Washington DC
16 December 2016
Reporter: Barney Dixon

Forum shopping decision could reduce patent lawsuits

A US Supreme Court decision on forum shopping could lead to a reduction in patent lawsuits overall.

TC Heartland brought a patent case to the Supreme Court that asks whether the “patent venue statute, which provides that patent infringement actions ‘may be brought in the judicial district where the defendant resides’ is the sole and exclusive provision governing venue in patent infringement actions and is not to be supplemented by the statute governing ‘venue generally’, which has long contained a sub-section that, where applicable, deems a corporate entity to reside in multiple judicial districts”.

Experts say that if the Supreme Court rules in favour of ignoring the supplemented “venue generally” statute, there could be a reduction in the number of patent infringement suits filed overall, especially from so-called ‘patent trolls’.

Tom Duston, partner at Marshall, Gerstein & Borun, said: “The Supreme Court generally does not accept review of decisions of the Federal Circuit with the expectation of merely affirming those decisions.”

“The fact that the decision the Supreme Court has agreed to review is the denial of an extraordinary writ (ie, writ of mandamus) where the standard of review is exceedingly deferential to the Federal Circuit would seem to reinforce this expectation.”

He added: “The Supreme Court has rendered a number of decisions in the patent area recently that are hostile to the ‘patent litigation industry’ involving non-practicing entities. “

In agreement with Duston, Byron Pickard, director at Sterne, Kessler, Goldstein & Fox, added: “I would not be surprised to see a 9-0 vote in this case.”

“This case presents an issue reminiscent of the court’s recent decision in Daimler v Baumon, which was decided 9-0 and which severely cut back on the ability of plaintiffs to sue foreign companies in the U.S.”

“In many ways, this case presents the same underlying concerns as in Daimler about forum shopping and the fairness of forcing companies to defend suits where they have a limited presence.”

Duston said that a Supreme Court agreement with TC Heartland’s position were accepted, patent litigation would shift dramatically to the District of Delaware.

He said: “New filings in the Eastern District of Texas would dry up overnight. The more uncertain question is what would become of current cases that would now be pending in jurisdictions in which venue has now been declared improper.

“I suspect that courts with pending cases, and particularly the Eastern District of Texas, will look for rationales to continue overseeing those cases, especially those in which substantive actions have already occurred.”

Pickard agreed, saying: “I would expect a large downturn in the number of cases filed in the Eastern District of Texas, with many, if not most of those cases ending up in Delaware, Northern California, and New York because so many companies choose to incorporate in those states.”

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