Goodbye Texas Eastern District

 

But armadillos love patent trolls!

In the TC Heartland v. Kraft Food case, the Supreme Court ruled that the Eastern District Court of Texas is no longer patent litigation central. Goodbye forum shopping. 

In a strange quirk of patent law, a single judge from Marshall Texas (population 24,000) has been deciding more than 25% of the US patent infringement cases. If you wanted to sue someone for patent infringement and wanted a friendly court, the Eastern District Court of Texas was the place for you.

Put it this way: so much patent litigation happened here that Samsung actually sponsored a local Marshall Texas ice skating rink, just to keep the locals happy.

This is very unusual.  Corporations are typically sued in their state of incorporation or in the primary state where they do business.  However, patent litigation has had its own set of rules.  For nearly a generation, lower courts have interpreted these rules as implying that corporations can be for sued for patent violations nearly anywhere in the US.

It didn’t take long for patent litigation experts to figure out that if this was the rule, then why not sue where the courts are friendliest? This practice is also called “forum shopping”.

The local economy around Marshall Texas had been struggling.  What to do? In what may have been a bit of a “race to the bottom”, the Federal Court and local juries in Marshall Texas became increasingly patent-plaintiff-friendly.  Lots of attorneys with big corporate expense accounts started flying to Marshall.  Good for the local economy, but it starts to look a bit fishy…

In the recent TC Heartland v. Kraft Food decision, the Supreme Court decided that this had to stop.  They ruled that if Congress had intended this sort of thing, Congress would have said so plainly.  They also pointed out that there wasn’t much of a basis for the “file anywhere” interpretation. So goodbye “file anywhere” rule.  And for the most part, goodbye Eastern District Court of Texas.

Going forward, the new hot spots for patent litigation may become Delaware (many corporations are incorporated there), California (high tech industry), and other high-tech areas.

Patent demand letters

Frustrated patent troll
Frustrated patent troll

Patent demand letters are stressful.  Before responding or ignoring, evaluate infringement, patent prosecution history, ownership, and litigation history.

Has your startup received a “demand” letter asserting that you are infringing on a patent?  Although real infringement of valid patents does occur, and some of these letters are legitimate, many demand letters are sent in less than 100% good faith. The sender may be betting that the startup will settle quickly to avoid litigation costs, regardless of the actual merits of the situation.

Don’t immediately contact the sender, and don’t ignore the letter either.  Instead, calm down and evaluate the facts, preferably with the help of a patent attorney.  Is there a plausible infringement problem or not?  How to tell the difference?  A few common methods are discussed below.

To start, get: 1) a copy of the issued patents discussed in the demand letter, 2) the USPTO prosecution history of these patents, and 3) information about the allegedly infringing product.  If the letter doesn’t provide actual issued patent numbers, or if the letter only cites patent application numbers, the probability that the letter is bogus becomes higher.

Look at the independent claims for each patent (claim 1 is not always the broadest claim), and see if your allegedly infringing product infringes the entire wording of any independent claim. If so, look at the relevant dependent claims for more detail. If the letter argues contributory infringement, combine your product with the other accused product for this analysis, and check if your marketing literature is promoting this combination.

The patent prosecution history for the patents in question, usually downloadable from the USPTO, can be very relevant. This history will often reference if the patent has been used in litigation before; if the patent has been reevaluated by either reexamination or the Patent Trial and Appeal Board (PTAB); and if the patent applicant had to make significant concessions during the patent prosecution history.

The patent’s USPTO assignment records can be used to better understand the relationship between the sender and the actual patent owner of record. This is often obfuscated. What is this relationship, and is the purported patent owner the real patent owner?

If there is a history of litigation, check it out. Patent litigation usually takes place in Federal Courts.  This is usually available through PACER (Public Access to Court Electronic Records) and a number of other sources. Has the patent owner been filing a lot of lawsuits and then settling before the court reaches a decision, or does the patent owner usually win?

There are many other issues that can be explored as well, but this type of information can help you and your attorney better evaluate what your next steps should be.