Courts May Now Have More Leeway In Moving Patent Lawsuits Away From East Texas

from the slowly,-but-surely dept

Mon, Mar 10th 2008 9:44am — Mike Masnick

Slowly, but surely, the courts are fixing many (though, not nearly all) of the most egregious problems with the patent system. The Supreme Court has been a big part of this with a series of decisions in the last few years that are pushing to re-establish at least some of the patent system's original purpose from what it has turned into. The Court of Appeals for the Federal Circuit (CAFC), which is the appeals court that handles patent suit appeals (and is often considered one of the reasons why the patent system has gone so astray) appears to finally be getting the message. Earlier this year, we noted that CAFC was finally going to re-evaluate the patentability of software and business models. And, now, it looks like CAFC is looking to alleviate all the jurisdiction shopping that happens in the lower courts, leading to so many patent lawsuits being filed in Marshall, Texas.

What's slightly ironic, of course, is that one of the main reasons CAFC was created in the first place was to put an end to jurisdiction shopping in the past. What used to happen, prior to CAFC, was that patent attorneys knew which districts and which appeals courts tended to favor patent holders, and would rush to file in those districts. In forming CAFC, the idea was that all appeals would go to a central court. What they didn't expect was that CAFC would become dominated by former patent attorneys who were always in favor of more patents -- and that the jurisdiction shopping would just shift down to the district court level.

However, last week, CAFC came out with a ruling that appears to say that district courts should pay more attention to making sure patent lawsuits are held in districts that are convenient. Right now, in order to file in East Texas, all you need to do is claim that the companies "do business" in the district and to have a local lawyer (of which there are plenty willing to help). So you get absolutely ridiculous situations where two California companies right down the street from one another, find themselves in court in Texas for no reason other than the fact that the Texas district court is known to be both quick and likely to favor patent holders. This latest ruling certainly won't fix things entirely, but it does suggest that CAFC is at least sympathetic to the problem of patent holders picking a favorable jurisdiction, often at odds with the most reasonable location -- and suggesting that perhaps that doesn't make sense any more.

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Filed Under: cafc, east texas, jurisdiction shopping, lawsuits, patents

13 Comments

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MLS, 10 Mar 2008 @ 10:17am

Venue for Lawsuits
While the CAFC is the court to which appeals are taken in matters involving a substantial question of patent law, it is Congress who did not put the skids on general venue statutes concerning district courts in which lawsuits can be filed. The CAFC has no control over this other than to apply general rules such as forum non conveniens.

As I have stated, the CAFC has never been dominated by patent lawyers, with only three of its nine members having ever practiced patent law prior to their appointment to the federal bench.

As for the suggestion that the court is "patent happy", its jurisprudence over the years demonstrates this is hardly the case. In fact, many of the purported problems the court has supposedly created depend in large measure from Supreme Court dictates that in charitable terms can only be discribed as inconsistent, ambiguous, unenlightening, and largely unintelligible. I fully expect that an upcoming decision from the Supreme Court in the matter of LG v. Quanta will continue this fine tradition.
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DanC, 10 Mar 2008 @ 10:48am

Re: Venue for Lawsuits
Kimberly Moore, Richard Linn, Arthur Gajarsa, Randall Rader, Alan Lourie, Pauline Newman, and Paul Michel have all either litigated patent cases, or held posts pertaining to intellectual property prior to appointment.

That's 7 out of the 16 judges currently comprising the CAFC, based on just a cursory examination of their website. I don't currently have the time to examine the private practices of the remaining judges. Maybe later today.
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Willton, 10 Mar 2008 @ 11:25am

Re: Re: Venue for Lawsuits
Kimberly Moore, Richard Linn, Arthur Gajarsa, Randall Rader, Alan Lourie, Pauline Newman, and Paul Michel have all either litigated patent cases, or held posts pertaining to intellectual property prior to appointment.

Litigating a patent case does not make one a patent lawyer, nor does holding a post pertaining to intellectual property. A patent lawyer is a lawyer that primarily practices in patent law. Chief Judge Michel and Judge Rader never practiced patent law prior to being appointed to the bench.
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DanC, 10 Mar 2008 @ 12:37pm

Re: Re: Re: Venue for Lawsuits
Chief Judge Michel and Judge Rader never practiced patent law prior to being appointed to the bench.

I misread Michel's biographical info. My apologies.

From the CAFC website:

"Prior to his appointment, Judge Rader served as Minority Chief Counsel, Staff Director, Senate Committee on the Judiciary, Subcommittee on Patents, Trademarks, and Copyrights from 1987 to 1988."

To get back on the article, it seems like this may not be much of a precedent after all, since Micron was actually the first to file suit.
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Anonymous Coward, 10 Mar 2008 @ 12:43pm

Re: Venue for Lawsuits
In that case, what is your explanation for the fact that patent-holders undeniably seek out this district?
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MLS, 10 Mar 2008 @ 1:05pm

Re: Re: Venue for Lawsuits
Because the current venue statute permits it...that statute having been written and enacted by Congress. One of the current proposals for amending present day patent law is to amend the venue statute to address issues such as this.
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Anonymous Coward, 10 Mar 2008 @ 2:26pm

All this whining about venue selection, damage calculations, yada-yada-yada, is nothing but a thinly veiled attempt at making it harder for the little guy to patent and protect their inventions. Certain venues are selected over others for various reasons. In the case of TX the rules of the court are such to provide for a speedy and timely trial. The docket in some jurisdictions might delay for serval years . As they say, justice delayed in justice denied. Time is money and for a small company delays can be deadly. Not so for infringers of course. They’d like to delay until hell freezes over.
Steve
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Le Blue Dude, 10 Mar 2008 @ 2:32pm

Re: Re: Re: Venue for Lawsuits
I (personally) would respond, if I were in charge of a company, by simply refusing to do business in East Texas. That way I could punish Texas for the asshole judge, and show how absurd the whole thing was. My company site would mention that we do not employ East Texans, ship to East Texas, use East Texan goods or conduct any business within the boundaries of the district for patent law of East Texas. Problem (for me) solved, and I get to point out all of the absurdity.
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Anon, 10 Mar 2008 @ 2:58pm

Interesting...
I wonder why the big companies behind Patent Reform are lobbying to allow THEM to sue in Texas (i.e. wherever a product company has an R&D site) but don't want the little guys (and other non-practicing entities) to do the same.

Sounds reasonable, no?

Almost insulting how stupid they think we (and the Senate) are!!! I see that most large tech companies have initiated cases in E. Texas....
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Willton, 10 Mar 2008 @ 4:27pm

Re: Re: Re: Re: Venue for Lawsuits
I (personally) would respond, if I were in charge of a company, by simply refusing to do business in East Texas. That way I could punish Texas for the asshole judge, and show how absurd the whole thing was. My company site would mention that we do not employ East Texans, ship to East Texas, use East Texan goods or conduct any business within the boundaries of the district for patent law of East Texas. Problem (for me) solved, and I get to point out all of the absurdity.

One big problem - you can't preclude a suit from being brought in the Eastern District of Texas unless you actively avoid the entire state of Texas. That would require an entire boycott of an extremely large market. This is what we call "cutting your nose off to spite your face."
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Agnew van Tumthwatle, 10 Mar 2008 @ 5:00pm

Re: Re: Venue for Lawsuits
after reading "In that case, what is your explanation for the fact that patent-holders undeniably seek out this district?" I am NONPLUSSED. Is this person suggesting that a Paent holder -- whether independent or corporate -- like IBM perhaps -- should NOT choose to choose a venue that is SEEMINGLY favorable to them?

Put another way -- who with even the brains of a turkey (you know they will drown in a heavy rain by looking up) would NOT choose a favorable and fast and MUCH LESS EXPENSIVE VENUE?

Think of it this way -- If you have a choice of shoemakers -- one of whom is MUCH less expensive yet produced marvelously fitting shoes in the shortest possible time -- and all the rest who will have you walking barefoot (on Pins and Needles and Nails and hot coals -- for YEARS ON END ----WHICH would YOU choose?

End of discussion.
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DanC, 10 Mar 2008 @ 5:41pm

Re:
All this whining about venue selection, damage calculations, yada-yada-yada, is nothing but a thinly veiled attempt at making it harder for the little guy to patent and protect their inventions

And Marshall Texas is chosen by the plantiffs because they find in favor of the plaintiff 78% of the time, the jury pool is composed largely of the elderly, the trial is rushed, plaintiffs are awarded massive amounts of money far in excess of actual damages.

All this talk of "making it harder for the little guy" by allowing a venue that makes sense, or determining realistic damages is actually just a justification for abusing the judicial system.
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Matt Bennett, 11 Mar 2008 @ 10:59am

If you were a patent troll, wouldn't you just set up your offices in East Marshall? Might as well be near the court if you're going to spend so much time there, and now you'd also have the excuse needed to file there.
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