Monday, May 22, 2017

Farewell, Eastern District of Texas?

I've been away all day, so I just now got around to reading the U.S. Supreme Court's 8-0 decision this morning in TC Heartland LLC v. Kraft Foods Group Brands LLC(Opinion by Justice Thomas.)  Without going into too many of the technical details, the Court overruled Federal Circuit precedent and reinstated the rule, which the Supreme Court had previously announced in 1957, that the appropriate venue for a civil action for patent infringement filed against a domestic U.S. corporation can be either (1) the district corresponding to the state in which the defendant is incorporated, or (2) the district corresponding to the state in which "the defendant has committed acts of infringement and has a regular and established place of business."  Under the Federal Circuit's now-overruled interpretation of the federal venue statute (the meaning of which that court believed Congress had implicitly modified in 1988) a patent suit could be filed in any district in which the court could assert personal jurisdiction over the defendant--essentially meaning that a big company like Samsung could be sued just about anywhere.  Seizing this opportunity, patentees (particularly patent assertion entities) in recent years had taken to filing a disproportionate share of patent infringement suits (over 40% in 2015) in the Eastern District of Texas, which was known for its more plaintiff-friendly procedures, a comparatively high overall success rate for patent owners, and comparatively high median damages awards (though not as high as some districts; see p.22 of PwC's recent Patent Litigation Study).  Prospectively, it seems likely that the holding in TC Heartland will lead to many fewer cases being filed in the U.S. District Court for the Eastern District of Texas, though it remains to be seen how the holding will affect pending cases; whether it will mollify Congress's long-standing concerns over PAE litigation; and whether it will motivate more lawsuits against end users (e.g., retailers who may have "a regular and established place of business" in the Eastern District of Texas).  For some of my thoughts on end user suits, see here.  

No comments:

Post a Comment