – PATENTEE WIN RATE
Table 3: Patentee Win Rate in Districts with 25 or More Outcomes
Source: Lemley, Where to File 36.3% Central District of California 37.0% Southern District of New York 38.4% District of Massachusetts 40.0% Eastern District of Missouri 40.3% Eastern District of Texas 45.2% District of Oregon 45.3% District of Delaware 46.2% District of Nevada 46.3% Middle District of Florida 55.1% Northern District of Texas Claimant Win Percentage District

OVERALL TRIAL RATE 2000-2010
Per Lemley – 2.8% of patent cases reached trial
More trials – fewer settlements, defense SJs
Faster trials = money/injunction sooner; pressure leading to settlements

MOST POPULAR VENUES 2000-2010 – TRIAL RATE
Table 4: Percentage of Patent Cases that Result in Trial in Districts with 25 or More Outcomes
Source: Lemley, Where to File 3.5% Southern District of Texas 4.0% Middle District of Florida 4.0% Western District of Texas 4.1% Eastern District of Missouri 4.4% Southern District of Florida 6.2% District of Massachusetts 6.4% Eastern District of Virginia 7.4% Western District of Wisconsin 8.0% Eastern District of Texas 11.8% District of Delaware Percentage to Trial District

MOST POPULAR VENUES 2000-2010 – TIME TO TRIAL
Table 5: Districts with 25 or More Outcomes, Sorted by Time to Trial
Source: Lemley, Where to File 2.26 Northern District of Texas 2.22 District of Maryland 2.19 Western District of Washington 2.13 Eastern District of Texas 2.07 District of Oregon 2.03 District of Delaware 2.00 Middle District of Florida 1.66 Southern District of Florida 0.96 Eastern District of Virginia 0.67 Western District of Wisconsin Time to Trial (years) District

“ BEST” VENUES 2000-2010 – AGGREGATED FACTORS
Table 6: Aggregate Ranking of Districts
Source: Lemley, Where to File 7 5 11 6 1 28 18 4 14 2 Claimant Win Percentage Ranking 7 11 8 2 17 3 6 1 4 9 Percent to Trial Ranking 18 25 11 28 10 1 4 15 2 6 Time to Resolution Ranking 15 6 16 7 10 1 3 5 2 4 Time to Trial Ranking 47 Eastern District of Missouri 47 District of Oregon 46 Western District of Texas 43 Eastern District of Texas 38 Northern District of Texas 33 Western District of Wisconsin 31 Southern District of Florida 25 District of Delaware 22 Eastern District of Virginia 21 Middle District of Florida Aggregate Ranking District

DAMAGE AWARDS
Table 7: Distribution of 25 Highest Awards, 2005 – 4/11/2011
Source: Patstats.org 1 District of Rhode Island 1 District of Oregon 1 Northern District of New York 1 District of Kansas 1 District of Arizona 2 District of Massachusetts 2 District of Delaware 2 Southern District of California 2 Northern District of California 12 Eastern District of Texas No. of Top 25 Damage Awards District

“ BEST” VENUES v. BIG MONEY “ Best” Venues M. D. Fla. E. D. Va. S.D. Fla. W. D. Wis. N. D. Tex. W. D. Tex. E. D. Tex (12) D. Del. (2) D. Ore. (1) Most Big $ Awards N. D. Cal. (2) S. D. Cal. (2) D. Mass. (2) D. Ariz. (1) D. Kan. (1) N. D. N. Y. (1) D. R. I. (1)

INJUNCTIONS, POST-EBAY (5/15/2006 – 4/11/2011)
132 Injunctions granted
44 Denied
Source: Patstats.org

INJUNCTIONS IN LEMLEY’S BEST VENUES
Table 8: Grants v. Denials in Top Plaintiffs’ Districts, Post-eBay (ending 4/11/2011)
Source: Patstats.org 0 3 2 19 2 1 3 11 1 3 Grants 0 0 0 9 0 1 0 7 2 2 Denials Eastern District of Missouri District of Oregon Western District of Texas Eastern District of Texas Northern District of Texas Western District of Wisconsin Southern District of Florida District of Delaware Eastern District of Virginia Middle District of Florida District

OTHER FACTORS
Experience with technology or other issues in the case
Patent Local Rules
But of Lemley’s Best Venues, only 4 have PLR: E.D. Tex, W.D. Tex., N.D. Tex., E.D. Mo.
“ Patent Pilot Program” participation
Goal: Improve speed & quality by building expertise

PATENT PILOT PROGRAM DISTRICTS
Eastern District of New York
Southern District of New York
Western District of Pennsylvania
District of New Jersey
District of Maryland
Northern District of Illinois
Southern District of Florida*
* Lemley Top 10 District
District of Nevada
Eastern District of Texas*
Northern District of Texas*
Western District of Tennessee
Central District of California
Northern District of California
Southern District of California

ONCE YOU’RE THERE, CAN YOU STAY?
TRANSFER BASICS:
28 U.S.C. § 1404(a) – court may transfer to any other district in which the case could have been brought “for the convenience of the parties, in the interests of justice”
28 U.S.C. § 1406(a) – if venue is improper, the district court “shall dismiss, or if it be in the interest of justice, transfer such case to any district or division in which it could have been brought”
Common law forum non conveniens – case can be dismissed if there is another, more convenient forum in another jurisdiction. Bonzel v. Pfizer, Inc. , 439 F.3d 1358 (Fed. Cir. 2006) (affirming dismissal in favor of action in Germany enforcing a German license agreement with a German doctor).

CURRENT TRANSFER TRENDS
Transfer governed by regional circuit law, not Federal Circuit law.
In re Volkswagen of Am., Inc. , 545 F.3d 304 (5th Cir. 2008)( en banc ).
In re TS Tech , 551 F.3d 1315 (Fed. Cir. 2008): on petition for writ of mandamus, applied; In re Volkswagen and ordered E.D. Tex. to transfer
Since TS Tech through 2010, at least 14 writs of mandamus sought from E. D. Texas:
Six granted writ for transfer
Six denied writ for transfer
Two had no decision on the merits

FACTORS IN TRANSFER ANALYSIS
Private Interests:
Access to proof
Availability of compulsory process for witnesses
Cost of attendance for willing witnesses
Other practical problems making trial “easy, expeditious and inexpensive”
Public Interests:
Impact of court congestion
Local interest in having localized issues decided at home
Forum’s familiarity with governing law
Avoidance of conflict of laws or application of foreign laws
Gulf Oil v. Gilbert, 33 U.S. 501 (1947), cited in In re Volkswagen

CONCLUSIONS?
Assuming venue statute, personal jurisdiction satisfied:
Remember - “Past performance is not a predictor of future results” and “Your mileage may vary.” This is not an exact science.
Prioritize your goals
Weight factors toward most important goal
Consider chances of transfer

QUESTIONS?
Please contact: Ann G. Fort at [email_address]

Selecting a Patent Suit Venue

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