Recalibrating Patent Venue
47 Pages Posted: 4 Sep 2016 Last revised: 10 Mar 2017
Date Written: October 6, 2016
For most of patent law’s 200-year plus history, the rule has been that patentholders are permitted to sue defendants only in the district they inhabit. In 1990, the Federal Circuit ruled that Congress changed this by enlarging the scope of permissible venue to all districts with personal jurisdiction over the defendant. Since then, patentees have flocked to fewer districts, and in 2015, brought more than 40% of their cases in a single rural district with 1% of the US population, the Eastern District of Texas. Fueled in particular by concerns that non-practicing entities (NPEs), who bring the majority of cases in the Eastern District, are abusing venue, several pending Congressional bills and the TC Heartland case, potentially headed for Supreme Court review, could reinstate a more restrictive rule. We add to the policy discussion by reporting on a novel analysis of ~1,500 patent and non-patent cases filed in 2015, to explore how filing patterns might be impacted under different versions of the law. We find that about 86% of 2015 patent cases were brought outside of the defendant’s home district (principal place of business), a strikingly high share. Things would change if venue were reformed, but the specifics would vary based on which reform is implemented – that of the Court (e.g. TC Heartland reform) or Congress (e.g. VENUE Act reform). If the courts decide to restrict venue to where defendant resides or has an established place of business, an estimated 58% of 2015 cases would have had to been filed in a different venue. If Congress decides that cases can also be filed in home districts with research or manufacturing connections to the case, about half the NPE cases in our sample would have to be refiled in an unfamiliar district, but only 14% of the operating company cases would. Cases would leave the Eastern District of Texas, and many, we project, would go to Delaware or California. Under TC Heartland smaller defendants would get more from venue relief than would larger defendants, because of their relatively smaller footprints. Among NPEs, university, individuals and small company NPEs would be impacted to a lesser extent than would PAEs, considerably so under the VENUE Act.
Keywords: patents, patent venue
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