by Dennis Crouch
Back in 2008, I remember speaking with Judge Rader about the court’s recent jurisprudence. My thought was that In re TS Tech (Fed. Cir. 2008) was the most important of the year thus far. In that case, the Federal Circuit started the trend of mandamus actions for venue change that had an important (although not conclusive) impact on venue in patent cases. Following TS Tech, patent plaintiffs learned ways to shape their behavior to better ensure venue by, for example, incorporating in Texas and creating a headquarters in Marshall. At that time, we also saw a rise in patent infringement filings in Delaware – the corporate home for many companies, plaintiffs and defendants alike.
The new pending mandamus petition of In re TC Heartland (Fed. Cir. 2015) has the potential of even more dramatically shaking-up patent litigation filing strategy and limiting the extensive forum shopping available under current Federal Circuit doctrine. In particular, the E.D. Texas filings might be brought-back into the norm.
The Federal Circuit has taken its first step toward hearing the mandamus action by ordering Kraft to provide a response to Heartland’s petition. The per curiam order requires Kraft to respond within seven days. 10-26-15Order.
In the case, Heartland proposes a reinterpretation of the more powerful doctrine of jurisdiction rather than the venue requirements of TS Tech.
Under Heartland’s proposed statutory interpretation, a patent case could only be filed in districts (1) where the defendant resides or (2) where the defendant has both committed acts of infringement and has a regular and established place of business. This stems directly from the language of 28 U.S.C. 1400(b).
Further, in cases where a court’s personal jurisdiction over the defendant is based on acts of infringement in the forum (specific jurisdiction rather than general jurisdiction), Heartland argues that the courts don’t have jurisdiction to adjudge the alleged out-of-state infringement.
Susan Decker provides more perspective in Bloomberg.
[…] 40% of patent suits this year have been filed in a single district where most of the defendants are neither incorporated nor have a place of business. This trend has existed for a number of years. Today, November 6, 2015, Lecorpio LLC joined a […]
[…] 40% of patent suits this year have been filed in a single district where most of the defendants are neither incorporated nor have a place of business. This trend has existed for a number of years. Today, November 6, 2015, Lecorpio LLC joined a […]
[…] week I discussed the TC Heartland mandamus petition here and here. Two amicus briefs have now been filed in support of the […]
An arcane procedural question that may pique the interest of an expert. From the order: “ Kraft Foods Group Brands LLC is directed to respond to the petition no later than seven days from the date of filing of this order. Any reply [by petitioner] must be filed no later than three days from the date of the response.”
This seemed like a short fuse, so I looked up the Rules on the CAFC website. They are in side-by-side columns with the general rules of appellate procedure on the left and Federal Circuit rules on the right. Rule 21 covers Writs of Mandamus.
From the general rules: “(b)(1) The court may deny the petition without an answer. Otherwise, it must order the respondent, if any, to answer within a fixed time.
No fixed times are given for respondent’s answer. A reply by the petitioner is not mentioned.
From the CAFC Rules: “(a)Title; Fee; Answer. (5) No answer may be filed by any respondent unless ordered by the court.” and “(c) Reply. If the court directs the filing of a response [answer?] to a petition, then the petitioner may file a reply within 7 days of the date of the filing of the response. The court may act on the petition before the receipt of any reply, and thus the filing of a reply should be expedited if appropriate.”
No fixed times are given for the respondent’s answer to the petition, but the petitioner is given 7 days to reply to respondent’s answer. However, the Order shortened the reply to 3 days. Does this mean the court is likely to act expeditiously on the petition? Is the court playing by the rules?
Troubled, three days is not much, but enough. Recall the emergency hearings the Supreme Court twice gave Bush v. Gore?
Under FRAP Rule 2, the Federal Circuit is free to set a deadline for the reply that is different from Rule 21. They are likely expediting this because the district court case is ongoing and so they want to act as quickly as possible before the case gets too far down the road.
The panel certainly has discretion to expedite the mandamus briefing. Fed. R. App. P. 2 (“On its own or a party’s motion, a court of appeals may
— to expedite its decision or for other good cause — suspend any provision of these rules in a particular case and order proceedings as it directs, except as otherwise provided in Rule 26(b).).
That it did expedite suggests to me that the panel is taking this very seriously.
Thanks to the three of you.
The CAFC granted the parties’ joint motion to extend the deadlines. The response to the petition is now due November 9, with the reply due November 16. So at least the briefing won’t be too rushed.
Under Heartland’s proposed statutory interpretation, a patent case could only be filed in districts (1) where the defendant resides or (2) where the defendant has both committed acts of infringement and has a regular and established place of business. This stems directly from the language of 28 U.S.C. 1400(b).
I’d be curious to know whether, over the last 7 years, any of the usual suspects out there decried the “judicial activism” of a court “ignoring the words” of 1400(b). We can bet that there is going to be some howling by those “principled” folks now.
Petitioner’s argument – based partly on statistics – would lead to the absurd result that a small company would have to suffer the indignity of having its patents infringed in its own backyard by a multinational corporation — and having no choice but to sue that multinational far away, either at the multinational’s home base or another location where the multinational has an established business and which is therefore convenient only to the multinational alleged infringer. While there might be the odd case where the infringer had a local office nearby the plaintiff, so that the case would stay where the plaintiff filed it, one would expect that to be the exception, given the vast numbers of districts in the US court system. Bottom line: the local company who can least afford to seek to litigate on foreign turf has to make the Hobson’s choice of enduring infringement or litigating vastly more expensively, far from its home and probably with far away lawyers and paying for travel and hotels. Isn’t it enough protection for the fat cats that if they get sued in EDTX (or elsewhere) due to their own activities there that they can have the case transferred if the plaintiff has no connection to its chosen forum – which is the current state of the law? Do they now need more than that, pulling the rug out from under any plaintiff who sues in its legitimate home court due to the defendants’ purposeful activities in that same venue?
The fix for both that and a E.D. Texas patent suit Mecca inconvenient to almost everyone would be a new patent venue statute that would allow bringing suit in any district with a principal place of business of either the patent owner or the defendant, for patent owners that have has a real business, not just lawsuits and licenses. [Defendants all have real businesses, or they would not be being sued, and they normally have far greater litigation burdens.]
A new patent venue statute is already being proposed re the pending patent litigation, but given all the lobbying activities one wonders what will transpire?
Paul, Fourco held that congress did not intended to change the law from 1911 to the 1948 version. The substitution of 1391(c) into the 1911 version would make no sense. Since VE Holding did not consider this, it is ripe for reconsideration and overrule en banc.
It is odd that the petition did not point this out, however — at least, not so far as I can recall.
This mandamus petition states, inter alia, that: “To be clear, the argument set forth here is that this Court’s holding in VE Holding no longer applies given the changed language in §§ 1391(a) and (c). In the alternative, however, the validity of VE Holding should be re-examined by this Court en banc. The reasoning of VE Holding directly conflicts with the Supreme Court’s holding in Fourco. ”
[However, I wish the latter argument had been further supported in this petition by some of the errors of statutory interpretation in VE Holding noted in the comments of the preceding Patently-O blog. ]
P.S. Finding and citing appropriate citations on statutory interpretation from Justice Scalia’s new treatise “Reading Law: The Interpretation of Legal Texts” might be useful? Especially if the mandamus petition is to get the attention of the Fed. Cir. that the Sup. Ct. might weigh in on this issue. Ned notes that the Sup. Ct. did not take cert on VE Holding, but that was back when they rarely took cert from the Fed. Cir. on anything, and that is clearly not the situation these days.
Hmm…Judge Posner doesn’t seem to be too enamored with Justice Scalia’s new book:
link to newrepublic.com
I can’t wade in here much more than pointing this out.
Interesting. It does look like the Seventh Circuit is where the real talent of the American judicial system currently exists. Posner and Easterbrook. Great jurists.
It is interesting to read Stonite Products Co. v. Melvin Lloyd Co., 315 US 561 – Supreme Court 1942, relied upon by Fourco Glass Co. v. Transmirra Products Corp., 353 US 222 – Supreme Court 1957. Stonite held that the 1897 statute regarding patent venue was intended to replace and be exclusive of a more general and more permissive venue statute. Fourco held that there was no substantive change intended between the 1911 version and the 1948 version. The 1911 version read,
At the time of Fourco, 1391(c) would permit a corporation to be sued where it was doing business. Once can see from the 1911 version that such an inclusion would have render the clause about acts of infringement and doing business irrelevant for corporations. Thus, the 1948 version should be interpreted in the same way as the 1911 version. “Resides” for a corporation must mean their place of incorporation or where they have a principle place of business.
VE Holdings did not discuss the wording of the 1911 statute and the holding of Fourco that no substantive change occurred. So, if we read the 1988 amendment into the 1911 statute, it again makes no sense. Corporations can only be sued for patent infringement where they are incorporated, etc.; or where they commit acts of infringement and have a regular and established place of business.
That said, the Supreme Court did not take certiorari. VE Holding Corp. v. Johnson Gas Appliance Co., 499 U.S. 922, 111 S. Ct. 1315, 113 L. Ed. 2d 248 (Supreme Court 1991).
Why? VE Holding is remarkable in its wrongheadedness.
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