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Posts Tagged ‘TC Heartland LLC’

Judge Gilstrap’s Four-Factor Test

July 10th, 2017 Alexander No comments

U.S. District Judge, Rodney Gilstrap, the country’s busiest patent judge, took a broad stance on what constitutes a company’s place of business in terms of venue. This is a promising signal for patent owners who want to keep their cases in the Eastern District of Texas after the Supreme Court’s decision in TC Heartland.

Judge Rodney Gilstrap created a four-factor test leading his decisions regarding whether cases will remain in the district. This test takes into consideration whether a business has a retail store in the district in addition to the sales revenue the business has generated in the district. However, no single factor carries more weight than another. The test takes into account all of the circumstances of the case.

Since the Supreme Court’s decision in TC Heartland LLC v. Kraft Foods Group Brands LLC, there has been a new emphasis on the “place of business” requirement of the patent venue statute. In this case, the Supreme Court stated that patent suits can only be filed where the accused patent infringer has an established place of business or where it is incorporated. During the weeks after the TCH Heartland decision, the majority of the district court decisions regarding venue were directed towards whether a defendant waived its arguments by not bringing them up sooner. Judge Gilstrap is the first to create a place-of-business test after the TC Heartland decision.

In developing this test, Judge Gilstrap stated that he gathered factors from other court decisions and modernized them, one of them being a 1985 Federal Circuit case- In re: Cordis Corp. Judge Gilstrap wrote: “Regardless of the area of law, a consistent theme among courts is that the technological advances that foster growth and advancement in today’s business world cannot be ignored.”

The first factor of the test takes into consideration whether a business has a physical presence in the district, such as warehouses and retail stores. If the business has employees or independent contractors there, it will also weigh in favor of the business. The second factor determines the extent to which a business demonstrates that it has a presence in the district. The third factor takes into account the benefits the business receives from its presence in the district, including sales revenue. The fourth and last factor examines a business’s targeted interactions with consumers there, such as localized customer support and marketing techniques.

This test is not binding on other district courts or judges within the district. It has yet to be determined whether other courts will chose to use this test or create a test of their own.

For more information, See Law360.



Courts Restrict Where Patent Suits Can Be Filed

May 29th, 2017 Alexander No comments

Last week, the Supreme Court placed even more limitations on where patent owners can file infringement lawsuits. This decision will drastically change almost 30 years of settled practice, probably pushing numerous lawsuits out of the Eastern District of Texas.

The Supreme Court reversed a ruling that basically permitted patent holders to file suit anywhere a defendant makes sales. Critics stated that this encouraged forum shopping and an aggregation of suits in a few courts.

Justice Clarence Thomas stated in an opinion “We therefore hold that a domestic corporation ‘resides’ only in its state of incorporation for purposes of the patent venue state.”

In Fourco Glass Co. v. Transmirra Products Corp., the Supreme Court ruled that “resides” meant the place of incorporation. However, in 1990, the Federal Circuit implemented a broader rule, permitting patent lawsuits to be filed anywhere that a defendant does business.

After Kraft Foods Group Brands LLC sued TC Heartland for infringement, TC Heartland challenged the statute, encouraging the Supreme Court to overturn the Federal Circuit’s broad interpretation of the law.

A majority of people believed that if the Supreme Court ruled for TC Heartland, a bulk of patent suits would move to Delaware, where a lot of businesses are incorporated, and the Northern District of California, where there are many technology companies.

For more information, see Law360.



Patent Glory Days Limited for East Texas

April 1st, 2017 Alexander No comments

East Texas has a long-standing reputation as a “patent hotspot.” Judges in the Eastern District of Texas are familiar with patents as they have ruled over numerous cases. Likewise, many potential jurors also have some type of experience with patents. In 1999, the amount of patent cases in East Texas was less than 100, but by 2007, this number skyrocketed to 369. By 2011, East Texas was recognized as a favorable patent location.

Patent holders favor the Eastern District of Texas because of the benefits and advantages that it offers for plaintiffs. To begin with, the discovery process happens fairly quickly and the judges in the district are less susceptible than judges in other districts to summary judgment motions. In addition, there are methods which permit the first parts of a suit to advance predictably without a lot of court involvement.

A high-profile case is putting East Texas at risk of losing its long-established dominance. This Monday, the Supreme Court will hear oral arguments in a case regarding where patent suits can be filed, specifically Section 1400(b) of the U.S. Code. This statute states that patent suits can 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.”

Kraft Foods Group Brands brought suit against TC Heartland LLC in the District of Delaware, alleging infringement of its concentrated liquid dispenser patents. After TC Heartland unsuccessfully moved the case to the Southern District of Indiana, it filed a petition for a writ of certiorari with the Supreme Court. TC Heartland asserts that this statute is allowing patent holders to forum-shop, leading to inequitable results. TC Heartland contends that patent suits should only be allowed be to be filed where a company is incorporated, citing Fourco Glass Co. v. Transmirra Products Corp.

However, if this were to happen, a large number of patent plaintiffs would be forced out of Texas and into Delaware, where numerous companies are incorporated. While a number of people think that limiting where patent suits can be filed would create impediments for nonpracticing entities and reduce the number of lawsuits, others believe that it would have little impact.

For more information, see Law360.

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Fed. Circ. Refuses To Restrict Venue In Patent Cases

May 8th, 2016 Alexander No comments

The Federal Circuit recently denied liquid sweetener company TC Heartland LLC’s request for new restrictions on where patent suits can be filed. TC Heartland was sued by Kraft Foods Group Brands LLC in the District of Delaware and was seeking to have the case moved to the Southern District of Indiana, where it is based.

TC Heartland’s petition for a writ of mandamus, which urged the court to cast aside a 1990 ruling that patent suits can be filed in any district where the defendant makes sales, was denied.

TC Heartland argued that the 1990 decision known as VE Holding was overruled by a 2011 federal law, and that under that statute, patent suits can be filed only in places where the defendant is incorporated or has an established place of business and has allegedly infringed. The Federal Circuit rejected that argument, calling it “utterly without merit or logic.”

“The 2011 amendments to the general venue statute relevant to this appeal were minor,” the court wrote, adding that the statute was in fact “a broadening of the applicability of the definition of corporate residence, not a narrowing. This change in no manner supports Heartland’s arguments.”

“Boy, doesn’t this feel like something a legislature should do rather than something we should be asked to do?” U.S. Circuit Judge Kimberly A. Moore said at oral arguments.

Although the case did not actually involve the Eastern District of Texas, where the most patent suits are filed, it has been closely watched because a decision restricting venue in the way TC Heartland requested would have kept most suits out of the district, since few patent defendants are based there.

According to statistics compiled by Law360, there were 2,523 new patent complaints filed in the Eastern District of Texas last year, accounting for 45.5 percent of all cases nationwide. The collection of small cities 100 miles east of Dallas saw nearly 2,000 more new suits than the next-busiest court, the District of Delaware.

For more information, see Law360.