Selecting a Patent Suit Venue


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review of federal venue and jurisdiction; data re popular districts

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Selecting a Patent Suit Venue

  1. 1. Selecting a Patent Suit Venue Ann G. Fort July 27, 2011
  2. 2. GENERALLY RECOGNIZED FACTORS IN SELECTING A VENUE FOR PATENT INFRINGEMENT LITIGATION <ul><li>Venue statute </li></ul><ul><li>Personal jurisdiction over the defendant </li></ul><ul><li>Plaintiff’s “home court advantage” </li></ul><ul><li>“Pro-patent” jurisdiction </li></ul>
  3. 3. PATENT VENUE: 28 U.S.C. § 1400(b) <ul><li>“ 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). </li></ul><ul><li>“ 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).  </li></ul><ul><li>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. </li></ul>
  4. 4. PERSONAL JURISDICTION OVER OUT-OF-STATE DEFENDANT <ul><li>Fed. Cir law controls </li></ul><ul><li>Test: Satisfy forum state's long-arm statute + satisfy federal due process. </li></ul><ul><li>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 : </li></ul><ul><li>“ 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.” </li></ul><ul><li>Nuance Comm. v. Abbyy Software House , 626 F.3d 1222 (Fed. Cir. 2010) </li></ul>
  5. 5. TYPICAL GROUNDS FOR PERSONAL JURISDICTION <ul><li>Stream of Commerce theory – World Wide Volkswagen , Asahi Metals </li></ul><ul><li>Other contacts in jurisdiction – sometimes a close call (trade shows) </li></ul>
  6. 6. STREAM OF COMMERCE <ul><li>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. </li></ul><ul><li>Nuance Comm. v. Abbyy Software House , 626 F.3d 1222 (Fed. Cir. 2010): Due process satisfied where foreign manufacturer contracted with in-state distributor. </li></ul><ul><li>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. </li></ul><ul><li>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). </li></ul>
  7. 7. TRADE SHOW JURISDICTION <ul><li>Minimum contacts shown: multiple attendance/exhibition at trade shows in forum state </li></ul><ul><li>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.” </li></ul><ul><li>Patent Rights Protection Group, LLC v. Video Gaming Technologies, Inc., 603 F.3d 1364 (Fed. Cir. 2010). </li></ul>
  8. 8. NON-U.S. DEFENDANTS <ul><li>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); </li></ul><ul><li>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). </li></ul>
  9. 9. PLAINTIFF’S “HOME COURT ADVANTAGE” <ul><li>Lower costs litigating at home </li></ul><ul><li>Well-known employer/corporate citizen may hope for a sympathetic judge/jury by suing in home city. </li></ul><ul><li>BUT </li></ul><ul><li>Public opinion is a fickle thing. A layoff or factory closing can turn that opinion against the plaintiff overnight. </li></ul><ul><li>Famous ≠ Beloved: The 19 Most Hated Companies in America , The Atlantic, July 3, 2011 (banks, utility/cable companies, hotels, airlines, insurance companies, Facebook/Myspace) </li></ul>
  10. 10. TRAITS OF “PRO-PATENT” VENUE <ul><li>Patent owner’s goal – WIN </li></ul><ul><li>Injunction, damages or both </li></ul>
  11. 11. TRAITS OF A WINNING JURISDICTION <ul><li>High likelihood of granting injunction </li></ul><ul><li>Low likelihood of defense summary judgment </li></ul><ul><li>Speedy trial </li></ul><ul><li>High damage awards </li></ul>
  12. 12. SOURCES OF INFORMATION <ul><li>University of Houston Law Center Institute for Intellectual Property & Information Law: </li></ul><ul><li>Stanford Intellectual Property Litigation Clearinghouse, </li></ul><ul><li>Mark A. Lemley, Where to File Your Patent Case , 38 AIPLA Quarterly Journal Fall 2010 1 (2010) (analyzing data from Stanford IPLC) </li></ul><ul><li>IPO, The IP Record </li></ul><ul><li>Legal Metric research service reports </li></ul>
  14. 14. OVERALL RESULTS IN PATENT LITIGATION, 2000-2010 <ul><li>Per Lemley, contested cases resulted in overall patentee win rate of 32.5% </li></ul>
  15. 15. MOST POPULAR VENUES 2000-2010 <ul><li>Table 1: Number of Patent Cases Litigated in Districts with 25 or More Outcomes </li></ul>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
  16. 16. MOST POPULAR VENUES 2010 <ul><li>Table 2: Number of Patent Cases 2010 </li></ul>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
  17. 17. MOST POPULAR VENUES 2000-2010 – PATENTEE WIN RATE <ul><li>Table 3: Patentee Win Rate in Districts with 25 or More Outcomes </li></ul>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
  18. 18. OVERALL TRIAL RATE 2000-2010 <ul><li>Per Lemley – 2.8% of patent cases reached trial </li></ul><ul><li>More trials – fewer settlements, defense SJs </li></ul><ul><li>Faster trials = money/injunction sooner; pressure leading to settlements </li></ul>
  19. 19. MOST POPULAR VENUES 2000-2010 – TRIAL RATE <ul><li>Table 4: Percentage of Patent Cases that Result in Trial in Districts with 25 or More Outcomes </li></ul>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
  20. 20. MOST POPULAR VENUES 2000-2010 – TIME TO TRIAL <ul><li>Table 5: Districts with 25 or More Outcomes, Sorted by Time to Trial </li></ul>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
  21. 21. “ BEST” VENUES 2000-2010 – AGGREGATED FACTORS <ul><li>Table 6: Aggregate Ranking of Districts </li></ul>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
  22. 22. DAMAGE AWARDS <ul><li>Table 7: Distribution of 25 Highest Awards, 2005 – 4/11/2011 </li></ul>Source: 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
  23. 23. “ 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)
  24. 24. INJUNCTIONS, POST-EBAY (5/15/2006 – 4/11/2011) <ul><li>132 Injunctions granted </li></ul><ul><li>44 Denied </li></ul><ul><li>Source: </li></ul>
  25. 25. INJUNCTIONS IN LEMLEY’S BEST VENUES <ul><li>Table 8: Grants v. Denials in Top Plaintiffs’ Districts, Post-eBay (ending 4/11/2011) </li></ul>Source: 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
  26. 26. OTHER FACTORS <ul><li>Experience with technology or other issues in the case </li></ul><ul><li>Patent Local Rules </li></ul><ul><ul><li>But of Lemley’s Best Venues, only 4 have PLR: E.D. Tex, W.D. Tex., N.D. Tex., E.D. Mo. </li></ul></ul><ul><li>“ Patent Pilot Program” participation </li></ul><ul><ul><li>Goal: Improve speed & quality by building expertise </li></ul></ul>
  27. 27. PATENT PILOT PROGRAM DISTRICTS <ul><li>Eastern District of New York </li></ul><ul><li>Southern District of New York </li></ul><ul><li>Western District of Pennsylvania </li></ul><ul><li>District of New Jersey </li></ul><ul><li>District of Maryland </li></ul><ul><li>Northern District of Illinois </li></ul><ul><li>Southern District of Florida* </li></ul><ul><li>* Lemley Top 10 District </li></ul><ul><li>District of Nevada </li></ul><ul><li>Eastern District of Texas* </li></ul><ul><li>Northern District of Texas* </li></ul><ul><li>Western District of Tennessee </li></ul><ul><li>Central District of California </li></ul><ul><li>Northern District of California </li></ul><ul><li>Southern District of California </li></ul>
  28. 28. ONCE YOU’RE THERE, CAN YOU STAY? <ul><li>TRANSFER BASICS: </li></ul><ul><li>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” </li></ul><ul><li>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” </li></ul><ul><li>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). </li></ul>
  29. 29. CURRENT TRANSFER TRENDS <ul><li>Transfer governed by regional circuit law, not Federal Circuit law. </li></ul><ul><li>In re Volkswagen of Am., Inc. , 545 F.3d 304 (5th Cir. 2008)( en banc ). </li></ul><ul><li>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 </li></ul><ul><li>Since TS Tech through 2010, at least 14 writs of mandamus sought from E. D. Texas: </li></ul><ul><ul><li>Six granted writ for transfer </li></ul></ul><ul><ul><li>Six denied writ for transfer </li></ul></ul><ul><ul><li>Two had no decision on the merits </li></ul></ul>
  30. 30. FACTORS IN TRANSFER ANALYSIS <ul><li>Private Interests: </li></ul><ul><ul><li>Access to proof </li></ul></ul><ul><ul><li>Availability of compulsory process for witnesses </li></ul></ul><ul><ul><li>Cost of attendance for willing witnesses </li></ul></ul><ul><ul><li>Other practical problems making trial “easy, expeditious and inexpensive” </li></ul></ul><ul><li>Public Interests: </li></ul><ul><ul><li>Impact of court congestion </li></ul></ul><ul><ul><li>Local interest in having localized issues decided at home </li></ul></ul><ul><ul><li>Forum’s familiarity with governing law </li></ul></ul><ul><ul><li>Avoidance of conflict of laws or application of foreign laws </li></ul></ul><ul><ul><li>Gulf Oil v. Gilbert, 33 U.S. 501 (1947), cited in In re Volkswagen </li></ul></ul>
  31. 31. CONCLUSIONS? <ul><li>Assuming venue statute, personal jurisdiction satisfied: </li></ul><ul><ul><li>Remember - “Past performance is not a predictor of future results” and “Your mileage may vary.” This is not an exact science. </li></ul></ul><ul><ul><li>Prioritize your goals </li></ul></ul><ul><ul><li>Weight factors toward most important goal </li></ul></ul><ul><ul><li>Consider chances of transfer </li></ul></ul>
  32. 32. <ul><li>QUESTIONS? </li></ul>Please contact: Ann G. Fort at [email_address]