Tag Archives: Personal Jurisdiction

TC Heartland LLC v. Kraft Foods Oral Arguments.

Last week’s oral arguments in TC Heartland LLC v. Kraft Foods (SCT 16-341) went well for the petitioner. [TRANSCRIPT: 16-341_8njq]  In the case, the accused infringer TC Heartland argues that Delaware is an improper venue for its patent case since 28 U.S.C. 1400(b) limits patent venue to “judicial district where the defendant resides, or where the defendant has committed acts of infringement and has a regular and established place of business.”  TC Heartland is an Indiana LLC that is also HQed in Indiana and has no regular place of business in Delaware – seemingly excusing it from defending a patent case in Delaware.  The big catch, however, is that 28 U.S.C. 1391(c) provides a broad definition of “reside” –

Except as otherwise provided by law . . . For all venue purposes . . .  an entity . . . shall be deemed to reside, if a defendant, in any judicial district in which such defendant is subject to the court’s personal jurisdiction with respect to the civil action in question.

28 U.S.C. 1391(c).  This provision appears to greatly extend the reach of proper venue for all federal cases to the limits of personal jurisdiction as well. Operating from a blank slate, I expect that the best reading of the statute is that 1391(c) controls and broad venue is available.  The problem though, is that the Supreme Court previously held the other way in Fourco Glass (1957).  And, although the statute has been somewhat amended, there is no suggestion in the record that Congress intended to overrule Fourco.

Arguing for TC Heartland, James Dabney begins:

MR. DABNEY: The Court in this case is presented with an historic choice. That choice is between upholding or destroying venue protections that Congress provided in 28 U.S.C. 1400(b), and that this Court interpreting that statute declared to exist in its Fourco Glass decision. And the correct choice, we submit, is to adhere to this Court’s existing, long-established interpretation of Section 1400(b) and to reject the new call for a new revisionist interpretation that would render Section 1400(b) nugatory in this case and in all but the most unusual cases. . . .

In the Fourco Glass case, the Court considered statutory language that was not materially different in this respect from current 1391 and held that 1400(b) when it says the judicial district where the defendant resides, that means domicile.

Justice Kagen appeared to agree that Fourco controls – and that the Federal Circuit has been going the wrong way for some time:

JUSTICE KAGAN: One oddity of this case is usually, when we say something, when we issue a decision, we can be pretty confident that Congress is acting against the backdrop of that — that decision. But I think that that would be an odd thing to say in this case, given that for 30 years the Federal Circuit has been ignoring our decision and the law has effectively been otherwise. And then It seems actually that if I were a congressman, I’d think that the practical backdrop against which I’m legislating is not Fourco; it is instead the Federal Circuit’s decision in VE Holding, which is the decision that the practice has conformed to.  . . . When 30 years of practice goes against you, what happens?

MR. DABNEY: I heard Justice Souter say something like that in the KSR case, you know, the teaching-suggestion-motivation test had been around so long that, at some point, the mistake becomes the law. And this Court has again and again and again stood up for its authority to declare what the law is.

On issues of patent law, there’s actually a precedent, Andrews v. Hovey that says no issue of patent law is settled until we have settled it.

Chief Justice Roberts, who tends to focus on precedent, seems to also agree that congressional action since then had no intent to overrule the patent venue cases:

CHIEF JUSTICE ROBERTS: No — [the recent amendment to 1391] wasn’t intended to overrule VE Holding, but I suspect it wasn’t intended to overrule Fourco at all either. And Fourco is a decision of this Court.

For his part, William Jay, arguing on behalf of Kraft focused on the statutory language.

MR. JAY: [The post-Fourco amendment] it isn’t here a change from “for venue purposes” just to “for all venue purposes.” [there are several other amendments to the statute] . . . [Although] the principles by which Fourco interpret the statutes are still good law — the definition that Fourco applied is no longer the controlling definition of “residence.”

So Fourco is based on two things. Number one, the fact that 1400 was recodified in the 1948 revision of the Judicial Code. [That is interpreted differently than ordinary amendments, which presume an intent to change and overrule.]

The other thing is the specific and the general canon. This Court said that 1391(c), as it then existed, was clearly a general corporation venue statute, and so it was. It provided where a corporation could be sued. It doesn’t do that anymore. 1391(c) is now a purely definitional provision, and it was adopted specifically to clear up a number of the nagging problems that the members of the Court have been asking my friend about, including where do you sue an artificial entity that is not a corporation? Where does it reside.

An important statutory interpretation question is whether the Supreme Court’s Fourco interpretation of 1400(b) should be included within the “except as otherwise provided by law” limitation of 1391(c).  Interesting question about what Congress intended when it said “provided by law.”

Only a small portion of the discussion involved policy questions of the focus of patent cases in E.D. of Texas and the pending congressional legislation. This, I think brought out a good point by Mr. Jay.

MR. JAY: I think that the issue is not the definition of residence. The [real] issue is how do we come up with a different patent venue statute altogether? And that is something that Congress has been working on, trying to come up with something more calibrated, so that, for example, a research university would be able to bring suit in its home district, because that’s where it did the invention; it’s where the inventor’s lab is and so forth, you know, where they would want to be able to sue a defendant in its own principal place of business, even if it doesn’t commit the relevant act of infringement there.

Big picture here – the statutory interpretation is messy enough that there is not a clean pathway to an answer for the Supreme Court.  If we have a reversal – we’ll see more big changes to patent litigation.

In Defense of the Federal Circuit: TC Heartland and Patent Venue

Guest Post by Professors Megan M. La Belle & Paul R. Gugliuzza

Patent litigation is, as we all know, highly concentrated in a small number of districts.  Most notably—some might say, notoriously—the rural Eastern District of Texas hears about forty percent of all patent cases nationwide.  Many lawyers and scholars consider this case concentration to be a critical flaw in the patent system.

Against this background, TC Heartland doesn’t seem like a case the Supreme Court would hear simply to affirm.  As Dennis reported last week, nearly twenty amicus briefs have been filed urging reversal, including one signed by sixty-one law professors and economists.  Predictions of a unanimous ruling against the Federal Circuit are not hard to find.  Indeed, TC Heartland looks like other recent cases in which the Supreme Court has reversed the Federal Circuit without breaking a sweat:  It involves a procedural-type rule so favorable to patent owners that, one could easily assume, it must conflict with the rules in other areas of federal litigation.

The Federal Circuit, in the caselaw on review in TC Heartland, has interpreted the patent venue statute to allow patentees to sue corporations for patent infringement in any district where personal jurisdiction exists.  For companies that sell products nationwide, venue is proper almost anywhere, and that enables litigation to cluster in places like East Texas.  Surely, the conventional wisdom seems to be, the Supreme Court will not permit the Federal Circuit to make the venue statute a dead letter in most patent cases.

In our forthcoming article, we defend the Federal Circuit’s venue doctrine, and we challenge the notion that Federal Circuit venue law is outside the mainstream.  As we explain in detail, the expansive venue options available in patent cases are consistent with historical trends in venue law more generally.  For over a century, Congress has steadily expanded plaintiffs’ venue choices, particularly in cases against corporations.  In fact, the Wright and Miller treatise has gone so far as to say that Congress has “nearly eliminate[d] venue as a separate restriction in cases against corporations.”  Venue in patent cases, simply put, is just like venue in other federal cases.

In the article, we also explain why the Federal Circuit’s interpretation of the venue statute is doctrinally sound.  Though the relevant statutes are somewhat complicated and have been amended several times, our defense of the Federal Circuit’s venue law is simple.  It is based on the plain language of two sections of the Judicial Code:  28 U.S.C. §§ 1391(c) and 1400(b).  Section 1391(c)(2), a subsection of the general venue statute, says that, “[f]or all venue purposes,” corporate defendants “reside” in any district in which they are subject to personal jurisdiction.  Section 1400(b), a venue statute specifically for patent infringement cases, says that infringement suits may be brought, among other places, “where the defendant resides.”  Reading the two statutes together, a corporation can be sued for patent infringement in any district in which it is subject to personal jurisdiction—just like in all other types of federal cases.  That is precisely what the Federal Circuit held in its seminal 1990 decision, VE Holding Corp. v. Johnson Gas Appliance Co.

Of course, there’s more law on this issue than the statutes alone.  The petitioner in TC Heartland argues that the question presented is “precisely the same” as in Fourco Glass Co. v. Transmirra Products Corp., a 1957 decision in which the Supreme Court held that the general venue statute—as it read at the time—did not supplement the patent venue statute.  The Court in Fourco relied heavily on its 1942 decision, Stonite Products Co. v. Melvin Lloyd Co., in which the Court interpreted an even older version of the venue statute and held that, in patent infringement cases, a defendant “resided” only in the state in which it was incorporated.

The petitioner in TC Heartland, building on the theme of “patent exceptionalism” that has resonated with the Supreme Court in recent years, claims that the Federal Circuit has ignored this authoritative Supreme Court precedent.  As we explain in the article, however, even if the Supreme Court decided Fourco correctly (which is not beyond doubt), the general venue statute today is far different than it was at the time of Fourco.  Recent amendments to the statute make plain that the definition of corporate residence in the general venue statute does in fact apply to the patent venue statute.

To be sure, as a matter of policy, granting plaintiffs unbridled discretion over choice of forum in patent litigation may be problematic.  It has incentivized judges, particularly in East Texas, to adopt rules and practices favorable to patent holders in an effort to attract cases.  It has encouraged litigants to engage in unseemly tactics to influence prospective jurors. Ultimately, discretion in forum choice can threaten innovation by facilitating nuisance litigation.  But, contrary to the prevailing wisdom, these problems are emphatically not the result of a misinterpretation of the venue statute by the Federal Circuit, nor does Federal Circuit venue doctrine reflect any sort of patent exceptionalism.

There are better ways to reform the law of forum selection in patent cases.  Congress could amend the venue statute.  Or it could reduce the incentive for litigants to forum shop—and the ability of district judges to “forum sell”—by mandating increased procedural uniformity in patent cases.  Or the Supreme Court could alter personal jurisdiction doctrine, which, for corporate defendants, is tightly linked to venue.  Later this Term, the Court will decide a personal jurisdiction case that could have major consequences for patent litigation.

For a more detailed explanation of these points, read our draft article, which is forthcoming in a terrific symposium issue of the American University Law Review.

Megan La Belle is Associate Professor of Law at Catholic University of America.
Paul Gugliuzza is Associate Professor of Law at Boston University School of Law. 

Supreme Court Update: Are Secondary Indicia of Invention Relevant to Eligibility?

by Dennis Crouch

The Supreme Court is on recess until Feb 17.

I don’t know if my end-of-April prediction will hold true, but I do expect Neil Gorsuch to become a Justice on the United States Supreme Court.  As a 10th Circuit Judge, Gorsuch never decided a patent case, but does have a handful of interesting IP cases.

There are a few petitions filed that we have not discussed here: 

 In its newest petition, DataTreasury takes 101 for a new spin by taking the 101/103 analysis to its next logical level.  If we are going to include a 103 analysis as part of the eligibility doctrine then lets go whole hog.  Thus, DataTreasury asks: whether a court must consider secondary indicia of invention as evidence in its eligibility analysis? In the case, the Federal Circuit had affirmed the PTAB judgment without opinion under R.36. A second eligibility petition is found in TDE Petroleum Data Solutions, Inc. v. AKM Enterprise, Inc., dba Moblize, Inc. TDE asks the court to “please reconcile Diehr and Alice.” (I’m not literally quoting here).  The patent at issue (No. 6,892,812) claims a four-step process of “determining the state of a well operation.” (a) store several potential “states”; (b) receive well operation data from a plurality of systems; (c) determine that the data is valid by comparing it to a threshold limit; and (d) set the state based upon the valid data.

In Wi-LAN v. Apple, the patentee revives both Cuozzo and Markman claim construction arguments – this time focusing on “whether claim terms used to define the metes and bounds of an invention are generally given their “plain and ordinary meaning,” or are redefined (limited) to match the scope of the exemplary embodiments provided in the specification.”

duPont v. Macdermid asks whether summary judgment of obviousness is proper because of the factual disputes at issue.  Similarly, in Enplas v. Seoul Semiconductor, the petitioner argues that a finding of anticipation by the PTAB must be supported by findings each and every element of the subject patent claim is disclosed in the prior art.  In Enplas, the Federal Circuit affirmed the PTAB on a R.36 Judgment Without Appeal — it difficult for the petitioner to point to the particular deficiencies.


=== THE LIST===

1. 2016-2016 Decisions:

  • Design Patent Damages: Samsung Electronics Co. v. Apple Inc., No 15-777 (Total profits may be based upon either the entire product sold to consumers or a component);  GVR order in parallel case Systems, Inc. v. Nordock, Inc., No. 15-978.  These cases are now back before the Federal Circuit for the job of explaining when a component

2. Petitions Granted:

3. Petitions with Invited Views of SG (CVSG): 

4. Petitions for Writ of Certiorari Pending:

  • Claim Construction: Wi-LAN USA, Inc., et al. v. Apple Inc., No. 16-913 (“plain and ordinary meaning”)
  • Is it a Patent Case?: Boston Scientific Corporation, et al. v. Mirowski Family Ventures, LLC, No. 16-470 (how closely must a state court “hew” federal court patent law precedents?) (Appeal from MD State Court)
  • Anticipation/Obviousness: Google Inc., et al. v. Arendi S A.R.L., et al., No. 16-626 (can “common sense” invalidate a patent claim that includes novel elements?) (Supreme Court has requested a brief in response)
  • Anticipation/Obviousness: Enplas Corporation v. Seoul Semiconductor Co., Ltd., et al., No. 16-867 (“Whether a finding of anticipation under 35 U.S.C. § 102 must be supported by findings that each and every element of the subject patent claim is disclosed in the prior art?”)
  • Anticipation/Obviousness: E.I. du Pont de Nemours and Company v. MacDermid Printing Solutions, L.L.C., No. 16-905 (summary judgment of obviousness proper)
  • Jury Trial: Oil States Energy Services, LLC v. Greene’s Energy Group, LLC, et al., No. 16-712 (“Whether inter partes review … violates the Constitution by extinguishing private property rights through a non-Article III forum without a jury.”) [oilstatespetition]
  • Jury Trial: Nanovapor Fuels Group, Inc., et al. v. Vapor Point, LLC, et al., No. 16-892 (Can a party forfeit a properly demanded trial by jury without an explicit, clear, and unequivocal waiver?)
  • Is it a Patent Case?: Big Baboon, Inc. v. Michelle K. Lee, No. 16-496 (Appeal of APA seeking overturning of evidentiary admission findings during reexamination – heard by Federal Circuit or Regional Circuit?)
  • LachesMedinol Ltd. v. Cordis Corporation, et al., No. 15-998 (follow-on to SCA); Endotach LLC v. Cook Medical LLC, No. 16-127 (SCA Redux); Romag Fasteners, Inc. v. Fossil, Inc., et al, No. 16-202 (SCA Redux plus TM issue)
  • Eligibility: TDE Petroleum Data Solutions, Inc. v. AKM Enterprise, Inc., dba Moblize, Inc., No. 16-890 (Please reconcile Diehr and Alice)
  • Eligibility: DataTreasury Corporation v. Fidelity National Information Services, Inc., No. 16-883 (secondary indicia as part of eligibility analysis).
  • Eligibility: IPLearn-Focus, LLC v. Microsoft Corp., No. 16-859 (evidence necessary for finding an abstract idea)

5. Petitions for Writ of Certiorari Denied or Dismissed:


TC Heartland: Statutory Interpretation, Fairness, and E.D.Texas

by Dennis Crouch

The topside briefs have been filed in TC Heartland with strong support for the petitioner who is looking to dismantle the notion of nationwide venue against accused patent infringers.  The question presented in the case is one of basic statutory interpretation of Congress’s venue statute: Whether 28 U.S.C. § 1400(b) is the sole and exclusive provision governing venue in patent infringement actions and is not to be supplemented by 28 U.S.C. § 1391(c).

28 U.S.C. § 1400(b) appears to severely limit venue in patent cases to “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.”  Section 1391(c), however seems to broaden the definition of residence “For all venue purposes . . . (2) . . .[defendant] shall be deemed to reside … in any judicial district in which such defendant is subject to the court’s personal jurisdiction.”  Since most patent defendants are subject to nationwide personal jurisdiction, venue is then proper in any jurisdiction.

This first-level statutory interpretation seems to make TC Heartland’s case a loser. The thing is, the Supreme Court already decided what is almost the exact same case in its 1957 decision Fourco Glass (limiting patent venue) and the unusual concentration of patent cases in the E.D.Texas has certainly reached the ears of the high court in a way that may influence the outcome.

TC Heartland’s attorneys Dabney & Duffy write:

This is an extraordinary case because it presents a question of statutory interpretation that this Court specifically answered more than a half century ago.

[Petitioner’s Merits Brief: 16-341_pet-authcheckdam1]

In addition to stare decisis, the brief offers a cogent explanation that the narrower, specific interpretation makes sense and that the “for all venue purposes” phrase in the broader statute is limited by its preparatory statement “except as otherwise provided by law.”

One debate here that may arise is a question of what is the “settled law.”  The Federal Circuit broad-venue doctrine has been the approach since its 1990 VE Holdings decision.  Here, however, TC Heartland raises the little known case of  Andrews v. Hovey (1888) for the proposition that a patent statute’s interpretation “cannot be regarded as judicially settled [until] so settled by the highest judicial authority which can pass upon the question.” I wonder though, whether creation of the Federal Circuit should be seen as overruling that prior statute – likely not.

A strong set of amicus briefs have been filed in support.  Most briefs are fairly similar – arguing the statutory interpretation and that the result is bad policy / unfair.  See Bankers Brief [16-341-tsac-aba];  ABA [16-341-tsac-american-bar-association]; APP Ass’n [16-341-tsac-act]; Internet Companies and Retailers [16-341-tsac-48-internet-companies]

The only party in opposition thus far is AIPLA who argues, inter alia, that if a policy needs changed then congress should do the changing. [16-341-ac-aipla]

Although I do not expect the Federal Government (SJ) to weigh-in on the case, one interesting brief comes from a group of 17 state attorneys general, including Texas whose “citizens [have been facing] abusive claims of patent infringement, which businesses and residents confirm are a drag on economic growth.” [16-341-texas-et-al]

Without the Government Brief, Mark Lemley’s brief (on behalf of 61 professors) may be seen as the most influential.  However, I would suggest that the brief loses some amount of its “law professor” credibility by being so one-sided in its statutory construction. [16-341-tsac-61-prof-of-law] Alongside Lemley’s brief is that filed by Stanford’s IP Clinic that argues, inter alia, harm to small businesses and start-ups: “frivolous PAE litigation is negatively correlated with venture capital (VC) investment.” Implicit (and often explicit) in these briefs is the argument that E.D.Texas is supporting frivolous litigation. Stanford writes:  “The Eastern District of Texas Exhibits Abnormal Forum-Selling and Litigant Gamesmanship That Undermine the Appearance of Integrity of the Patent Litigation System.” [16-341tsacengineadvocacy] Orange County IP Law Association’s brief filed by Bill Brown raises the real argument that E.D. Texas Judges now have “de facto policy making authority.” [16-341-tsac-ocipla]; See also Unified Patents [16-341-tsac-unified-patents]

Intel and Dell also offered a strong brief filed by Donald Verrilli in his new role at Munger Tolles: All indicia of statutory meaning show that Congress narrowed patent venue in 1897 and has never expressed an intent to expand it.” [16-341tsacintelcorporation].  Following onto Intel’s intent argument, WLF explains that post-Fourco amendments by Congress should be considered “within the context of a century of special rules governing patent cases. [16-341tsacwashingtonlegalfoundation] The Intel brief also focuses on a common complaint against the Federal Circuit – that it fails to really respect and follow the principles of statutory interpretation.  Here though, the issue is failing to follow Supreme Court precedent.  Intel argues that the “Court does not depart from the doctrine of stare decisis without some compelling justification.” (quoting Hilton v. S. Carolina Pub. Rys. Comm’n, 502 U.S. 197, 201 (1991).

GiantCo GE offers some crocodile tears at the “unfairness” of the provision to nice companies like GE.  Astutely foreshadowing a likely upcoming challenge, GE also reflects that part of the problem is “the Federal Circuit’s expansive approach to personal jurisdiction [that] has further stretched the boundaries of permissible venue in patent cases.” (citations omitted). [16-341-ac-ge]

Although GE’s unfairness arguments likely fall flat, one of the best briefs is that filed by EFF who does a great job of explaining how venue’s primary concern is that of fairness and that the Federal Circuit’s interpretation completely ignores that import. [16-341-tsac-electronic-frontier-foundation]

Generic Pharma adds to the statutory construction by explaining that the venue provisions in Hatch-Waxman Act are inconsistent with the Federal Circuit’s interpretation. [16-341-tsac-generic-pharmaceutical-association]

Finally, last but not least, Chicago’s IP Law Ass’n offers its analysis that patent venue battles over the “best venue” are wasting time and would be unnecessary under Fourco. [16-341-ac-intellectual-property-law-association] [16-341-ac-appendix]

Supreme Court 2017 – Patent Preview

by Dennis Crouch

A new Supreme Court justice will likely be in place by the end of April, although the Trump edition is unlikely to substantially shake-up patent law doctrine in the short term.

The Supreme Court has decided one patent case this term. Samsung (design patent damages).  Five more cases have been granted certiorari and are scheduled to be decided by mid June 2017. These include SCA Hygiene (whether laches applies in patent cases); Life Tech (infringement under 35 U.S.C. § 271(f)(1) for supplying single component); Impression Products (using patents as a personal property servitude); Sandoz (BPCIA patent dance); and last-but-not-least TC Heartland (Does the general definition of “residence” found in 28 U.S.C. 1391(c) apply to the patent venue statute 1400(b)).

Big news is that the Supreme Court granted writs of certiorari in the BPCIA dispute between Sandoz and Amgen.   The BPCIA can be thought of as the ‘Hatch Waxman of biologics’ – enacted as part of ObamaCare.   The provision offers automatic market exclusivity for twelve years for producers of pioneer biologics.   Those years of exclusivity enforced by the FDA – who will not approve a competitor’s expedited biosimilar  drug application during the exclusivity period.   The statute then provides for a process of exchanging patent and manufacturing information between a potential biosimilar producer and the pioneer – known as the patent dance.  The case here is the Court’s first chance to interpret the provisions of the law – the specific issue involves whether the pioneer (here Amgen) is required to ‘dance.’ [Andrew Williams has more @patentdocs]

A new eligibility petition by Matthew Powers in IPLearn-Focus v. Microsoft raises eligibility in a procedural form – Can a court properly find an abstract idea based only upon (1) the patent document and (2) attorney argument? (What if the only evidence presented supports eligibility?).  After reading claim 1 and 24 (24 is at issue) of U.S. Patent No. 8,538,320, you may see why the lower court bounced this. Federal Circuit affirmed the district court’s ruling without opinion under Federal Circuit Rule 36 and then denied IPLF’s petition for rehearing (again without opinion).

1. A computing system comprising:

a display;

an imaging sensor to sense a first feature of a user regarding a first volitional behavior of the user to produce a first set of measurements, the imaging sensor being detached from the first feature to sense the first feature, the first feature relating to the head of the user, and the first set of measurements including an image of the first feature, wherein the system further to sense a second feature of the user regarding a second volitional behavior of the user to produce a second set of measurements, the second feature not relating to the head of the user; and

a processor coupled to the imaging sensor and the display, the processor to:

analyze at least the first set and the second set of measurements; and determine whether to change what is to be presented by the display in view of the analysis.

24. A computing system as recited in claim 1, wherein the system capable of providing an indication regarding whether the user is paying attention to content presented by the display.

=== THE LIST===

1. 2016-2016 Decisions:

  • Design Patent Damages: Samsung Electronics Co. v. Apple Inc., No 15-777 (Total profits may be based upon either the entire product sold to consumers or a component);  GVR order in parallel case Systems, Inc. v. Nordock, Inc., No. 15-978.  These cases are now back before the Federal Circuit for the job of explaining when a component

2. Petitions Granted:

3. Petitions with Invited Views of SG (CVSG): 

4. Petitions for Writ of Certiorari Pending:

  • Is it a Patent Case?: Boston Scientific Corporation, et al. v. Mirowski Family Ventures, LLC, No. 16-470 (how closely must a state court “hew” federal court patent law precedents?) (Appeal from MD State Court)
  • Anticipation/Obviousness: Google Inc., et al. v. Arendi S A.R.L., et al., No. 16-626 (can “common sense” invalidate a patent claim that includes novel elements?) (Supreme Court has requested a brief in response)
  • Civil Procedure – Final Judgment: Johnson & Johnson Vision Care, Inc. v. Rembrandt Vision Technologies, L.P., No. 16-489 (Reopening final decision under R.60).
  • Anticipation/Obviousness: Enplas Corporation v. Seoul Semiconductor Co., Ltd., et al., No. 16-867 (“Whether a finding of anticipation under 35 U.S.C. § 102 must be supported by findings that each and every element of the subject patent claim is disclosed in the prior art?”)
  • Post Grant Admin: Oil States Energy Services, LLC v. Greene’s Energy Group, LLC, et al., No. 16-712 (“Whether inter partes review … violates the Constitution by extinguishing private property rights through a non-Article III forum without a jury.”) [oilstatespetition]
  • Eligibility: IPLearn-Focus, LLC v. Microsoft Corp., No. 16-859 (evidence necessary for finding an abstract idea)
  • Post Grant Admin: SightSound Technologies, LLC v. Apple Inc., No. 16-483 (Can the Federal Circuit review USPTO decision to initiate an IPR on a ground never asserted by any party)
  • Is it a Patent Case?: Big Baboon, Inc. v. Michelle K. Lee, No. 16-496 (Appeal of APA seeking overturning of evidentiary admission findings during reexamination – heard by Federal Circuit or Regional Circuit?)
  • LachesMedinol Ltd. v. Cordis Corporation, et al., No. 15-998 (follow-on to SCA); Endotach LLC v. Cook Medical LLC, No. 16-127 (SCA Redux); Romag Fasteners, Inc. v. Fossil, Inc., et al, No. 16-202 (SCA Redux plus TM issue)
  • Eligibility and CBM: DataTreasury Corporation v. Fidelity National Information Services, Inc., No. 16-883 (I have not seen the petition yet, but underlying case challenged whether (1) case was properly classified as CBM and (2) whether PTAB properly ruled claims ineligible as abstract ideas) (Patent Nos. 5,910,988 and 6,032,137).

5. Petitions for Writ of Certiorari Denied or Dismissed:

Guest Post: TC Heartland and Statutory Interpretation

By: Michael Risch, Professor of Law, Villanova University Charles Widger School of Law

After the certiorari grant in TC Heartland, Dennis solicited a blog post from anyone who thought the case was not a slam dunk. Always the contrarian, I took him up on the offer. In a prior blog post at my own blog, Written Description, I detail some of the history of the statute and highlight why I think that Fourco does not necessarily answer the question. Colleen Chien and I flesh out the history and interpretation a bit more in our article, which we’ve blogged about here in the past.

I should note that the outset that I favor TC Heartland’s position from a policy point of view. I’ve long said in a variety of venues (including comment threads on this very blog) that there are significant problems with any system in which so much rides on where the case is filed. And I think that’s true whether you think they are doing a great or terrible job in the Eastern District of Texas.

Now, on to the interpretive issues. In general, I favor the application of longstanding original norms of statutory interpretation unless there’s good reason to depart from them (see, e.g., my new paper on reasonable royalties). I think this is doubly true where no one ever challenged the original interpretation (see, e.g. the ridiculous claims that common law copyright grants a performance right to sound recordings, despite the fact that no one ever thought so in the history of common law copyright). But in this case, I don’t think one can simply rely on the fact that no one challenged VE Holdings for 25 years. After all, the Supreme Court just overturned our understanding of design patent damages despite a tacit understanding that was more than 100 years old. As I noted here, this bothered me a bit given my general views, but I also think it was the correct statutory interpretation.

But, as I noted in my prior blog post, I don’t think one can just say “Fourco controls.” As I noted there: “Stonite and Fourco were statutory interpretation problems…. [T]his is a statutory interpretation problem. But the statute in Fourco is different from the statute today and has been amended twice since. We cannot rely on a supposed ‘rule’ about a statute that no longer exists.”

Instead, we have to return to first principles. In Stonite, the court clearly held that the patent venue statute was a special statute, to be specially applied differently than the general venue statute.  After Stonite, the general venue statute was amended. But let’s look at the statutes of the time. Right out of Fourco:

Section 1400 is titled “Patents and copyrights,” and subsection (b) reads:

“(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.”

Section 1391 is titled “Venue generally,” and subsection (c) reads:

“(c) A corporation may be sued in any judicial district in which it is incorporated or licensed to do business or is doing business, and such judicial district shall be regarded as the residence of such corporation for venue purposes.”

The court ruled that not enough changed since Stonite: we still had two separate venue tracks, and the patent statute was separate. The question now: is there a way for Congress to have changed this? could it have done so unintentionally? Let’s look at the 1988 change to 1391(c):

“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 at the time the action is commenced.”

There is a key change here: 1391(c) no longer talks about a “separate” track where corporations can be sued “for venue purposes.” Instead, it says that “for purposes of venue under this chapter…” the definition of resides has now been set (emphasis added). The question is whether the Fourco precedent means that Congress had to do more than this to change the meaning of 1400(b) (which is in the same chapter). In VE Holdings, the Federal Circuit said no, it didn’t – that the plain language modified 1400, and, essentially, that Congress had said there were no more tracks here.

And that, I think, is the core question here. This is not a Supreme Court policy. This is the Court interpreting the statute. What did Congress do? In Stonite and Fourco, the Court said that Congress intended two separate tracks. The Federal Circuit says that in 1988, Congress merged those tracks by changing the definition of “venue” “under this chapter.”

The only other information we have is that in 2011, more than 20 years after VE Holdings, Congress expanded 1391 again. Section 1391(a) says the section applies to all civil actions “except as otherwise provided by law” (and as we detail in our article, the legislative history is clear that this referred to a list of statutes compiled by the ALI, and 1400 is not among them.) Further, 1391(c) expanded from “under this chapter” to “all venue purposes.” In other words, knowing that the Federal Circuit had interpreted 1391(c) and 1400 to be in a single track, Congress further expanded 1391 even more broadly and did nothing to clarify that no, really, “resides” in 1400(b) was really intended to continue to have the narrow definition. We know from many other contexts, in patent law and otherwise, that Congress is fully capable of correcting erroneous court interpretations, and the agglomeration of cases in Texas was known in 2011. Indeed, the AIA was passed in close proximity, and it included special provisions to deal with filings in Texas, but never once attempted to clarify that VE Holdings interpretation was wrong. For Congress to have expanded the venue statute and pass the AIA without addressing this point is particularly salient.

I, frankly, have no idea how this statutory interpretation issue will or even should come out. I don’t think this is a statutory slam dunk either way. TC Heartland is represented by outstanding lawyers who make outstanding arguments to the contrary. And the Court even granting cert. says something. You could dismiss all I’ve written with a wave of the hand: Fourco stands for the proposition that 1400(b) is separate and the current 1391(c) is no different in structure than the 1391(c) that faced the court then. I am troubled by this argument, but I can see how others might reasonably embrace it.

Supreme Court Patent Cases: Post Sale Exhaustion

by Dennis Crouch

Substantive Patent Law: Newly filed petition in Merck & Cie v. Watson Labs raises a core substantive patent issue – does the on sale bar apply to secret sales? The defendant asks:

Whether the “on sale” bar found in § 102(b) applies only to sales or offers of sale made available to the public, as Congress, this Court, and the United States have all made clear, or whether it also applies to non-public sales or offers of sale, as the Federal Circuit has held.

The Merck petition is focused on pre-AIA patents.  The PTO (and patentees) are arguing more forcefully that the AIA certainly intended to exclude secret sales from the scope of prior art in cases now pending before the Federal Circuit.

The second new substantive patent law case is Google v. Arendi that challenge’s the Federal Circuit’s limitations on the use of common sense in the obviousness analysis.  In its decision, the Federal Circuit limited KSR to combination patents and held that “common sense” cannot be used to supply missing limitations.  Google argues that the Federal Circuit’s approach is contrary to the broad and flexible obviousness analysis required by KSR.  Patentees bristle term “common sense” – they see an overly flexible analysis as providing opportunities to invalidate patents without evidence.  The question: “Did the Federal Circuit err in restricting the Board’s ability to rely on the common sense and common knowledge of skilled artisans to establish the obviousness of patent claims?”

As these new petitions were being filed, the Supreme Court has also denied the pending obviousness, anticipation, and eligibility petitions.  In addition, Cooper v. Square has also been denied.

Civil Procedure: In J&J v. Rembrandt, the defendant J&J won at trial. However, Rembrandt later learned that J&J’s expert had testified falsely and the Federal Circuit ordered the case re-opened under R.60(b)(3) that empowers district courts to revisit final judgments after a showing of “fraud …, misrepresentation, or misconduct by the opposing party.”  The various circuits follow different standards and procedures for analyzing process and J&J has asked the Supreme Court to reconcile these (in its favor).  Another CivPro petition was also filed by Eon Corp that questions whether an appellee needed to file a R.50 JMOL motion to overturn a jury verdict that was based upon a faulty legal conclusion by the district court (here claim construction).  The Question Presented is:

Whether the Federal Circuit erred in ordering entry of judgment as a matter of law on a ground not presented in a Rule 50 motion in the district court, even though the ground presented a purely legal question.

Both J&J and Eon are only marginally patent cases, the core procedure case now pending is TC Heartland that would substantially upset the status quo of patent lawsuit concentration in E.D. Texas. Briefing continues in TC Heartland. In recent weeks a set of seven amici briefs were filed on the top side.

Next week Supreme Court conference includes review of the most likely-to-be-granted petition of Impression Products, Inc. v. Lexmark International, Inc. that focuses on important questions of post-sale exhaustion of patent rights.  The setup – If I buy a used product that was made and sold by the patentee, do I still need to worry that I might get sued for patent infringement?  The Federal Circuit says yes. The Supreme Court is likely to add some caveats to that.  The US Government (Obama Administration via DOJ) has argued that the case should be reviewed and that the Federal Circuit’s position should be rejected. Both parties then filed supplemental responsive briefs.  Lexmark’s best argument here is that these principles are well settled and that Congress can take on the role of tweaking them if needed.

Upcoming Supreme Court Oral Argument: Life Tech (export of components) set for December 6, 2016.


TC Heartland Law Professor Amicus Brief

In TC Heartland, the accused infringer has asked the Supreme Court to reset the law of venue and give effect to the statutory statement that infringement actions be brought either (1) “in the judicial district where the defendant resides” or (2)” where the defendant has committed acts of infringement and has a regular and established place of business.”  28 U.S.C. § 1400(b).   In its 1957 Fourco decision, the Supreme Court affirmatively answered this question.  However, Fourco has been undermined by subsequent Federal Circuit decisions.  Thus, the question presented again is the same as what was originally asked in Fourco: “Whether 28 U.S.C. § 1400(b) is the sole and exclusive provision governing venue in patent infringement actions and is not to be supplemented by 28 U.S.C. § 1391(c).”

From a policy perspective, the case is seen as a vehicle for defendants who do not like being sued in the Eastern District of Texas and into more venues perceived as more defendant friendly.

A group of 50+ law and economics professors led by Mark Lemley, Colleen Chien, Brian Love, and Arti Rai have filed an important brief in support of the TC Heartland petition that I have copied below.  Their position is (1) the Federal Circuit has erred on interpreting the law; and (2) the permissive venue result has fueled many of the problems of our patent system.

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Amici are 53 professors and researchers of law and economics at universities throughout the United States. We have no personal interest in the outcome of this case, but a professional interest in seeing patent law develop in a way that encourages innovation and creativity as efficiently as possible.


28 U.S.C. § 1400(b) provides that a defendant in a patent case may be sued where the defendant is incorporated or has a regular and established place of business and has infringed the patent. This Court made clear in Fourco Glass Co. v. Transmirra Prods. Corp., 353 U.S. 222, 223 (1957), that those were the only permissible venues for a patent case.  But the Federal Circuit has rejected Fourco and the plain meaning of § 1400(b), instead permitting a patent plaintiff to file suit against a defendant anywhere there is personal jurisdiction over that defendant.  The result has been rampant forum shopping, particularly by patent trolls. 44% of 2015 patent lawsuits were filed in a single district: the Eastern District of Texas, a forum with plaintiff-friendly rules and practices, and where few of the defendants are incorporated or have established places of business.  And an estimated 86% of 2015 patent cases were filed somewhere other than the jurisdictions specified in the statute. Colleen V. Chien & Michael Risch, Recalibrating Patent Venue, Santa Clara Univ. Legal Studies Research Paper No. 10-1 (Sept. 1, 2016), Table 3. This Court should grant certiorari to review the meaning of 28 U.S.C. § 1400(b) because the Federal Circuit’s dubious interpretation of the statute plays an outsized and detrimental role, both legally and economically, in the patent system.


1. The Federal Circuit’s Expansive and Incorrect Interpretation of 28 U.S.C. § 1400(b) Allows Patentholders to Sue Anywhere in the Nation

Section 48 of the Judiciary Act of 1897 limited jurisdiction in patent cases to districts that the defendant inhabited or had a place of business and committed infringing acts. Act of March 3, 1897, c. 395, 29 Stat. 695. In 1942, this Court confirmed that “Congress did not intend the Act of 1897 to dovetail with the general provisions relating to the venue of civil suits, but rather that it alone should control venue in patent infringement proceedings.” Stonite Prods. Co. v. Melvin Lloyd Co., 315 U.S. 561, 563 (1942).

In 1948, Congress enacted 28 U.S.C. § 1400(b), specifying that “patent venue is proper 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.” In 1957, this Court confirmed that patent venue should not be interpreted with reference to the general jurisdiction statute, holding that “28 U.S.C. 1400(b) . . . is the sole and exclusive provision controlling venue in patent infringement actions, and that it is not to be supplemented by the provisions of 28 U.S.C. 1391(c).” Fourco Glass Co. v. Transmirra Prods. Corp., 353 U.S. 222, 223 (1957).

In 1990, the Federal Circuit declined to apply this Court’s longstanding precedent and decided that the general venue statute should define interpretation of the patent venue statute.  It made this decision on the basis of a ministerial change Congress made in 1988 to 28 U.S.C. § 1391. VE Holding Corp. v. Johnson Gas Appliance Co., 917 F.2d 1574, 1583 (Fed. Cir. 1990). That statutory language changed the wording in 28 U.S.C. § 1391, from defining residence “for venue purposes” to defining residence “for purposes of venue under this chapter.” There was no indication that Congress intended this change to impact the patent venue statute.

The Federal Circuit’s conclusion that Congress’s ministerial change overruled this Court’s longstanding precedent is incorrect for at least two reasons.  First, it violates fundamental rules of statutory construction.  It is well-established that Congress “does not alter the fundamental details of a regulatory scheme in vague terms or ancillary provisions—it does not, one might say, hide elephants in mouseholes.” Whitman v. American Trucking Assns., Inc., 531 U.S. 457, 468 (2001) (citing MCI Telecomm. Corp. v. American Tel. & Tel. Co., 512 U.S. 218, 231 (1994); FDA v. Brown & Williamson Tobacco Corp., 529 U.S. 120, 159-60 (2000)).

Second, the Federal Circuit’s interpretation renders the second half of § 1400(b) largely superfluous.  That section provides:

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.

The term “resides” in § 1400(b) must mean something different than having “a regular and established place of business.” Otherwise, there would have been no reason to include both provisions in the venue statute, or to link them through the disjunctive term “or.”  In Brunette, this Court, interpreting 28 U.S.C. § 1400(b) as well as 28 U.S.C. § 1391(d), confirmed that where a corporation “resides” is where it is incorporated. Brunette Mach. Works v. Kockum Indus., 406 U.S. 706, n.2 (1972).

Instead of parsing § 1400(b) carefully, the Federal Circuit has chosen to read the § 1391(c)(2) definition of corporate residence for general venue purposes into the specific patent venue provision.  In relevant part, § 1391(c)(2) provides that corporate defendants:

shall be deemed to reside . . . in any judicial district in which such defendant is subject to the court’s personal jurisdiction with respect to the civil action in question . . . .

For patent infringement cases, the relevant aspect of personal jurisdiction is typically specific jurisdiction, which focuses on whether the defendant’s suit-related conduct establishes a “substantial connection” with the judicial forum in question.  Walden v. Fiore, 134 S.Ct. 1115, 1121 (2014).  But a corporation will have established a suit-related “substantial connection” with, and thus be subject to jurisdiction in, any district in which it “has committed acts of infringement and has a regular and established place of business.” So the Federal Circuit’s decision to read the § 1391(c) definition of “resid[ing]” into § 1400(b) renders the second half of the latter section superfluous as to corporations, a category which includes virtually all patent defendants.  A judicial reading that renders half of a statutory provision superfluous is strongly disfavored.  United States v. Jicarilla Apache Nation, 131 S.Ct. 2313, 2330 (2011) (“‘As our cases have noted in the past, we are hesitant to adopt an interpretation of a congressional enactment which renders superfluous another portion of that same law.’” (quoting Mackey v. Lanier Collection Agency & Serv., Inc., 486 U.S. 825, 837 (1988))); Babbitt v. Sweet Home Chapter of Communities for a Great Oregon, 515 U.S. 687, 698 (1995) (noting “[a] reluctance to treat statutory terms as surplusage”).

The Federal Circuit’s expansive, and we believe incorrect, interpretation of 28 U.S.C. § 1400(b) effectively allows patent owners to file suit in any federal district where an allegedly infringing product is sold.  In re TC Heartland, LLC, No. 2016-105, at 10 (Fed. Cir. Apr. 29, 2016) (holding that jurisdiction is proper in a patent suit “where a nonresident defendant purposefully shipped accused products into the forum through an established distribution channel and the cause of action for patent infringement was alleged to arise out of those activities”).  The widespread availability of products over the internet means, in effect, that patentholders can bring their suits in any district in any state in the country.

2. Permissive Venue has Fueled and Enabled Forum Shopping and Selling, Patent Trolls, and Case Concentration

The Federal Circuit’s expansive interpretation of 28 U.S.C. §1400(b) has harmed the patent system in three distinct ways. It has led to forum selling and forum shopping, it has contributed to the growth of opportunistic patent litigation by patent trolls, and it has led to undue case concentration.

Patent lawyers today spend a great deal of time figuring out the best districts in which to file patent cases, and for good reason. The district in which you file your patent case has consequences for how much your case will cost, how long it will last, and whether you will prevail in court. Mark A. Lemley, Where to File Your Patent Case, 38 AIPLA Q.J. 401 (2010); Brian J. Love & James C. Yoon, Predictably Expensive: A Critical Look at Patent Litigation in the Eastern District of Texas, Stan. Tech. L. Rev. ___ (forthcoming, 2016).

The choice of venue enabled by the Federal Circuit’s liberal interpretation of the statute has created an incentive for courts to differentiate themselves in order to compete for litigants and “sell” their forum to prospective plaintiffs. See J. Jonas Anderson, Court Competition for Patent Cases, 163 U. Pa. L. Rev. 631 (2015); Daniel M. Klerman & Greg Reilly, Forum Selling, 89 S. Cal. L. Rev. 241 (2016).

Among district courts, the Eastern District of Texas is the clear forum of choice for patent plaintiffs. It has been the most popular venue for patent cases in eight of the last ten years. Chien & Risch, supra at 3.  Whether intentionally or not, judges in the Eastern District of Texas have adopted rules and practices relating to case assignment, joinder, discovery, transfer, and summary judgment that attract patent plaintiffs to their district. Klerman & Reilly, supra; Matthew Sag, IP Litigation in U.S. District Courts: 1994-2014, 101 Iowa L. Rev. 1065 (2016) (detailing evidence of “forum selling” and five advantages to plaintiffs of filing suit in the Eastern District of Texas).

A study of all patent cases filed from 2014 to June 2016 quantifies some of the advantages. Love & Yoon, supra.  Compared to their colleagues across the nation, judges in the Eastern District of Texas take 150 additional days on average to rule on motions to transfer, id. at 15, and are 10 percentage points less likely to stay the case in favor of an expert adjudication on the validity of the patent by Patent and Trademark Office (PTO) in inter partes review, id. at 26., despite the fact that patents asserted in the Eastern District of Texas are challenged in inter partes review more often than patents asserted in any other district. Saurabh Vishnubhakat, Arti Rai, & Jay Kesan, Strategic Decision Making in Dual PTAB and District Court Proceedings, 31 Berkeley Tech. Law J. 45, 109 (2016).  At the same time, judges in the Eastern District of Texas have adopted discovery rules that begin earlier, end sooner, and require broader disclosure than just about anywhere else in the country. Love and Yoon, supra at 19-22 (comparing discovery and other pretrial deadlines applicable in the Eastern District of Texas and District of Delaware).  In combination, relatively early and broad discovery requirements and relatively late rulings on motions to transfer ensure that defendants sued in the Eastern District of Texas will be forced to incur large discovery costs, regardless of the case’s connection to the venue.

However, not all types of plaintiffs choose to take advantage of the leverage that these rules and procedures make possible.  Patent assertion entities (PAEs), or patent “trolls” use patents primarily to gain licensing fees rather than to commercialize or transfer technology. Colleen V. Chien, From Arms Race to Marketplace: The Complex Patent Ecosystem and Its Implications for the Patent System, 62 Hastings L.J. 297 (2010) Trolls make particular use of the advantages provided by the Federal Circuit’s permissive approach to forum shopping. Since 2014, over 90 percent of patent suits brought in the Eastern District of Texas were filed by trolls established for the purpose of litigating patent suits.  Love & Yoon, supra at 9. By contrast, operating companies, individuals, and universities are more likely to sue in other districts.  Chien & Risch, supra at 3-4, 40.

The troll business model explains this difference in behavior. As the FTC’s recent report describes, “litigation PAEs” sign licenses that are “less than the lower bounds of early stage litigation costs,” a finding “consistent with nuisance litigation, in which defendant companies decide to settle based on the cost of litigation rather than the likelihood of their infringement.” Federal Trade Commission, Patent Assertion Entity Activity: An FTC Study, https://www.ftc.gov/reports/patent-assertion-entity-activity-ftc-study.   Rather than a decision on the merits and damages commensurate with the value of patented technology, litigation PAEs instead seek to leverage the high cost of litigation to coerce nuisance-value settlements keyed not to the merits of the lawsuit, but the cost of litigation.  Mark A. Lemley & A. Douglas Melamed, Missing the Forest for the Trolls, 113 Colum. L. Rev. 2117 (2013). Further, unlike operating companies that sell products, litigation PAEs generally lack customers and regular operations and therefore have the flexibility to incorporate and file suit based solely on litigation considerations, through shell companies or otherwise.

While forum shopping in general impairs the operation of law, disadvantages those who lack the resources to engage in forum shopping, and creates economic waste, Jeanne C. Fromer, Patentography, 85 N.Y.U. L. Rev. 1444, 1464-1465 (2010), the rise of the troll business model exacerbates these problems in patent litigation, creating a particularly urgent need for the Court to hear this case. This Court has previously warned against the problems of abusive patent litigation.  More than a century ago, it worried about the rise of “a class of speculative schemers who make it their business to watch the advancing wave of improvement, and gather its foam in the form of patented monopolies, which enable them to lay a heavy tax upon the industry of the country, without contributing anything to the real advancement of the arts.”  Atlantic Works v. Brady, 107 U.S. 192, 200 (1883).  And in Commil v. Cisco, this Court said:

The Court is well aware that an “industry has developed in which firms use patents not as a basis for producing and selling goods but, instead, primarily for obtaining licensing fees.” eBay Inc. v. MercExchange, L. L. C., 547 U. S. 388, 396 (2006) (KENNEDY, J., concurring). Some companies may use patents as a sword to go after defendants for money, even when their claims are frivolous.

576  U.S. __, 135 S.Ct. 1920 (2015).

Because troll suits now dominate patent litigation nationwide, their filing patterns have led to an overall concentration of 44% of all patent cases in the Eastern District of Texas in 2015. Among cases initiated 2014 through 2016, one U.S. District Judge on the Eastern District of Texas—Judge Rodney Gilstrap of Marshall, Texas—was assigned almost one quarter of all patent case filings nationwide, more than the total number of patent cases assigned to all federal judges in California, New York, and Florida combined.[2]

This level of concentration is a problem for the legal system whatever one thinks of the decisions of the Eastern District of Texas and regardless of how fair and capable the judges there are. Simply from a logistical standpoint, the current caseload in the Eastern District of Texas is problematic.  If even 10 percent of the 1,686 patent cases assigned to Judge Gilstrap in 2015 go to trial, he will need to preside over three to four patent trials per week every week for an entire year to avoid creating a backlog.

Further, when Congress decided to consolidate patent appeals in the newly-created United States Court of Appeals for the Federal Circuit, it deliberately chose to include both appeals from the United States Patent and Trademark Office and the district courts, so the new court would not hear only appeals from patent owners.  And it considered and rejected proposals to create a specialized district court to hear patent cases.  But the Federal Circuit’s interpretation of § 1400(b) has in practice created just such a court.

The current distribution of patent litigation filings is the result of strategic behavior by a specific type of patent enforcer, not an artifact of proximity to the original locus of invention or alleged infringement. Forum-shopping plaintiffs will naturally gravitate towards whatever district seems to have the most favorable rules. The effect of the Federal Circuit’s decision to expand patent venue beyond the scope of the statute and this Court’s decisions has been to create a de-facto specialized patent trial court, one chosen by litigants on one side rather than by Congress.


The Federal Circuit’s permissive venue rule has fundamentally shaped the landscape of patent litigation in ways that harm the patent system, by enabling extensive forum shopping and forum selling, supporting opportunistic patent litigation by patent trolls, and creating undue case concentration.  This Court should grant certiorari in order to curb abuse of venue based on its misinterpretation of § 1400(b).

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[1] No person other than the amici and their counsel participated in the writing of this brief or made a financial contribution to the brief. Letters signifying the parties’ consent to the filing of this brief are on file with the Court.

[2] According to Lex Machina, between January 1, 2014 and June 30, 2016 Judge Gilstrap was assigned 3,166 new patent suits, more than the combined total of all district courts in California, Florida, and New York: 2,656. Love & Yoon, supra, at 5 (collecting these statistics).

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Signed, Professor John R. Allison (Texas); Professor Margo Bagley (Emory); Professor James Bessen (BU); Professor Jeremy Bock (Memphis); Professor Daniel H. Brean (Akron); Professor Michael A. Carrier (Rutgers); Professor Michael W. Carroll (American); Professor Bernard Chao (Denver); Professor Tun-Jen Chiang (George Mason); Professor Colleen V. Chien (Santa Clara); Professor Andrew Chin (UNC); Professor Robert Cook-Deegan (ASU); Professor Rochelle Dreyfuss (NYU); Dr. Dieter Ernst (Honolulu); Professor Robin C. Feldman (Hastings); Professor Lee Fleming (Berkeley); Professor Brian Frye (Kentucky); Professor William Gallagher (Golden Gate); Professor Shubha Ghosh (Wisconsin); Professor Eric Goldman (Santa Clara); Professor Bronwyn H. Hall (Berkeley); Professor Yaniv Heled (Georgia State); Professor Christian Helmers (Santa Clara); Professor Joachim Henkel (Technische Universität München); Professor Susan Helper (CWRU); Professor Tim Holbrook (Emory); Professor Herbert Hovenkamp (Iowa); Professor William Hubbard (Baltimore); Dr. Xavier Jaravel (Stanford); Professor Dennis S. Karjala (ASU); Professor Peter Lee (UC Davis); Professor Mark A. Lemley (Stanford); Professor David K. Levine (WashU); Professor David S. Levine (Elon); Professor Doug Lichtman (UCLA); Professor Yvette Joy Liebesman (SLU); Professor Orly Lobel (USD); Professor Brian Love (Santa Clara); Professor Phil Malone (Stanford); Professor Michael J. Meurer (BU); Dr. Shawn Miller (Stanford); Professor Matthew Mitchell (Toronto); Professor Susan Barbieri Montgomery (Northeastern); Professor Sean Pager (Michigan State); Professor Arti K. Rai (Duke); Professor Jacob H. Rooksby (Duquesne); Professor Jorge R. Roig (Charleston); Professor Matthew Sag (Loyola Chicago); Professor Pamela Samuelson (Berkeley); Ana Santos Rutschman (DePaul); Professor Lea Bishop Shaver (Indiana); Professor John L. Turner (Georgia); Professor Jennifer Urban (Berkeley); Professor Eric von Hippel (MIT).

Supreme Court Update: Extending the ITC’s Reach Beyond US Borders

by Dennis Crouch

Constitutional Challenge to Inter Partes Review: Although the Constitutional issues in Cooper v. Lee and MCM v. HP were law-professor-interesting, they were not substantial enough for certiorari.  The Supreme Court has now denied the Cooper and MCM petitions — leaving the IPR regime unchanged.  Although Cooper v. Square is still pending, its chances are slight. The Supreme Court has also denied certiorari in Encyclopaedia Britannica (malpractice), Gnosis (appellate review), and GeoTag (case-or-controversy).

A new 101 Challenge: In its first conference of the term, the Supreme Court denied all of the pending petitions regarding patent eligibility.  However, Trading Technologies has filed a new petition asking whether a new card game is categorically unpatentable so long as it uses a standard deck (rather than a novel deck) of cards.  My post on the case asks: Does the Patent Statute Cabin-in the Abstract Idea Exception?  That question references Section 100 of the Patent Act that expressly allows for the patenting of new use of a known manufacture.

Extra Territoriality of Trade Secrecy Law: On the trade secrecy front, Sino Legend has petitioned to review the Federal Circuit’s affirmance of the International Trade Commision’s ban on Legend’s importation of rubber resins used for tire production. The underlying bad-act was a trade secret misappropriation that occurred in China and the question on appeal asks: Whether Section 337(a)(1)(A) permits the ITC to adjudicate claims regarding trade secret misappropriation alleged to have occurred outside the United States.  A Chinese court looked at the same case and found no misappropriation.

Design Patent Damages: Oral arguments were held earlier this week in Samsung v. Apple. During the arguments, all parties agreed that (1) the statute does not allow for apportionment of damages but rather requires profit disgorgement; (2) the article-of-manufacture from which profits can be calculated may be a component of the product sold to consumers; and (3) the determination of what counts as the article-of-manufacture is a question of fact to be determined by the jury.   The only dispute then was on the factors that a jury should be considered and when the “inside gears” of a product should ever be included in the calculation.

Upcoming Supreme Court Oral Argument: SCA Hygiene (laches) on November 1; Star Athletica (copyright of cheerleader outfit) on October 31.


Supreme Court Patent Cases – September 28 Update

by Dennis Crouch

Cooper v. Lee and Cooper v. Square are both ask the same question: whether 35 U.S.C. §318(b) violates Article III of the United States Constitution, to the extent that it empowers an executive agency tribunal to assert judicial power canceling private property rights amongst private parties embroiled in a private federal dispute of a type known in the common law courts of 1789, rather than merely issue an advisory opinion as an adjunct to a trial court.”  The issues here are also parallel to those raised in MCM Portfolio v. HP (“Does IPR violate Article III of the Constitution?”).  The cases received a boost this month with the Court’s call for response (CFR) in Cooper v. Square.  Square had previously waived its right to respond, but its response is now expected by October 11, 2016.  Under Supreme Court R. 37, the Call for Response reopens the period for filing of an amicus curiae brief in support of petitioner. (~ due October 8, 2016).  Eight Amici Curiae briefs were filed in MCM and two in Cooper v. Lee.  In general, each brief additional brief incrementally increases the odds of certiorari.  Statistical analysis also suggests that a call for response significantly increases the odds of certiorari being granted.

I wrote earlier this week about the new IPR process challenge in Ethicon where the patentee has challenged Director Lee’s delegation of institution decision authority to the PTAB.  The case is one of statutory interpretation but uses the separation-of-function doctrine as an interpretive guide. The same question is also presented in LifeScan Scotland, Ltd. v. Pharmatech Solutions, Inc.  Both petitioners (Ethicon and LifeScan) are owned by J&J.

The final new petition is a personal jurisdiction case: Mylan v. Acorda.  The Hatch-Waxman setup involved Mylan preparing and filing its abbreviated new drug application that created a cause of action for infringement under 35 U.S.C. 271(e)(2). Although the ANDA preparation occurred in West Virginia and the filing in Maryland, the infringement lawsuit was filed by Acorda in Delaware.  Mylan asks: “Whether the mere filing of an abbreviated new drug application by a generic pharmaceutical manufacturer is sufficient to subject the manufacturer to specific personal jurisdiction in any state where it might someday market the drug.”  The argument builds on the non-patent decision Daimler AG v. Bauman, 134 S. Ct. 746 (2014). In the pro-business case of Daimler, the Supreme Court reduced the scope of general personal jurisdiction to states where the defendant company is incorporated or has its personal place of business.


In the claim construction front, the Supreme Court also called for a response in Google v. Cioffi. In that case Google suggests an interpretative principle of “strictly construing” amended claim language against the patentee. [GoogleCioffiPetition]

On the merits side – we have three patent cases pending oral arguments.  First-up is the design patent damages case of Apple v. Samsung.   Although not a party, the Solicitor General has requested to been granted leave to participate in oral arguments.   Its brief, the SJ argued (1) Section 289 does not permit apportionment but rather requires award of the infringers profits on the relevant article of manufacture; but (2) the article of manufacture can be a “component” rather than a finished product sold to end-users.  In the end, the SJ argues that the jury should have been tasked with determining the appropriate article-of-manufacture and that the case should be remanded to determine whether a new trial is warranted.  Briefing continues in both SCA Hygiene (laches) and Life Tech (Component Export liability).



Patent Venue at the Supreme Court: Correcting a 26 Year Old Legal Error

TC Heartland v. Kraft Foods (Supreme Court 2016) [Petition for Writ of Certioari]

Patent litigation continues to be concentrated in a small number of venues.  This case is potentially a big deal because it could eliminate this concentration — especially patent cases in the E.D.Texas.  Both the PTO and Congress appear in favor of venue reforms, but statutory reforms will likely wait until the Supreme Court decides TC Heartland.

Background: The scope of patent venue is codified in 28 U.S.C. § 1400(b) and limits venue to judicial districts “where the defendant resides, or where the defendant has committed acts of infringement and has a regular and established place of business.”  At first glance, this venue statute would seem to significantly limit venue — For instance, few patent infringement defendants actually reside or have a place of business in the E.D. Texas.  That narrowness was confirmed in the Supreme Court’s decision in Fourco Glass Co. v. Transmirra Products Corp., 353 U.S. 222 (1957).  The issue in Fourco Glass involved the parallel statute of 28 U.S.C. § 1391 (titled “Venue generally”) that broadly defined a corporation’s residence to include “any judicial district in which it is … licensed to do business or is doing business.” Despite the seeming broadening statutory definition, the Supreme Court held that the more general Section 1391(c) could not be used to expand venue beyond what was contemplated in Section 1400(b).  Rather, the court held that “where the defendant resides” in § 1400(b) is limited to “the state of incorporation only.” Fourco Glass.

We hold that 28 U.S.C. § 1400(b) is the sole and exclusive provision controlling venue in patent infringement actions, and that it is not to be supplemented by the provisions of 28 U.S.C. § 1391(c).


In 1988 Congress amended 1391(c) to expand the definition of residency “for all venue purposes” to include “any judicial district in which such defendant is subject to the court’s personal jurisdiction.” Based upon that change, the Federal Circuit determined in 1990 that Fourco Glass had been implicitly overruled and that the new provision of 1391(c) now does redefine and greatly expand Section 1400(b) even though the legislative history of the 1988 amendment did not discuss patent venue. VE Holding Corp. v. Johnson Gas Appliance Co., 917 F.2d 1574 (Fed. Cir. 1990).

The chart below from the cert petition shows the 1988 statutory change that the Federal Circuit found sufficient to indicate an overruling of Fourco Glass.


It is this 1990 combination of 1400(b)/1391(c) that is now the status quo – venue is proper in any any federal court that has personal jurisdiction over the accused infringer.*

TC Heartland challenges the VE Holding interpretation offering broad venue.  It writes:

The question in this case is thus precisely the same as the issue decided in Fourco: Whether 28 U.S.C. § 1400(b) is the sole and exclusive provision governing venue in patent infringement actions and is not to be supplemented by 28 U.S.C. § 1391(c).

The Supreme Court previously decided patent venue in Stonite Products Co. v. Melvin Lloyd Co., 315 U.S. 561 (1942) and also held that the specific patent venue provisions should prevail and remain unmodified by the general venue provisions.

I’ll be happy if TC Heartland wins because it will make it much easier for me to watch patent cases here in Missouri.

The new petition is filed by James Dabney and John Duffy who were the forces behind KSR v. Teleflex.

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* The one major caveat is that Congress again amended 1391(c) in 2011 and the associated legislative history suggests a Congressional recognition that “VE Holding is the prevailing law.”  Update and Correction – On suggestion from a reader, I followed chased down the above quote – it does not actually come from the Congressional Record but instead is Judge Moore’s conclusion found in the TC Heartland case.  The opinion states:

In fact, before and after these [recent] amendments, in the context of considering amending the patent venue statute, Congressional reports have repeatedly recognized that VE Holding is the prevailing law.

For its conclusion, the court cites several Congressional reports that I have not read: “See H.R. Rep. No. 110–314, at 39–40 (2007); S. Rep. No. 110–259, at 25 (2008); H.R. Rep. No. 114–235, at 34 (2015) (stating that “Congress must correct” our holding in VE Holding by amending § 1400); cf. Venue Equity and Non-Uniformity Elimination Act of 2016, S. 2733, 114th Cong. § 2(a) (2016).”  An important note with this is that the court did not identify any record contemporaneously with the 2011 report that suggests a conscious choice to keep VE Holding as the prevailing law.

Letter to Congress from 28 Law Professors & Economists Urging Caution on the VENUE Act

In July 2016, I discussed a letter from 45 professors arguing for statutory reforms to limit venue in patent infringement cases.  The letter focused on the “staggering concentration of patent cases in just a few federal district courts” and offered the the positive conclusion that such a concentration is “bad for the patent system.”  In the abstract, concentration of cases is not necessarily bad — here though, the particular arguable “badness” is that the high concentration of cases is in the Eastern District of Texas rather than Silicon Valley, New York, Chicago, or Delaware.

Now, a competing group of law professors has offered their suggestion – urging caution in terms of patent venue reform, especially with regard to the pending VENUE Act. Venue Equity and Non-Uniformity Elimination Act, S.2733, 114th Cong. (2016).   The proposed VENUE Act would allow patent actions to be brought only in judicial districts where:

  • the defendant has its principal place of business or is incorporated;
  • the defendant has committed an act of infringement of a patent in suit and has a regular and established physical facility that gives rise to the act of infringement;
  • the defendant has agreed or consented to be sued;
  • an inventor named on the patent conducted research or development that led to the application for the patent in suit; or
  • a party has a regular and established physical facility and has managed significant research and development for the invention claimed in the patent, has manufactured a tangible product alleged to embody that invention, or has implemented a manufacturing process for a tangible good in which the process is alleged to embody the invention.

Under the current statutory framework (as interpreted), venue is proper in any jurisdiction where the court has personal jurisdiction over the defendants.  For any large company operating in the US, this current approach leads to the results that venue for a patent infringement case is proper in any federal court across the country – including those located in the Eastern District of Texas.

The new letter argues that the venue limiting proposals are basically serving as a mechanism of weakening the power of patent holders: “The reality is that the major proponents of changing the venue rules are primarily large high-tech companies and retailers with an online presence sued in the Eastern District of Texas that would rather litigate in a small number of more defendant-friendly jurisdictions.”

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[Read the Full Letter]

Dear Chairman Grassley, Ranking Member Leahy, Chairman Goodlatte, and Ranking Member Conyers:

As legal academics, economists, and political scientists who conduct research in patent law and policy, we write to express our concerns about the recent push for sweeping changes to patent litigation venue rules, such as those proposed in the VENUE Act.[1] These changes would vastly restrict where all patent owners could file suit—contrary to the general rule that a plaintiff in a civil lawsuit against a corporate defendant can select any court with jurisdictional ties to the defendant.[2]

Given the recent changes in the patent system under the America Invents Act of 2011 and judicial decisions that have effectively weakened patent rights,[3] we believe that Congress should adopt a cautious stance to enacting additional changes that further weaken patent rights, at least until the effects of these recent changes are better understood.

Proponents of amending the venue rules have an initially plausible-sounding concern: the Eastern District of Texas handles a large percentage of patent infringement lawsuits and one judge within that district handles a disproportionate share of those cases. The reality is that the major proponents of changing the venue rules are primarily large high-tech companies and retailers with an online presence sued in the Eastern District of Texas that would rather litigate in a small number of more defendant-friendly jurisdictions.

Indeed, the arguments in favor of this unprecedented move to restrict venue do not stand up to scrutiny. Specifically:

  • Proponents for the VENUE Act argue that “[t]he staggering concentration of patent cases in just a few federal district courts is bad for the patent system.”[4] As an initial matter, data indicates that filings of patent lawsuits in the Eastern District of Texas have dropped substantially this year—suggesting a cautious approach until trends have stabilized.[5]
  • Contrary to claims by its proponents, legislative proposals like the VENUE Act would not spread lawsuits throughout the country. In fact, these same proponents have found that restricting venue in a manner similar to the VENUE Act would likely result in concentrating more than 50% of patent lawsuits in just two districts: the District of Delaware (where most publicly traded corporations are incorporated) and the Northern District of California (where many patent defendants are headquartered).[6] Instead of widely distributing patent cases across numerous districts in order to promote procedural “fairness,” the VENUE Act would primarily channel cases into only two districts, which happen to be districts where it is considered much more difficult to enforce patent rights.[7]
  • Proponents for the VENUE Act have argued that the Eastern District of Texas is reversed more often by the Federal Circuit than other jurisdictions, claiming that in 2015 the Federal Circuit affirmed only 39% of the Eastern District of Texas’s decisions but affirmed over 70% of decisions from the Northern District of California and District of Delaware.[8] These figures are misleading: they represent only one year of data, mix trials and summary judgment orders, and fail to take into account differences in technology types and appeals rates in each district. In fact, a more complete study over a longer time period by Price Waterhouse Coopers found that the Eastern District of Texas affirmance rate is only slightly below the national average for all districts.[9]
  • The Federal Circuit recently confirmed in In re TC Heartland (Fed. Cir. Apr. 29, 2016) that 28 U.S.C. § 1400(b) provides that a corporate defendant in a patent case—like corporate defendants in nearly all other types of cases—may be sued in any district in which personal jurisdiction lies. Constitutional due process requires a “substantial connection” between the defendant and forum.[10] Thus, contrary to its title and the claims of its proponents, the VENUE Act does not re-establish a “uniform” litigation system for patent rights by requiring substantial ties to the forum. Instead, the Act thwarts the well-established rule that plaintiffs can bring suit in any jurisdiction in which a corporate defendant has committed substantial violations of the law.[11]
  • The VENUE Act would raise costs for many patent owners by requiring them to litigate the same patent against multiple defendants in multiple jurisdictions, increasing patent litigation overall. In recent years, the America Invents Act’s prohibition on joinder of multiple defendants in a single lawsuit for violating the same patent has directly resulted in increased lawsuits and increased costs for patent owners.[12] Moreover, the VENUE Act would also result in potentially conflicting decisions in these multiple lawsuits, increasing uncertainty and administration costs in the patent system.
  • The VENUE Act encourages the manipulation of well-settled venue rules across all areas of law by the self-serving efforts of large corporate defendants who seek to insulate themselves from the consequences of violating the law. By enacting the VENUE Act, Congress would send a strong signal to corporate defendants that they can tilt the substantive playing field by simply shifting cases to defendant-friendly jurisdictions.

Innovators and their investors have long been vital to a flourishing innovation economy in the United States.  Startups, venture capitalists, individual inventors, universities, and established companies often rely heavily on patents to recoup their extensive investments in both R&D and commercialization.  We urge you to exercise caution before enacting further sweeping changes to our patent system that would primarily benefit large infringers to the detriment of these innovators and, ultimately, our innovation economy.


[1] S.2733, Venue Equity and Non-Uniformity Elimination Act of 2016,  https://www.congress.gov/114/bills/s2733/BILLS-114s2733is.pdf.

[2] See 28 U.S.C. § 1391(c)(2). See generally Ferens v. John Deere Co., 494 U.S. 516, 527 (1990) (“a plaintiff . . . has the option of shopping for a forum with the most favorable law”).

[3] These include, among others: (1) administrative procedures for invalidating patents created by the America Invents Act, which have had extremely high invalidation rates, leading one former federal appellate judge to refer to these procedures as “death squads,” and (2) several decisions by the Supreme Court and the Federal Circuit that have drastically curtailed patent rights for many innovators. See Adam Mossoff, Weighing the Patent System: It Is Time to Confront the Bias against Patent Owners in Patent ‘Reform’ Legislation, Washington Times, March 24, 2016, http://www.washingtontimes.com/news/2016/mar/24/adam-mossoff-weighing-the-patent-system/.

[4] Colleen Chien & Michael Risch, A Patent Reform We Can All Agree On, Wash. Post, June 3, 2016, https://www.washingtonpost.com/news/in-theory/wp/2015/11/20/why-do-patent-lawyers-like-to-file-in-texas/.

[5] See Michael C. Smith, “Hot But No Longer Boiling“ – EDTX Patent Case Filings Down almost Half; New Case Allocation and Procedures (No More Letter Briefing for SJ motions), EDTexweblog.com, July 21, 2016, http://mcsmith.blogs.com/eastern_district_of_texas/2016/07/edtx-patent-case-filing-trends-new-case-allocation-and-procedures.html.

[6] Colleen Chien & Michael Risch, What Would Happen to Patent Cases if They Couldn’t all be Filed in Texas?, Patently-O, March 11, 2016, https://patentlyo.com/patent/2016/03/happen-patent-couldnt.html. This study also finds that 11% of cases would continue to be filed in the Eastern District of Texas, concentrating nearly two-thirds of all cases in three districts. See id. The authors of this study are presently expanding their investigation to an enlarged data set, which will also capture additional aspects of the VENUE Act. Neither the data nor their results are available yet. However, we have no reason to believe that the expanded data or analysis will produce results other than what has already been shown: a high concentration of patent cases in a small number of districts.

[7] See PricewaterhouseCoopers LLP, 2015 Patent Litigation Study (May 2015) (“PWC Study”), http://www.pwc.com/us/en/forensic-services/publications/assets/2015-pwc-patent-litigation-study.pdf.

[8] Ryan Davis, EDTX Judges’ Love of Patent Trials Fuels High Reversal Rate, Law360 (Mar. 8, 2016), http://www.law360.com/articles/767955/edtx-judges-love-of-patent-trials-fuels-high-reversal-rate.

[9] See PWC Study, supra note 7 (finding an average affirmance rate of 48% for all districts, compared to an affirmance rate of 42% for the Eastern District of Texas).

[10] See Burger King Corp. v. Rudzewicz, 471 U.S. 462, 475 (1985).

[11] See generally Gulf Oil Corp. v. Gilbert, 330 U.S. 501, 508 (1947) (“[T]he plaintiff’s choice of forum should rarely be disturbed.”).

[12] See Christopher A. Cotropia, Jay P. Kesan & David L. Schwartz, Unpacking Patent Assertion Entities (PAEs), 99 Minnesota Law Review 649 (2014), http://www.minnesotalawreview.org/wp-content/uploads/2015/02/REVISEDSchwartzetal_MLR.pdf.


Venue Challenges Part 2

While law professors call for venue patent reform, the TC Heartland venue and personal jurisdiction challenge appears to still have legs.  In April 2016, the Federal Circuit rejected the mandamus action, but the Supreme Court recently granted TC Heartland’s delay petition – allowing its petition for writ of certiorari to be filed by September 12, 2016.  In the case, TC Heartland argues that the statute itself (28 U.S.C. § 1400(b)) limits where patent claims can be brought and that the Federal Circuit has unduly broadened venue in ways that harm the system.  [SCT Docket]

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28 U.S.C. § 1400(b) provides the venue requirements for patent cases – limiting proper venue to (1) “the judicial district where the defendant resides” or (2) “where the defendant has committed acts of infringement and has a regular and established place of business.”   This appears to be quite narrow in that few defendants actually reside or have an established place of business in the Eastern District of Texas.  The catch, however, comes in the form of 28 U.S.C. § 1391(c). That provision expansively defines the term “reside” — indicating that “except as otherwise provided by law . . . [a defendant] shall be deemed to reside . . . in any judicial district in which such defendant is subject to the court’s personal jurisdiction with respect to the civil action in question.”  Section 1391(c) appears to completely gut the limits of 1400(b) to indicate that venue is proper whenever a court has personal jurisdiction.  TC Heartland argues that the statute should be interpreted differently – namely that the express limits of 1400(b) should take precedence over the broad definition of 1391(c) as suggested by the “otherwise provided by law” exception.


Pending Supreme Court Patent Cases 2016 (May 18 Update)

by Dennis Crouch

It is now time to begin looking for an opinion in the Halo/Stryker regarding whether the Federal Circuit’s test for willful infringement is too rigid. Those cases were argued in February 2016.  We can also expect a decision in Cuozzo prior to the end June 2016.

Supplying Components Abroad: The Solicitor General has finally filed its brief in Life Tech v. Promega. The brief supports certiorari — but only for one of the two questions presented: namely,

whether a supplier can be held liable for providing ‘all or a substantial portion of the components of a patented invention’ from the United States when the supplier ships for combination abroad only a single commodity component of a multi-component invention

The patent in the case involves a DNA amplification kit used for personal identification.  And, although the allegedly infringing kids were made in the UK, one commodity-component (the Taq polymerase) was supplied from the U.S.  Focusing on the language of the statute, the Solicitor Generals argues that liability for export of a single component of a multi-component invention “is contrary to Section 271(f)’s text and structure, and it is inconsistent with the presumption against extraterritoriality.”  Separately, the brief argues that the Federal Circuit was correct in its holding that a party can actively induce itself – thus 271(f)(1) inducement does not require a third party to be induced. [USPromega CVSG Petition].

Post Grant Admin: I previously discussed GEA Process Engineering. That case involves the Flip-side of Cuozzo and asks whether an appeal can follow when the PTAB exceeds its authority by terminating an already instituted IPR proceeding?  The respondent (Steuben Foods) had previously waived its right to respond, but the Supreme Court has now requested a response.  That move makes certiorari more likely, but the result will depend upon the outcome in Cuozzo.

Attorney Fees: Newegg Inc. v. MacroSolve, Inc., No. 15-1369.  Professor Mark Lemley’s brief on behalf of Newegg asks that the attorney-fee framework of Octane Fitness actually be implemented. [NewEggPetition].  Although Octane Fitness gives district courts discretion in determining whether to award fees, Newegg argues that the E.D. Texas court improperly applied “a special, heightened burden of proof.”  The Supreme Court is currently considering the Kirtsaeng attorney fee case for copyright law. That decision may shed some light on the patent cases as well.

A new petition in Automotive Body Parts, No. 15-1314,  focuses on a question of civil procedure regarding a clerk’s transfer of a design patent case out of E.D.Tx in a manner that violated the local rules.  Here, the clerk transferred the case immediately after the judge ordered transfer even though the local rules call for a 21 day delay.  The case is rising through a petition for mandamus, but my view is that the petition fails to show why transfer is so harmful (except for the reality that patent plaintiffs are usually given more respect in E.D.Tx.).

The court was scheduled to discuss Cooper v. Lee at its May 12 conference. No action was taken following that conference – lightly suggesting to me that the court is holding judgment until it resolves Cuozzo.  Apart from the AIA Trial challenges, most potential life changing case on the docket for patent attorneys is Cubist v. Hospira that focuses on the role of secondary indicia of non-obviousness. As with most Supreme Court patent cases over the past decade, Cubist argues that the Federal Circuit’s rules are too restrictive and should instead follow a looser factor-based analysis when considering the issue.  In the next couple of weeks, the court will consider the Cubist petition as well as that of Dow v. NOVA  (appellate review standard); Vehicle Intelligence (abstract idea); and WesternGeco (damages calculation for 271(f) infringement by exporting components).

Secret Offers to Sell: The Federal Circuit is not slowing down its patent jurisprudence in any way – except for the rash of R.36 affirmances. An important case is Helsinn that focuses on whether the AIA abrogated the rule in Metallizing Engineering.

The big list: (more…)

Extra-Territorial Application of the Defend Trade Secrets Act

by Dennis Crouch

When U.S. courts interpret U.S. statutes, they tend to read an inherent territorial limitation into the law.   “It is a long-standing principle of American law that legislation of Congress, unless a contrary intent appears, is meant to apply only within the territorial jurisdiction of the United States,” Morrison v. National Australia, 130 S.Ct. 2869 (2010) (internal quotation omitted). However, when Congress clearly requires a longer reach, the courts oblige.

The Economic Espionage Act (EEA) includes a provision regarding its “applicability to conduct outside the United States.” 18 U.S.C. § 1837.  Section 1837 was left unchanged with DTSA’s amendments to EEA, but seemingly applies to the new private civil cause of action for trade secret misappropriation. The provision offers important insight on how the new cause of action can be applied in the foreign context.  Most importantly, a (1) U.S. corporation or citizen can be held liable for trade secret misappropriation under the DTSA regardless of whether the misappropriation occurred abroad; and (2) an entity can be held liable under the DTSA for foreign misappropriation if “an act in furtherance of the offense was committed in the United States.”

The provision:

This chapter also applies to conduct occurring outside the United States if—

(1) the offender is a natural person who is a citizen or permanent resident alien of the United States, or an organization organized under the laws of the United States or a State or political subdivision thereof; or

(2) an act in furtherance of the offense was committed in the United States.

18 U.S.C. § 1837 (DTSA Amendments) (The EEA/DTSA is collectively codified in Chapter 90 of Title 18).   It will be interesting to watch this play-out, but I expect that we will see a number of extra-territorial and cross-border cases over the next few years.

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  1. To be clear, a court would still need personal jurisdiction over the defendant. See International Shoe.  
  2. A possible but unlikely limitation on the extraterritorial application could occur if the courts read a territorial limitation into the definition of trade secret such that information is only protectable under the DTSA if created and/or stored in the U.S.


The Recent Federal Circuit Decision in Acorda Therapeutics v. Mylan Pharmaceuticals May Not be the Last Word on Personal Jurisdiction in ANDA Cases

Guest Post By: Paul Dietze and Mini Kapoor, Haynes and Boone, LLP[1]

 On March 18, 2016, the Federal Circuit held that Mylan Pharmaceuticals, Inc. (“Mylan”), a generic drug manufacturer, was subject to specific personal jurisdiction in Delaware because Mylan had filed an abbreviated new drug application (“ANDA”) and “contemplate[d] plans to engage in marketing of the proposed generic drugs” in the state.[2]  The ruling affirmed two different decisions by judges in the United States District Court for the District of Delaware that Mylan was subject to specific jurisdiction in Delaware.[3]  However, as noted below, it looks like Mylan intends to seek panel or en banc rehearing and possibly pursue a petition for certiorari if the Federal Circuit does not grant the rehearing or re-hears the case and continues to find personal jurisdiction.

I. Procedural Posture of the Cases

Mylan filed two separate ANDAs with the U.S. Food & Drug Administration (“FDA”) seeking permission to market generic versions of unrelated pharmaceutical products marketed by Acorda Therapeutics, Inc. and AstraZeneca AB under the statutory scheme outlined in the Hatch-Waxman Act (the “Act”).  As permitted under the Act, Mylan certified that the patents of the brand name drug companies listed in the FDA’s Approved Drug Products with Therapeutic Equivalence Evaluations (“the Orange Book”) were either invalid or would not be infringed by Mylan’s marketing of its proposed generic versions of the drugs.  Each certification is deemed an artificial act of infringement under the Act, and permits the brand name drug companies to sue the generic drug company.  Acorda and AstraZeneca sued Mylan for patent infringement in separate lawsuits filed in Delaware.  Mylan moved to dismiss in both cases, arguing that it was not subject to either general or specific personal jurisdiction.[4]

Specifically, Mylan, citing the Supreme Court’s decision in Daimler AG v. Bauman,[5] argued that it was not subject to general jurisdiction in Delaware because it did not have contacts with Delaware that were so continuous “as to render it essentially at home in the forum state,” and was not subject to specific jurisdiction because it did not satisfy the minimum contacts requirement.[6]  Both district court decisions held that Mylan was subject to specific jurisdiction in Delaware.[7]  The district court decisions, however, differed as to whether or not Mylan was subject to general jurisdiction in Delaware.

II. The Opinion

On appeal, the majority opinion of the Federal Circuit panel affirmed specific jurisdiction without addressing general jurisdiction.[8]  The panel identified Mylan’s ANDA filings as “formal acts that reliably indicate plans to engage in marketing of the proposed generic drugs” and held the particular actions that “Mylan has already taken—its ANDA filings—for the purpose of engaging in that injury-causing and allegedly wrongful marketing conduct in Delaware” were sufficient to satisfy the minimum contacts requirement.[9] The court also identified the significant expense a generic drug company incurs in the ANDA application process as evidence of an ANDA-filer’s plans to market the drug.[10]  The court further noted that Mylan’s distribution channels in Delaware make clear that these future marketing activities would “unquestionably take place in Delaware (at least).”[11] The court concluded that the planned sales were “close enough” to the subject of the lawsuits to satisfy the minimum contacts requirement and justify specific jurisdiction in Delaware.[12]

Having found the minimum contacts requirement satisfied, the court considered whether Delaware’s exercise of jurisdiction would “offend traditional notions of fair play and substantial justice.”[13]  The court held that other considerations, such as those identified in Burger King Corp. v. Rudzewicz,[14] would not render jurisdiction unreasonable.

III. The Logical Implications

 By establishing specific personal jurisdiction by virtue of filing an ANDA with plans to direct sales of a generic drug into a particular state, a generic drug manufacturer, such as Mylan, would appear to be subject to specific jurisdiction in any state in which it intends to market the generic drug.  Almost always, this will be any state in the country.

Prior to the Supreme Court’s ruling in Daimler, branded-drug companies often asserted jurisdiction in a state based on general jurisdiction, arguing that the generic company was subject to jurisdiction in the state because it intended to sell the generic version of the drug in the state.  In Daimler, however, the Supreme Court held that general jurisdiction cannot attach unless the defendant’s contacts with the forum state are “so continuous and systematic as to render [the non-resident corporate defendant] essentially at home in the forum State.”[15] A corporation is essentially at home only in its state of incorporation and the state where its principal place of business is located.[16] Daimler specifically rejected the notion that general jurisdiction will lie “in every State in which a corporation engages in a substantial, continuous, and systematic course of business.”[17] This decision in Daimler raised the concern as to whether brand name drug companies could continue to rely on general jurisdiction to file suits in the forum of their choice.  However, the court’s ruling in Acorda, by establishing specific jurisdiction based on filing an ANDA with plans to sell the drug in a state, arguably makes the high bar for general jurisdiction established in Daimler of little significance in ANDA cases.

Thus, under Acorda, brand name drug companies are likely to continue to have wide latitude in selecting the forum in which to sue an ANDA-filer.  Delaware and New Jersey, where ANDA cases are often brought, are likely to continue to be forums of choice for ANDA cases.

IV. Expected Future Litigation

 Letters filed by Mylan in pending district court actions indicate that Mylan plans to seek panel and en banc rehearing in Acorda.[18]  The letters provide a preview of Mylan’s potential arguments for rehearing.  Mylan is expected to argue that Acorda’s holding that Mylan is subject to specific jurisdiction in every state “is contrary to the basic notion of specific jurisdiction and the more basic constitutional guarantees at the heart of the Supreme Court’s due process/personal jurisdiction jurisprudence.”[19]  Mylan is further expected to argue that Acorda was wrongly decided because it “simply recreates the pre-Daimler status quo by allowing courts throughout the nation to rely on specific jurisdiction where general jurisdiction is no longer applicable.”[20]  Mylan also indicates that it will argue that Acorda’s reliance on Mylan’s future contacts in Delaware is contrary to the Supreme Court’s Walden v. Fiore decision[21] and that the present decisions are misplaced in view of prior Federal Circuit precedent in Zeneca Ltd. v. Mylan Pharm., Inc.,[22] where the Federal Circuit “held that submission of an ANDA to the FDA in Maryland did not authorize the exercise of jurisdiction over the ANDA-filer by Maryland federal courts.”[23]  Acorda, Mylan argues, makes “Zeneca merely academic.”

Regardless of the Federal Circuit’s final ruling, the losing party may very well file a petition for certiorari with the Supreme Court seeking review of the Federal Circuit’s decision.  That Acorda and Mylan were represented at the Federal Circuit by former Solicitor Generals (Theodore Olson for Acorda and Paul Clement for Mylan), while AstraZeneca was represented by another Supreme Court veteran (Kannon Shanmugam), shows that each party considers this case to be important and that they are likely preparing to ask the Supreme Court to consider the matter.  So the panel decision in Acorda appears to be merely the beginning of the appellate proceedings.  Given these expected actions it will be interesting to see if the brand name drug companies continue to file suits in both the brand name drug company’s preferred jurisdiction as well as where the generic drug company is incorporated or has its principal place of business until all the Acorda appellate proceedings are concluded.

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[1] Paul E. Dietze, Ph.D., is Of Counsel in the Washington, DC office and Mini Kapoor, Ph.D., is an associate in the Houston, Texas office of the law firm of Haynes and Boone, LLP.  Their practices emphasize pharmaceutical patent counseling, patent procurement, and patent litigation.

[2] Acorda Therapeutics Inc. et al. v. Mylan Pharm. Inc., No. 2015-1456 and AstraZeneca AB v. Mylan Pharm. Inc., No. 2015-1460, 2016 WL 1077048 (Fed. Cir. March 18, 2016) [Patently-O Discussion].

[3] Acorda Therapeutics Inc. & Alkermes Pharma Ireland Ltd. v. Mylan Pharm. Inc. & Mylan Inc., 78 F. Supp. 3d 572 (D. Del. 2015) (Stark, C.J.); AstraZeneca AB v. Mylan Pharm. Inc., 72 F. Supp. 3d 549 (D. Del. 2014) (Sleet, J.).

[4] Acorda, No. 1:14-cv-00935, 2014 WL 8772659  (Defs.’ Br. Supp. Mot. Dismiss) (Aug. 27, 2014);  AstraZeneca, No. 14-696, 2014 WL 4745288  (Defs.’ Br. Supp. Mot. Dismiss) (June 26, 2014).

[5] 134 S. Ct. 746 (2014).

[6] Acorda, No. 1:14-cv-00935, 2014 WL 8772659 (Defs.’ Br. Supp. Mot. Dismiss 3, 6) (Aug. 27, 2014); AstraZeneca, No. 1:14-00696, 2014 WL 4745288  (Defs.’ Br. Supp. Mot. Dismiss 5, 13) (June 26, 2014).

[7] Acorda, 78 F. Supp. 3d at 597; AstraZeneca, 72 F. Supp. 3d at 560.

[8] Judge O’Malley opined that by virtue of voluntarily electing to do business in Delaware, and registering and selecting an agent for service of process in the state, Mylan was subject to general jurisdiction in Delaware.  Acorda, Nos. 2015-1456 & 2015-1460, 2016 WL 1077048 at *11 – *12 (Judge O’Malley concurring).

[9] Acorda, Nos. 2015-1456 & 2015-1460, 2016 WL 1077048  at *8 -*9.

[10] Id. at *11 – *12.

[11] Id. at *13.

[12] Id.

[13] Id. at *13 -*14 (quoting Int’l Shoe Co. v. Washington, 326 U.S. 310, 316 (1945)).

[14] 471 U.S. 462, 477 (1985).

[15] Daimler, 134 S. Ct at 758 n.11 (emphasis added).

[16] Id. at 760.

[17] Id. at 760-61 (internal quotations omitted).

[18] See, for example, Takeda GmbH, et al., v. Mylan Pharm. Inc., 1:15-cv-00093 (N.D. W. Va.) (Defs.’ Letter Status Rep.) (Mar. 25, 2016).

[19] Id.

[20] Id.

[21] 134 S. Ct. 1115 (2014).

[22] Takeda GmbH, et al., v. Mylan Pharm. Inc., 1:15-cv-00093 (N.D. W. Va.) (Defs.’ Letter Status Rep.) (Mar. 25, 2016).

[23] 173 F.3d 829 (Fed. Cir. 1999).

Federal Circuit Continues Broad Venue Allowance in Patent Cases

by Dennis Crouch

In its petition for writ of mandamus, TC Heartland raised a set of interesting venue and personal jurisdiction claims – basically arguing that both the statute and Supreme Court precedent strongly limit where patent claims can be brought.

In its new decision, however, the Federal Circuit panel has rejected the petition – finding that “Heartland’s arguments are foreclosed by our longstanding precedent.”  This result was expected – likely even by Heartland’s counsel Prof John Duffy and Jim Dabney – and the long game has seemingly always been focused on en banc review and a potential supreme court review.  An eventual win by Heartland would result in a major shake-up of patent litigation by greatly reducing the concentration of patent cases – especially those in the Eastern District of Texas.

The basic setup:

Heartland alleged that it is not registered to do business in Delaware, has no local presence in Delaware, has not entered into any supply contracts in Delaware or called on any accounts there to solicit sales. But Heartland admitted it ships orders of the accused products into Delaware pursuant to contracts with two national accounts.

Based upon this setup, Heartland argues (1) that it does not “reside” in Delaware for venue purposes according to 28 U.S.C. § 1400(b); and (2) that Delaware district court lacks specific personal jurisdiction over it for this civil action.

Unfortunately for Heartland, these same arguments were raised and resolved by VE Holding Corp. v. Johnson Gas Appliance Co., 917 F.2d 1574 (Fed. Cir. 1990).  Although Heartland presented an argument that an amendment to the statute overruled VE Holdings, that argument was flimsy and rightly rejected by the appellate panel.  Rather, the real argument – now to be presented en banc – is that VE Holdings was wrongly decided and represents a misinterpretation of both the statute and Supreme Court precedent.

I previously explained the primary argument as follows:

In the dispute, Heartland has asked the court to reconsider its interpretation of the patent venue statute 28 U.S.C. § 1400(b) and order that the limiting elements of the provision be given effect.  Under the proposed interpretation, a patent infringement case could only be filed in districts either (1) the defendant resides or (2) the defendant has both committed acts of infringement and has a regular and established place of business. This proposal stems directly from the language of 28 U.S.C. § 1400(b) which requires either (1) residency or (2)  a combination of infringing acts plus a regular-place-of-business as a prerequisite to proper patent venue. For the past several decades the limits of § 1400(b) have been given essentially no weight after being undermined by 28 U.S.C. § 1391(c). This broadened provision undermines § 1400(b) by providing a very broad definition of the term “resides” — indicating that that “except as otherwise provided by law,” a defendant will be deemed to “reside” in any venue where the defendant is subject to that court’s personal jurisdiction in the action at hand. When § 1400(b) and § 1391(c) are read together, it appears that patent cases can be filed in any venue with personal jurisdiction over the defendant.  The point of the TC Heartland mandamus action is that those two provisions should not be read together, but instead, the more traditional and limited definition of “residency” should apply when interpreting 1400(b).

On TC Heartland’s side is Fourco Glass Co. v. Transmirra Products Corp., 353 U.S. 222 (1957).  In that case, the Supreme Court ruled that “28 U.S.C. § 1400(b) is the sole and exclusive provision controlling venue in patent infringement actions, and that it is not to be supplemented by the provisions of 28 U.S.C. § 1391(c).”  This statement was reiterated by the Supreme Court in Brunette Mach. Works Ltd. v. Kockum Indus., Inc., 406 U.S. 706 (1972) (“Congress placed patent infringement cases in a class by them-selves, outside the scope of general venue legislation.”).  Congress then amended the statute which led the Federal Circuit to hold that Fourco no longer held sway.




Implementing and Interpreting the Defend Trade Secrets Act

By Dennis Crouch

With today’s 410-2 House vote, the Defend Trade Secrets Act (DTSA) has now passed both the House and Senate and is headed to President Obama for his expected signature.[1]  The DTSA amends the Economic Espionage Act to create a private civil cause of action for trade secret misappropriation based upon the Congressional sense that trade secret theft exists and is harmful.[2]  Trade secret misappropriation (as a civil matter) has previously been purely a matter of state law.  Although there is substantial uniformity between the states,[3] there are also a number of differences and perceived procedural weaknesses.[4]  The DTSA would not eliminate or preempt the various state trade secret rights but rather would operate as an additional layer of potential protection.[5] The law is designed to go into effect on its day of enactment and apply to any misappropriation that occurs on or after that date.

On March 10, 2017, the University of Missouri’s Center for Intellectual Property and Entrepreneurship (CIPE) along with our new Business, Entrepreneurship, and Tax Law Review (BETR) will host a symposium on Implementing and Interpreting the Defend Trade Secrets Act.  I expect that we will live-stream the event and will also publish speaker articles in BETR.  There is a lot to figure out. Contact me if you are interested in sponsorship opportunities (dcrouch@patentlyo.com).

The central provision of the DTSA will be codified as 18 U.S.C. § 1836(b) and reads:

An owner of a trade secret that is misappropriated may bring a civil action under this subsection if the trade secret is related to a product or service used in, or intended for use in, interstate or foreign commerce.

Defining Trade Secret: The DTSA broadly defines the term “trade secret” to mean “all forms and types of financial, business, scientific, technical, economic, or engineering information, including patterns, plans, compilations, program devices, formulas, designs, prototypes, methods, techniques, processes, procedures, programs, or codes, whether tangible or intangible, and whether or how stored, compiled, or memorialized physically, electronically, graphically, photographically, or in writing if—(A) the owner thereof has taken reasonable measures to keep such information secret; and (B) the information derives independent economic value, actual or potential, from not being generally known to, and not being readily ascertainable through proper means by, the another person who can obtain economic value from the disclosure or use of the information.”  Although this definition is broad and certainly includes abstract ideas and laws of nature, it might not encompass information that is only stored in the human mind.[6]

Defining Misappropriation of a Trade Secret:  The statute also defines “misappropriation” in detail.  My rough approximation is as follows: without permission (A) obtaining a trade secret that was knowingly obtained through improper means or (B) disclosing or using a trade secret without knowing either (1) that it is a trade secret or (2) that it was obtained through improper means.  These “improper means” include “theft, bribery, misrepresentation, breach or inducement of a breach of a duty to maintain secrecy, or espionage through electronic or other means.” However, misappropriation does not include “reverse engineering, independent derivation, or any other lawful means of acquisition.”  The DTSA does not otherwise include a more general fair-use or news-reporting exception.  However, the First Amendment will certainly serve as a backstop.  Further, these definitions do not include any express territorial limit – it will be very interesting to see the extent that these limits will be implied into the law.  Thus, if a U.S. company is holding trade-secrets in India that are stolen in India, could the U.S. company bring action against the Indian entity that caused the injury (presuming personal jurisdiction over the defendant)?

Remedies Civil Seizure: A key procedural benefit of the DTSA is to offer a mechanism for Civil Seizure ordered by courts and enforced by Federal, State, and/or local law enforcement as a preventive measure (akin to a temporary restraining order).

Remedies: Once misappropriation is found, the court will be authorized to grant injunctive relief as “reasonable.”  If “exceptional circumstances” render injunctive relief is “inequitable” then a court may order a reasonable royalty for the misappropriator’s continued use of the trade secret.  Depending upon how the statute is interpreted, this setup appears to create a presumption of injunctive relief – a stark difference from contemporary patent law doctrine under eBay v. MercExcange.  The statute also provides for compensatory damages for either (i): (I) “actual loss of the trade secret” and, in addition (II) “any unjust enrichment” not compensated in (I); or (ii) a reasonable royalty for the use.  Willful misappropriation can double damages.[7] In these calculations, I suspect that courts will take into account both the market-value of the trade secret as well as the “expenses for research and design and other costs of reproducing the trade secret” that were avoided by the misappropriation. The provision also includes an attorney fee shifting provision limited to cases involving bad-faith or willful-misappropriation.

Remedy against Former Employees: Most trade secret cases involve former employees moving (or starting-up) to a competitor.  A major concern raised against early versions of the bill was that the DTSA would empower employers to prevent such movement.  As amended, the bill now indicates that injunctive relief that would “prevent (or place conditions on) a person from entering into an employment relationship” must be “based on evidence of threatened misappropriation and not merely on the information the person knows.”[8]  Of course, such “threat” does not necessarily mean that the employee expressly threatened misappropriation but rather will likely be based upon circumstantial evidence regarding likelihood of misappropriation (i.e., ‘threat level’).[9]  In addition, the injunction preventing or limiting employment cannot “otherwise conflict with an applicable State law prohibiting restraints on the practice of a lawful profession, trade, or business.”  This bit appears to be directed toward giving credence to non-compete and other limits in various states. However, of key importance is that it only limits injunctive relief and does not appear to limit any cause of action against former employees.  As a consequence, this sets the likelihood of a fight between certain state employment laws that favor employee rights against the new federal trade secret law.

Whistle Blowers: Professor Peter Menell was instrumental in proposing a public policy immunity provision that is included in the DTSA.  The provision would offer immunity from liability (whistle blower protection) for confidential disclosure of a trade secret to the Government or in a Court Filing (made under seal).  The provision includes a notification requirement that employers should immediately implement.

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[1] Defend Trade Secrets Act of 2016, S. 1890.

[2] Although trade secret rights are thought of as a form of intellectual property, the bill is clear that the DTSA “shall not be construed to be a law pertaining to intellectual property.”  The result of this could, for example, mean that the intellectual property licensee exception in bankruptcy law would not apply to licenses of trade secret information.  See 11 U.S.C. § 365(n).  [In Bankruptcy Law, Trade Secrets are defined as a form of IP, but it is unclear to me at this point which statute would prevail.]  Because the DTSA is an amendment to the Economic Espionage Act – a criminal law – it will also be codified in Title 18 of the United States Code that is generally directed to “crimes and criminal procedure.”  Although I don’t know exactly, there may be aspects of Title 18 (such as general definitions) that will shape the interpretation of federal trade secret law.  As an example, 18 U.S.C. § 2(b) offers a “general principle” of respondeat superior that “[w]hoever willfully causes an act to be done which if directly performed by him or another would be an offense against the United States, is punishable as a principal.”

[3] Consider the popularity of the Uniform Trade Secrets Act in the various states.

[4] Jury trial should still apply to the extent it has in state cases.

[5] The Economic Espionage Act already includes a rule of construction that the statute “shall not be construed to preempt or displace any other remedies, whether civil or criminal, provided by United States Federal, State, commonwealth, possession, or territory law for the misappropriation of a trade secret, or to affect the otherwise lawful disclosure of information by any Government employee under section 552 of title 5(commonly known as the Freedom of Information Act).”  The DTSA reaffirms this principle by stating that “[n]othing in the amendments made by this section shall be construed to modify the rule of construction under section 1838 of title 18, United States Code, or to preempt any other provision of law.”  The bill provides for original jurisdiction of these trade secret cases in federal district court. However, it does not create exclusive jurisdiction – as such it would be proper for a party to bring such a claim in state court (when permitted by the state court). However, in that case, the other party may attempt to remove the case to Federal Court.  You might also query as to whether the federal claim is a ‘compulsory claim’ under the law such that if someone brings a state-law claim and loses they would later be estopped from bringing the federal claim.

[6] There may also be constitutional limitations on a company owning and controlling that information.

[7] This provision suggests by implication that misappropriation may be non-willful despite the fact that the misappropriation definition includes a mens rea element.

[8] My understanding is that Jim Pooley and Mark Lemley were instrumental in suggesting the addition of this provision that has now put the Bill in form where it is broadly supported by the politicians.

[9] Improperly obtaining a trade secret is a form of misappropriation – this creates some potential confusing situations in the interpretation of the provision.

Venue and Personal Jurisdiction Updates

The world continues to spin as we await a decision in the TC Holdings mandamus venue action.

  • A group of Senators have introduced the VENUE Act (Venue Equity and Non-Uniformity Elimination Act of 2016). (S.2733).  The Bill would basically limit the venues where patent infringement claims can be brought.  EFF says: Pass the Venue Act
  • In Acorda Therapeutics v. Mylan Pharma (Fed. Cir. 2016), the Federal Circuit found that, by filing an ANDA with the FDA, a Generic manfacturer opens itself to nationwide personal jurisdiction for patent infringement. [Patently-O Discussion]
  • Sitting by designation in a district court case, Federal Circuit Judge Bryson has rejected a defendant’s contention that VE Holdings had been overruled by the 2011 amendments to the patent venue statute. Script Security Solutions, L.L.C. v. Amazon.com, LLC, No. 2:15-CV-1030-WCB, 2016 WL 1055827,  (E.D. Tex. Mar. 17, 2016) (Thanks to Robert Matthews for this update).

ANDA filing creates Nationwide Personal Jurisdiction

Acorda Therapeutics v. Mylan Pharma (Fed. Cir. 2016)

In this personal jurisdiction case, the Federal Circuit has affirmed the Delaware Court’s ruling that the court has specific jurisdiction over Mylan in two parallel cases.  In a super-broad holding, the court here finds that when a generic company files a new drug application (ANDA) with the FDA, that the filing opens the door to personal jurisdiction in any state where the Generic Company will market the drug if approved. This effectively means that the generic company could be sued in any state in the Union.

In Federal Courts, personal jurisdiction usually looks to underlying state law and asks whether the defendant would be “subject to the jurisdiction of a court of general jurisdiction in the state where the district court is located.”  Fed. R. Civ. P. 4(k)(1)(A). Delaware’s long-arm statute allows for personal jurisdiction so long as it does not violate the Constitutional due process protections.  On that issue, however, the Federal Circuit has repeatedly held that personal jurisdiction in patent cases is a patent-specific question that must be determined under Federal Circuit law rather than following the law of the regional circuit court of appeal. See Merial Ltd. v. Cipla Ltd., 681 F.3d 1283, 1292 (Fed. Cir. 2012); Akro Corp. v. Luker, 45 F.3d 1541, 1543 (Fed. Cir. 1995).

The facts here involve Mylan seeking FDA approval to market its generic drugs that will eventually be sold in Delaware (as well as every other state in the Union).  In considering that action, the court found it sufficient for personal jurisdiction for cases steming from the ANDA approval application. The court writes:

Mylan’s ANDA filings constitute formal acts that reliably indicate plans to engage in marketing of the proposed generic drugs. Delaware is undisputedly a State where Mylan will engage in that marketing if the ANDAs are approved. And the marketing in Delaware that Mylan plans is suit-related: the suits over patent validity and coverage will directly affect when the ANDA can be approved to allow Mylan’s Delaware marketing and when such marketing can lawfully take place.

The majority opinion in this case was penned by Judge Taranto and joined by Judge Newman.

Judge O’Malley wrote a concurring opinion arguing that the case would have been more easily (and less dramatically) decided on general jurisdiction grounds since Mylan was registered to operate in Delaware and had provided local agent for service of process in the State.

I tend to agree with O’Malley in this case — especially with the conclusion that the Majority opinion is likely overreaching.  The holding that Mylan is amenable to suit in Delaware is not problematic to me, but this case obviously opens the door to these pharma cases in the E.D. of Texas.

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I’ll note that the parties here hired some of the top Supreme Court lawyers in the country for this case. To name a few, Ted Olson represented Acorda; Paul Clement represented Mylan; Kannon Shanmugam for AZ; Andy Pincus and Carter Phillips both filed amicus briefs.  This means that they are planning to take the case up to the Supreme Court if allowed.