IP lawyer: Does TC Heartland signal the end of East Texas’ dominance?

It’s all over for East Texas but the crying, as they say. Following the Supreme Court’s ruling in TC Heartland, the flood of patent cases being heard in Marshall is at a high-water mark and shows no sign of subsiding

In TC Heartland, the US Supreme Court ruled that accused patent-infringing US companies can be required to defend only in the states where they are incorporated or where they have regular, established places of business and have committed acts of infringement (see 28 USC §1400(b)).

As result, torrents of patent cases are flowing away from Marshall and towards Delaware, Los Angeles, San Francisco and Chicago – cities and states where corporate defendants can be found and forced to defend.

Delaware is where most large companies (as many as 60% of the nation’s big corporations) are incorporated. However, very few (only 2%) are headquartered there.

Patent-owning plaintiffs have at least two choices when it comes to filing patent infringement complaints: either Delaware (or some other state of incorporation) or a state where the defendant maintains a “regular and established place of business” (although the full meaning of that second prong will take years to resolve).

TC Heartland wrests a large patent docket away from East Texas and deposits it in Delaware’s lap. But will Delaware be as effective as East Texas in delivering the “just, speedy, and inexpensive” determination of patent cases promised by Rule 1?

In 1992, Texas Instruments blazed a trail from Dallas to Marshall in search of a faster route to trial, with non-practising entities following that lead. Twenty-five years later, in TC Heartland, the Supreme Court has trimmed Marshall’s sails. But do not shed too many tears for Texas – there is still plenty of patent litigation to be sorted out between East Texas, Dallas and Houston.

Delaware: first state

Delaware is known for corporate law and patent litigation. The best way to resolve patent disputes is to put them on a fast route to trial and Delaware is good at this, though given the volume of new filings, trial dates are already stretching farther into the future.

The Delaware federal court casts a large shadow for its size. Four district judges are listed at the top of its website, although two of Delaware’s allotted federal judgeship seats are currently vacant. The court has extended a call for help from other districts and its website lists several visiting judges.

Delaware needs judges. Let this author add his voice to those who call on the president and the Senate for new appointments.

Local patent rules and claim construction

Local patent rules and early claim construction can help move cases to resolution. However, those same procedures also can cause delay, confusion and distraction.

The Delaware court has no local patent rules as such. The chief judge’s standing orders for patent cases are designed to advance cases to trial. The Revised Procedures for Managing Patent Cases (June 18 2014) eschew the oft-assumed need to construe every word of a claim and recognise that “plain and ordinary meaning” can suffice without further explication, especially in the absence of a material dispute. This sane approach should be adopted by the entire district and by other courts.

Alice and other post-grant challenges

Delaware’s attractiveness also will turn on the handling of Alice challenges to subject matter eligibility, juggling of concurrent inter partes and other post-grant review proceedings and management of discovery.

The district of Delaware is rightly famous for its effectiveness in mediating patent cases. While this is testament its magistrates’ experience and knowledge of patent litigation, not every case is amenable to early settlement.

Other leading venues

The Northern District of Illinois has a large, capable bench − the largest in the country sitting in one location, with its website listing 33 district judges. From the beginning of its patent pilot programme, 10 judges were designated as willing to decide patent cases and there are 12 magistrate judges. Local patent rules are detailed and demanding. Because every motion is noticed for hearing, lawyers are guaranteed face time.

With a large docket of patent cases, the Central District of California features many experienced patent judges, seven of whom serve on the patent pilot programme. However, with no uniform set of local patent rules, procedures can be somewhat unpredictable – although more than a few of the patent judges adopt the Northern District of California’s local patent rules.

The Northern District of California itself was an early adopter of uniform local patent rules and it continues to improve its version. Because of the large and vocal local tech community, the court has a large share of patent cases and its judges and magistrates are generally patent savvy, with three judges and seven magistrate judges serving on the patent pilot programme.

Courts in New Jersey and other states – too many to address here – also handle large numbers of patent cases.

So get ready, Delaware: more patent cases are coming your way. Capable venues in Los Angeles, Chicago, San Francisco and other cities also stand ready when defendants are incorporated or doing business in the corresponding states.

Richard P Beem is principal at Beem Patent Law Firm, Chicago, United States

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