Split the Cake to Eat it Whole: Ikorongo Argues for its Divide and Conquer Strategy

by Dennis Crouch

Ikorongo Texas LLC, et al. v. Samsung Electronics Co., Ltd., et al. (Supreme Court 2022)

Ikorongo Texas LLC holds exclusive rights to a set of patents, but only with respect to use of the inventions in counties within the Western District of Texas.  This includes McLennan County, home of Waco Texas and Judge Albright’s court.  Ikorongo Tech LLC holds the remaining interest in the patents.  This cutting-up of ownership rights is supported by old Supreme Court precedent as well as the Patent Act itself. See, Waterman v. Mackenzie, 138 U.S. 252 (1891) and 35 U.S.C. § 261 (patent rights may be conveyed “to the whole or any specified part of the United States”). Ikorongo Texas is also a Texas LLC (corporate registration in Texas), although its principles reside in North Carolina.

Ikorongo Texas then sued several companies, including Samsung & LG for patent infringement in WDTX.  The defendants asked that the case be transferred to the more-convenient forum of NDCal under 28 U.S.C. § 1404.  Although Judge Albright denied the motion, the Federal Circuit ordered transfer on mandamus.   Now, Ikorongo Texas has petitioned the Supreme Court for writ of certiorari.   To be clear Samsung and LG have previously litigated in Texas, they have lawyers in the state and lawyers willing to go to the state. The inconvenience of litigation is almost a total farce here.  The problem these companies have is with Judge Albright, and the likelihood that the case will go to trial rather than being dismissed on summary judgment.

Section 1404 Transfer: Absent consent from “all parties,” § 1404 only allows transfer to districts where the case “might have been brought.”  The key problem is that Ikorongo Texas could-not have brought the lawsuit in California court because venue would have been improper.

Might have been Brought:  Section 1400(b) defines proper venue for patent cases. The statute provides two different ways for finding proper venue.  First, state of incorporation.  A patentee can sue in federal court housed in the state where the defendant is incorporated.  In this case though, the defendants are incorporated in NY and Delaware. The Second approach asks whether “the defendant has committed acts of infringement and has a regular and established place of business” within the district.  Here, the defendants each have a place of business in N.D.Cal., and arguably infringe the patents in the district as well.  The catch, Ikorongo Texas argues that the infringing acts in California don’t impact Ikorongo Texas’s rights and therefore do not satisfy this second proper venue prong.  Bottom line, Ikorongo Texas argues that it could not have sued in California, and therefore it is improper to transfer the case to California.

In its decision, the Federal Circuit did not play the game but instead effectively pierced the corporate veil between the patent owners and their affiliated companies — holding that “Ikorongo Texas is plainly recent, ephemeral, and artificial—just the sort of maneuver in anticipation of litigation that has been routinely rejected.”

In its petition to the Supreme Court Ikorongo asks this question as follows: “Can a district court transfer a matter to a statutorily proscribed district based on expressly disregarding undisputed facts creating the proscription.”

The petition also asks a second question: “Should Gulf Oil Corporation v. Gilbert, 330 U.S. 501 (1946), be overruled, particularly in light of stronger technological abilities shifting the reasonable focus for determining what is convenient for parties and witnesses?”  Gulf Oil was decided in 1946 based upon the judicial doctrine of forum non conveniens. Two years later, Congress enacted Section 1404.  Still, Gulf Oil has remained a guidepost for these issues of convenient forum.

The petition takes issue with how convenient forum is litigated today — arguing that it is not simply a search for the “least inconvenient forum” nor is a search for the most convenient forum for the defendant.  Rather:

 [T]here must be some base significant inconvenience to a party to warrant transfer. . . [I]t is a remedy for when the plaintiff vexatiously chooses a forum that would cause undue hardship to the defendants. Simply weighing one forum against another defeats the purpose of Section 1404 by allowing defendants to abusively move a case to a forum that is inconvenient for the plaintiff. This case presents a robust example.

Petition. The petition also highlights the fact that electronic communications have  properly and dramatically changed how cases are litigated. And, “[a]lmost all of the private and public factors discussed by the Court in Gulf Oil are affected by the march of technology.”

43 thoughts on “Split the Cake to Eat it Whole: Ikorongo Argues for its Divide and Conquer Strategy

  1. 9

    Largely unrelated to the question at hand, but Dennis, as to venue not being proper in California (or anywhere in the U.S.), I thought venue was proper in all U.S. jurisdictions over all foreign defendants (such as LG and Samsung) (as long as service etc. is met). See In re HTC Corp., Misc. 2018-130 (May 5, 2018), (following Brunette Machine Works, Ltd. v. Kockum Industries, Inc., 406 U.S. 706 (1972), finding venue proper as to any foreign defendant in any district).

    1. 9.1

      Meaning this: “The key problem is that Ikorongo Texas could-not have brought the lawsuit in California court because venue would have been improper.” Isn’t right, unless I’m missing something.

      1. 9.1.1

        J. These are good points and would certainly undermine Ikorongo’s argument. However, my understanding is that the defendants sued here are US companies, both registered and headquartered in the USA. And, none of them are headquartered or registered in N.D. California. I believe that Samsung is incorporated in NY and LG is incorporated in Delaware; and that both are headquartered in New Jersey.

  2. 8

    Wow. Now the Federal Circuit is trying to eviscerate the protection of the corporate veil to deal with a venue issue?

    1. 8.1

      Whatever it takes. Ends. Justifies. Means.

      Once you’ve eviscerated Alice, doing so to the corp veil is nooooo problemo.

  3. 7

    By the way, the old mail order catalogue cases were decided on an illogical basis, and it is long over due for the reasoning to be reset.

    Oh my, look who is talking about what the law should be, rather than what it actually is….

    Why have any venue statute at all?

    If you want to sell something to anyone located anywhere in America, why you should be enthusiastic about being sued anywhere in America. Everyone knows that.

    Any judge with an entrepreneurial bent should go enterprising to attract plaintiffs with a little extra juice for their cases, because efficient infringement is the inevitable result of judicial consistency across districts. Everyone knows that too.

    One could imagine that someone who “contributes” between 1/3 and 1/2 of all the comments posted on this blog year in and year out would provide something other than performative kvetching, 360 degree aggression, and incoherent argument beyond the two themes that everyone is wrong about everything and that every accused infringer had it coming.

    Laughter is the sound of surprise. You ain’t surprising.

    At least Prophet is good for lulz, and virtually everyone else for well-mannered conversation. One wonders what this place would be like without your assistant curatorship. Better I suspect.

    1. 7.1

      Marty,

      Huge difference in my talking about what the law should be as I remain knowledgeable of the terrain of patent law.

    2. 7.2

      As to

      At least Prophet is good for lulz
      — that is clearly your feelings on the matter, which just goes to prove my point.

      So I suppose, a “thank you” may be in order for that.

    3. 7.3

      >Any judge with an entrepreneurial bent…

      What would that look like, particularly wrt a federal judge who doesn’t have to run for reelection? That somehow having a history of trying *patent* cases will help you get nominated to an appellate court?? (too bad, so sad DC Circuit, having to hear all those boring Con Law cases)

      Wouldn’t public-choice suggest that trial judges seek to discourage actual litigation in their districts i.e., to minimize the hours they need to work for their fixed salary?

      1. 7.3.1

        It’s doubtful that a district judge’s work hours are affected by trial load. There is always more work to do than can be done.

        I suppose it would look like an ice rink in Texas. Making a name for one’s self can happen in many different ways. That’s what entrepreneurs do.

        1. 7.3.1.1

          Add “your view of entrepreneurship” to the list of things that you are not exceedingly backwards about.

          “Making a name”….?

          Really?

          I get a marketing angle, but you quite clearly missed the thrust from OC in that “entrepreneurship” does not fit the context here.

          But when has context ever appeared in the reflection of the shallow pond that you are transfixed upon?

          1. 7.3.1.1.1

            Yea I started in my mom’s basement and sold (so far and alongside fine partners) into the nine figures of software- the hard way.

            So my view of entrepreneurship is backed by more than the flat ulance and raw projection that spills out of your keyboard by the hour.

            Judge Albright is not the first, nor will he be the last, district judge who enterprises outside the lines to make something happen.

              1. 7.3.1.1.1.1.1

                a mental condition in which people have an inflated sense of their own importance, a deep need for excessive attention and admiration, troubled relationships, and a lack of empathy for others

                Projection is a hell vua drug my friend.

      2. 7.3.2

        Since when is appropriate to even suggest that a Federal Judge is “entrepreneurial”? I have only read that the Waco judge has admirably gotten federal funding for a surprising 5 magistrate-judges to work for him, and federal funding for electronic facilities for his courtroom. As for what else he may have had in mind by advertising for such a large percentage of patent lawsuits to be filed in Waco, I have no idea. It may be that he just really likes to handle patent suits, given his prior experience.
        How successful he will be for the parties themselves will partially depend on his yet-to-be-seen record on appeals to the Fed. Cir. of his decisions on validity, patentable subject matter, and/or infringement. His record number of mandamus reversals is only on venue retention issues.

        1. 7.3.2.1

          Paul, “entrepreneurial” carries a connotation beyond the pecuniary.

          It means a spirit of seeing opportunity and stepping outside established practice to make a change in the world.

          I am not asserting that Judge Albright is doing what he is doing for personal financial gain.

        2. 7.3.2.2

          As for what else he may have had in mind by advertising for such a large percentage of patent lawsuits to be filed in Waco, I have no idea. It may be that he just really likes to handle patent suits, given his prior experience.

          I do not read Martin’s post as suggesting that Judge Albright is acting out of pecuniary interest. As for Judge Albright’s motivation, however, everyone should listen to the interview that he did with Eli Maxour’s “Clause 8” podcast. I definitely came away with the sense that he just enjoys patent cases (and who can blame him?) more than the other sorts of cases that a WDTX judge would usually be handling (mostly federal criminal cases and immigration issues).

          I took away from the interview that the judge likes patent cases. In order for him to handle patent cases, plaintiffs need to file patent cases in his court. Everything else that has followed since is just the logical outgrowth of Judge Albright asking himself “what do I need to do to convince plaintiffs to file in my court.” As an addendum to that, his fairly strenuous efforts to resist §1404 motions are also the natural result of his fondness for patent cases. Why, after all, work so hard to attract them if you are just going to have to send them elsewhere before they can even get interesting?

          1. 7.3.2.2.1

            is any of that outside of 5thC guidance, and if so, why has not the 5th C acted?

            Lots and lots of “accusations” and innuendo, but when push comes to shove, is this NOT a matter of discretion (and ultimate control of its own court) for the 5th C?

            This is NOT the first time this question has been put on the table, even though NONE of the naysayers have ever addressed it.

        3. 7.3.2.3

          Paul – his claim construction orders have zero analysis or reasoning; all he does is state what the construction is. I predict that he will be reversed on claim construction issues at a materially higher rate than other judges. It appears that he doesn’t bother reading the briefs and outsources everything to his technical advisor (a relatively junior attorney) and then charges the parties $25 K for the technical advisor’s time.

      3. 7.3.3

        “What would that look like, particularly wrt a federal judge who doesn’t have to run for reelection?”

        Why not the obvious? A career in patent law following some number of years as a judge.

  4. 6

    Even though Ikorongo Texas is a licensee, it’s not clear to me that they are actually an exclusive licensee under the law. My understanding is that when you carve up rights geographically, no licensee is actually “exclusive” for purposes of having standing to sue.

    As for whether the factors considered under Gulf Oil that are considered under 1404 really reflect modern litigation, I think that’s a question that probably is ripe for reconsideration. If you look at the factors many of them do reflect a different time in the 1940s, and may not be as applicable to 1404 transfer as they are to a dismissal for forum non conveniens where there’s another country which is asserted to have more of an interest. I think that Delaware, for example, has had a lot of Judges question the relevance of some factors in modern litigation, but they have followed the latest ruling on the issue from the Third Circuit (in 1995).

    The problem though is that in order to get a court to address the issue, it’s going to have to be a non-patent case that resolves the issue, because this is a regional circuit issue (unless you can somehow bring a Federal Circuit case on the issue to the Supreme Court, which is unlikely). And a big problem in that context is just finding a case where the issue is ripe. The only reason the 5th Circuit addressed it at all in Volkswagen was to address whether mandamus was proper to resolve 1404 motions, which isn’t an issue every Circuit agrees on. So I’m not sure how likely it is that the issue will be revisited by any circuit.

  5. 5

    I find myself compelled to pick a nit, Dennis. There is a difference between “principals” and “principles”, which is important when, for example, one wants to call out an organisation for being unprincipled, for having no principles. In your piece, however, you inform us of the Plaintiff LLC, mystifyingly, that:

    “its principles reside in North Carolina.”

    I take it that what you mean is that the principals are residents of NC.

  6. 4

    Even in the highly unlikely event of this already CAFC-tagged “artificial” venue Texas-two-step “maneuver” getting blessed by the Supremes, please explain how and where validity, infringement and damages of separate [by geographical areas only] pieces of the same patent against the same defendants to be decided? Will not case consolidation into one court be required anyway?

    1. 4.1

      Interesting point, but is such a point not moot by the decision of the rights holder?

      I do not see how a joinder of all holders of the right (putatively your forced nationalization) is mandatory. If only a regionalized rights holder is bringing suit, then only the regionalized rights holder is implicated.

      How are you moving beyond only the regionalized rights holder?

  7. 3

    The “farce” is Texas and, in particular, this disgusting judge and his equally disgusting supporters.

    1. 3.2

      Malcolm, your feelings of “disgust” are noted — as is the lack of your providing any cognitive basis for those feelings.

      As others have noted, you seem only capable of harboring anti-patent emotions, and one is left to wonder why you persist in a field that causes you such cognitive dissonance.

  8. 2

    Good note Dennis

    While I agree the venue law is a mess and conveniently engineered by the CAFC to diminish patent owner rights, I’m not a fan of this motion, and I suspect it won’t even be given full briefing. The thing is, “might have been be brought” will be tied back to the patent owner, and, in the fundamental sense, its tying back to a patent “owner” of all substantial rights. I think they can resort to this kind of plain contextual meaning.

    What irritates me more is the CAFC’s continuing artificial restrictions on “regular” and established business, suggesting that companies with massive internet presence in WDTX are not in business there, because they don’t have a warehouse, outlet, or other “physical” structure. This is baldfaced bastardization that pretends that “business” hasn’t evolved in the past 50 years.

    1. 2.1

      Fine, but I have not yet seen an explanation of how to depose, subpoena or cross-examine an internet server or screen display [any more than a Sears and Roebucks mail order catalog could be, back when that was a similar major way of doing business]. The patent venue statute itself was clearly written for the convenience of the companies being sued, not the plaintiff’s lawyers.

      1. 2.1.1

        Paul,

        You find your comment here to be duplicitous, as you assert a strawman fallacy conflating PLACE of business with PERSON engaging in acts of business.

        By the way, the old mail order catalogue cases were decided on an illogical basis, and it is long over due for the reasoning to be reset.

        Bottom line is that it is a business choice to obtain the benefit of business in any locale, and that choice should not be divorced from the accompanying risk of suit in any locale.

        Don’t want that risk? Abstain from that benefit.

  9. 1

    Worth emphasizing:

    To be clear Samsung and LG have previously litigated in Texas, they have lawyers in the state and lawyers willing to go to the state. The inconvenience of litigation is almost a total farce here. The problem these companies have is with Judge Albright, and the likelihood that the case will go to trial rather than being dismissed on summary judgment.

    1. 1.1

      Rather amusing to quote an academic view [contrary to an actual judicial decision], given the frequent trashing and conspiracy theories about academic views in blog comments here.
      If “where lawyers are” [much less mere local counsels] was a vital venue factor we ought to try everything in NYC, certainly not in remote little Waco or Marshall TX.
      As for “Judge Albright, and the likelihood that the case will go to trial” I have yet to see any evidence for more actual and faster trials by that court than other district courts with significant patent suit dockets being presented on this blog or anywhere else, in spite of a presumably higher rate of denial of 12(b)(6) motions. How come no interest in that statistic?

      1. 1.1.1

        Yes – I did find it amusing, especially as academics are so often anti-patent (and more typically aligned with your anti-patent tendencies).

        But you miss the point in thinking that this has is focused merely on “where lawyers are.” as that is merely removing one of the many excuses often given.

        The bottom line is that the anti-patent Ends will employ most any Means without regard.

        But you have no interest in THAT statistic, now do you, oh “objective one”

        1. 1.1.1.1

          On the contrary, I find fascinating the amazingly legally ingenious ways in which both PAEs [as here] and some defendants “will employ most any Means without regard,” especially “without regard” for likelyhood of success.

            1. 1.1.1.1.1.1

              Are you a disgruntled patent prosecutor and/or a disgruntled person that attempts to patent methods of doing things “on a processor”? Talk about a broken record

              1. 1.1.1.1.1.1.2

                You’ve been here long enough to know how engagement will go.

                Remember: “…the pig likes it.”

                1. LOL – perhaps – but most likely NOT for the reason that YOU may be thinking of, Ben

                  I do enjoy having the better position.

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