Patexia Insight 6: Top 10 Venues for Patent Litigation

This week at Patexia, we asked our data science team to look into the most popular U.S. district courts for patent litigation. This is important in light of the recent talk about Venue Reform from U.S. Senator Jeff Flake, Chairman of the Senate Judiciary Subcommittee on Privacy, Technology, and the Law. Out of the 94 Federal Judicial District Courts, our research showed more than ¾ of all patent cases were filed in the top 10 district courts in the first half of 2016. Eastern District of Texas ranked first with almost ⅓ of the 2,480 cases filed in the first half of 2016. The Delaware District Court was a distant second with 208 cases.

This renewed effort for venue reform occurred after Federal Circuit on April 29 denied a request for new restrictions on where patent suits can be filed, rejecting an argument that would have effectively barred filing most suits in the Eastern District of Texas.

“It’s clear that these types of forum abuses impose substantial costs on the economy and cannot be ignored,” Flake said. “I urge my colleagues to support the reforms contained in the VENUE Act to bring about a renewed attention to patent venue reform and to address the unfair forum shopping that plagues patent litigation.”

We looked at the patent litigation venues from the beginning of 2010. While, admittedly, the joinder rule under the AIA affected the filing rate, Eastern District of Texas has been the venue with more than ¼ of all cases filed on average. While Delaware District Court was popular from 2012 to 2014, last year Eastern District of Texas maxed at 41% of cases. Delaware was a distant second at 9%.

In the first half of 2016, we saw some signs of decline in Eastern District of Texas versus last year. It currently stands around 31% of cases. Regardless, for all years since 2010, Eastern District of Texas has been the number one venue for patent litigation, often by a large margin.

A letter signed by 45 professors and written to Congress on July 12, 2016, in sWe looked at the patent litigation venues from the beginning of 2010. While, admittedly, the joinder rule under the AIA affected the filing rate, Eastern District of Texas has been the venue with more than ¼ of all cases filed on average. While Delaware District Court was popular from 2012 to 2014, last year Eastern District of Texas maxed at 41% of cases. Delaware was a distant second at 9%.

upport of venue reform stated the following: “One reason for the disproportionate number of patent filings in the Eastern District of Texas is that the district employs procedural rules and practices that attract plaintiffs, including by delaying or denying the ability of defendants to obtain summary judgment to terminate meritless cases early. For example, the district requires parties seeking summary judgment in patent cases to first seek permission before filing any summary judgment motion, the effect of which is to delay and deter early resolution of cases.”

This open letter was followed by another letter written by 28 professors on August 1 advising against venue reform: “Given the recent changes in the patent system under the America Invents Act of 2011 and judicial decisions that have effectively weakened patent rights, 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.”

The second letter points out that VENUE Act will not necessarily solve the patent problem. It suggests a wait-and-see approach on this type of legislation, especially given the recent changes in the landscape after adopting AIA and the Supreme Court decision on the Alice case (software patents).

“The problem with AIA and other fixes by the self-appointed, anti-patent troll experts, is that such legislation has unintended consequences. Patents are a property right and fungible economic quantity, and legislation to ‘fix’ the problem may hurt the good, as well as the bad and the ugly,” said Cameron H. Tousi, an attorney with IP Law Leaders, who regularly advises clients on patent monetization, licensing and enforcement.

Data shows that Eastern District of Texas has been the number one venue for patent litigation for many years in a row. There have been recent discussions about the VENUE Act to change this trend. While this district’s popularity occurred because of generally plaintiff-friendly procedural rules and practices, overloading one district court is not good for the patent system. Notably, many recent and still evolving changes in the litigation landscape have already caused a noticeable drop in litigation in 2016. In our view, patent quality remains the primary underlying reason for frivolous lawsuits. VENUE Act and other similar solutions will not fix this key issue and may create new problems.

Which one do you think has a higher priority: Fixing the patent quality or the venue? Can the VENUE Act potentially reduce the patent litigation?