selecting a patent suit venue

Selecting a Patent Suit Venue

Ann G. FortJuly 27, 2011

©2011 Sutherland Asbill & Brennan LLP

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

District Total

Central District of California 2289

Northern District of California 1424

Northern District of Illinois 1233

Eastern District of Texas 1024

Southern District of New York 1018

District of Delaware 1017

District of New Jersey 987

District of Minnesota 600

District of Massachusetts 584

Southern District of California 519

Source: Lemley, Where to File


MOST POPULAR VENUES 2010

Table 2: Number of Patent Cases 2010

District Total



Northern District of Illinois 249

Central District of California 231


District of New Jersey 164

Southern District of New York 132

Northern District of Ohio 80


Eastern District of Virginia 69

Source: IPO, The IP Record 2011


MOST POPULAR VENUES 2000-2010 – PATENTEE WIN RATE

Table 3: Patentee Win Rate in Districts with 25 or More Outcomes

DistrictClaimant Win Percentage

Northern District of Texas 55.1%

Middle District of Florida 46.3%

District of Nevada 46.2%

District of Delaware 45.3%

District of Oregon 45.2%

Eastern District of Texas 40.3%

Eastern District of Missouri 40.0%

District of Massachusetts 38.4%

Southern District of New York 37.0%

Central District of California 36.3%



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

DistrictPercentage to Trial

District of Delaware 11.8%

Eastern District of Texas 8.0%

Western District of Wisconsin 7.4%

Eastern District of Virginia 6.4%

District of Massachusetts 6.2%

Southern District of Florida 4.4%

Eastern District of Missouri 4.1%

Western District of Texas 4.0%

Middle District of Florida 4.0%

Southern District of Texas 3.5%



MOST POPULAR VENUES 2000-2010 – TIME TO TRIAL

Table 5: Districts with 25 or More Outcomes, Sorted by Time to Trial

DistrictTime to Trial (years)

Western District of Wisconsin 0.67

Eastern District of Virginia 0.96

Southern District of Florida 1.66

Middle District of Florida 2.00

District of Delaware 2.03

District of Oregon 2.07

Eastern District of Texas 2.13

Western District of Washington 2.19

District of Maryland 2.22

Northern District of Texas 2.26



“BEST” VENUES 2000-2010 – AGGREGATED FACTORS

Table 6: Aggregate Ranking of Districts

DistrictClaimant Win Percentage Ranking

Percent to Trial Ranking

Time to Resolution Ranking

Time to Trial Ranking

Aggregate Ranking

Middle District of Florida 2 9 6 4 21Eastern District of Virginia 14 4 2 2 22District of Delaware 4 1 15 5 25Southern District of Florida 18 6 4 3 31Western District of Wisconsin 28 3 1 1 33Northern District of Texas 1 17 10 10 38Eastern District of Texas 6 2 28 7 43Western District of Texas 11 8 11 16 46District of Oregon 5 11 25 6 47Eastern District of Missouri 7 7 18 15 47Source: Lemley, Where to File


DAMAGE AWARDS

Table 7: Distribution of 25 Highest Awards, 2005 – 4/11/2011

DistrictNo. of Top 25 Damage Awards



Southern District of California 2



District of Arizona 1

District of Kansas 1

Northern District of New York 1

District of Oregon 1

District of Rhode Island 1

Source: Patstats.org


“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



INJUNCTIONS IN LEMLEY’S BEST VENUES

Table 8: Grants v. Denials in Top Plaintiffs’ Districts, Post-eBay (ending 4/11/2011)

District Grants Denials

Middle District of Florida 3 2

Eastern District of Virginia 1 2

District of Delaware 11 7

Southern District of Florida 3 0

Western District of Wisconsin 1 1

Northern District of Texas 2 0

Eastern District of Texas 19 9

Western District of Texas 2 0

District of Oregon 3 0

Eastern District of Missouri 0 0



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 protected]

selecting a patent suit venue

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