Articles

How To Evaluate And Select Venue To Gain A Strategic Advantage In Patent Litigation

Ryan Loveless

Statistics show that venue -- where a case is adjudicated -- often plays a critical role in the outcome of patent litigation. A key question for patent litigants thus becomes: what factors should be considered in selecting venue -- in either an original selection of venue or in seeking a transfer of venue?   This article discusses several factors that should be considered, including patent litigation statistics such as speed to disposition, patentee winning percentages, statistics on the dismissal of cases by particular methods, and venue transfer statistics. Other potentially-important factors the article discusses include regional biases, local patent rules in particular districts, and a court's and/or judge’s experience in handling patent cases.

Fans of Mel Gibson’s classic movie Braveheart may recall the Battle of Falkirk between the English and the Scots. In that battle, the Scots arrived at Falkirk before the English, in order to soak portions of the battlefield with oil and tar. When the English cavalry and infantry finally arrived and were in position above the oil and tar soaked portions of the battlefield, William Wallace, the leader of the Scots, called upon his archers to shoot flaming arrows to ignite the oil and tar and burn the English cavalry and infantry. On that day, the venue of Falkirk, without a doubt, provided a strategic advantage to the Scots.

So, what does Braveheart’s Battle of Falkirk have to do with patent cases? Plenty -- it reminds us that the battlefield always matters. How much does it matter? Plenty -- if you believe statistics. In a 2001 law review article, George Mason Law Professor Kimberly Moore presented the results of a study on patent litigation statistics, concluding that “choice of forum continues to play a critical role in the outcome of patent litigation.”1

In view of this recognition, what factors should a patent litigant consider in selecting a venue? This article will address several.2

As threshold matters, a patent litigant should consider: (1) where venue is proper; and (2) the possibility of a transfer of venue.

A. Where Is Venue Proper?

In the United States, there are ninety-four judicial districts,3 and within each district there may be a number of divisions. Venue in patent infringement actions is governed exclusively by 28 U.S.C. § 1400(b), which provides that infringement actions may be brought in any judicial district: (1) “where the defendant resides;” or (2) “where the defendant has committed acts of infringement and has a regular and established place of business.” In 1988 the general venue statute, 28 U.S.C. § 1391, was amended to provide that “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.” In 1990, the U.S. Court of Appeals for the Federal Circuit clarified that this newly amended general venue statute also applies to the statutory requirements for patent venue.4 Accordingly, for purposes of patent venue, “the tests for venue and personal jurisdiction are interchangeable for corporations.”5

The Federal Circuit has, in turn, adopted a relatively broad view of personal jurisdiction. In the leading case on jurisdiction, Beverly Hills Fan, the Court adopted a “stream of commerce” theory for personal jurisdiction, holding that a party who places a product into the stream of commerce knowing that a the product may thus likely reach a particular venue is subject to personal jurisdiction in that venue.6 Under the Federal Circuit’s view of personal jurisdiction, jurisdiction reaches alien defendants who inject products into the stream of commerce regardless of what a contract says about the geographical location where title changes hands.7 As a result, a potential patent plaintiff typically has many possible venues from which to choose.

B. Transfer Of Venue

A defendant who prefers a venue other than the one initially designated by the plaintiff has several choices. If the defendant is not subject to personal jurisdiction in the forum, he can move to have the case dismissed. In such cases, the defendant can then file a declaratory judgment action seeking a declaration of non-infringement or invalidity of the plaintiff’s patent(s), thereby shifting control of initial venue selection.

The defendant may, alternatively (or in addition), seek to transfer venue.8 Two federal statutes provide for a transfer of venue: 28 U.S.C. § 1404(a) and 28 U.S.C. § 1406(a). Section 1404(a) applies when the initially-designated venue is legally proper but the defendant invokes other grounds for why an alternative (and also proper) venue would be preferable, and Section 1406(a) applies when the initially-designated venue is alleged by defendant to be legally improper.9 Many litigants choose to cite both provisions in a motion to transfer. Ultimately, a case can only be transferred to a district where the suit “might have been brought” -- that is, where the defendant is subject to personal jurisdiction and venue is proper.10 Considerations that come into play in adjudicating venue transfer motions are beyond the scope of this article. However, some of the factors considered by parties in selecting a venue are similar to factors considered by courts in deciding whether or not to transfer venue.

III. Consideration Of Patent Litigation Statistics

One factor a patent litigant can consider in selecting a venue is litigation statistics. One source for such statistics is the Federal Judicial Center (“FJC”), which maintains statistics on federal district court filings. General data from the FJC on all civil court filings is made available through the Federal Court Management Statistics Website.11 A rawer form of data from the FJC is made available through the Inter-University Consortium for Political and Social Research ("ICPSR") at the University of Michigan.12 Using appropriate software to sort through this rawer form of data, one can obtain statistics specifically for patent cases. However, in analyzing the data, one caveat should be noted; like all statistical data, the data from the FJC should be taken with a grain of salt. That is, one cannot assume that such data is flawless. A variety of errors can occur in the characterization by court personnel of information concerning particular cases. That said, the data can give us a general idea of what is happening with patent litigations in particular districts.

The following section discusses a sampling of statistical information on patent litigation. By no means is the below information exhaustive of data that can be analyzed. Rather, it is a sampling of the significant categories of information that can be analyzed.

A. Speed To Disposition

The speed to disposition may be an important consideration for some litigants (either plaintiffs or defendants) in patent cases. Among other factors, a speedier disposition may: (1) prevent irreparable harm to the plaintiff from further infringement; (2) reduce price erosion that arises from infringement; or (3) allow an accused infringer to more quickly absolve itself of infringement charges. Obviously, the speed to disposition can have a bearing on the cost of the litigation. A shorter case can be less expensive (or, more expensive if extraordinary efforts must be made by counsel and the parties to conduct discovery and trial preparation on an expedited basis). It should also be noted that while plaintiffs frequently favor speedier outcomes and defendants frequently favor slower outcomes, this is not necessarily always the case in patent infringement disputes, and not infrequently the preferences of the parties are reversed.

The following table provides a snapshot of the speed of disposition in a select number of districts with statistics particularly applicable to patent cases.13 Once again, disclaimers are warranted here as to how much reliance can be placed upon the below figures, particularly given that these statistics depend upon accuracy of characterizations made by court personnel across the country.

B. Winning Percentage By Patentees

Another consideration for some litigants may be whether particular districts appear to favor one side or the other in patent cases. Again, these statistics must be taken with a grain of salt. It is hard to determine in “mixed result” cases whether the outcome can be said to favor the plaintiff or defendant. Additionally, there are many cases that courts report in an “unknown outcome” category. However, if the cases are correlated with other statistics (for example, method of case dismissal), the data may take on more meaning. The following chart sets forth the percentage of cases won by either the plaintiff or defendant (or both) for selected districts:17

Professor Moore’s law review article takes a closer look at success rates when parties go to trial. Professor Moore studied the outcome of all reported patent cases tried between 1983 and 1999. The results were as follows:18

C. Method Of Case Dismissal

Yet another consideration for some litigants may be statistics on the dismissal of cases by particular methods in particular districts. The following table summarizes the method of dismissal (when reported) of cases in particular districts. One category in the statistics for terminations is voluntary dismissals. As always, the available data are not perfect nor perfectly consistent -- for instance, it is unclear into what category various district courts place settlements resulting in voluntary dismissals.

D. Transfer Statistics

Yet another consideration for some litigants may be statistics on the percentage of cases that are transferred. The table below provides transfer statistics for certain districts having large patent dockets. The table reflects the total number of patent cases in the jurisdiction during the particular period, and the total number of cases terminated by transfer or remand during that period.

From the above data, there is no way to determine how many transfer motions were filed and how many were denied in any particular district. Thus, these statistics do not predict the likelihood of success of a transfer motion. However, they may generally indicate the propensity (or lack thereof) of a particular jurisdiction to transfer cases.

E. Other Statistics

A variety of other statistics can also be analyzed, including time to trial statistics. Further, the statistics can be analyzed at a more granular division-by-division level as opposed to being analyzed on a district-wide level.

IV. Other Venue Considerations

In addition to patent litigation statistics, a litigant may also consider a variety of other non-statistical items.

A. Regional Biases

A consideration for some litigants may be biases that are perceived to exist in particular regions either for or against a particular party or class of parties (corporations, foreign entities, contingent fee litigants, etc.). In considering such possible biases, one should not assume that a party’s home jurisdiction will treat that party favorably. Sometimes juries or judges in a particular home jurisdiction would be more likely to treat even a particular “hometown” party unfavorably.

B. Local Patent Rules In A Particular District

Some litigants may find it significant to consider whether a particular district has local patent rules (which are typically accompanied by formulaic, and often fairly expedited, discovery and trial timelines). For example, the following districts have local patent rules:

• Northern District of California19
• Eastern District of Texas20
• Northern District of Georgia21
• Western District of Pennsylvania22

C. Court And/Or The Judge’s Experience In Handling Patent Cases

Another consideration for some litigants may the relative experience the court and/or judge has with patent cases. For example, does the judge have a streamlined approach for patent cases, and some background in handling them, or will it prove necessary to explain the basic concepts of claim construction and other routine patent concepts from the ground up?

V. Conclusion

Patent litigation statistics show that the venue chosen for a patent litigation can play a critical role in the outcome of litigation. Accordingly, in selecting venue, litigants may wish to look to a variety of factors, including patent litigation statistics such as speed to disposition, patentee winning percentages, dismissal rates for cases by particular methods, and venue transfer frequency. Litigants may also look at other items including regional biases, local patent rules in particular districts, and a court and/or judge’s experience in handling patent cases.

1See Kimberly A. Moore, Forum Shopping in Patent Cases: Does Geographic Choice Affect Innovation?, 79 N.C. L. Rev. 889 (2001), reprinted at 83 JPTOS 558 (2001) (hereinafter “Patent Forum Shopping”).
2Although the focus of this article is on patent litigation, much of the information discussed herein may be applicable to other types of intellectual property cases.
3See http://www.uscourts.gov/understand03/content_3_0.html (last visited September 18, 2005).
4See VE Holding Corp. v. Johnson Gas Appliance Co., 917 F.2d 1574, 1584 (Fed. Cir. 1990), cert. denied, 499 U.S. 922 (1990) (holding that §1391(c) applies for purposes of venue under § 1400(b)).
5Koh v. Microtek Intern., Inc., 250 F. Supp.2d 627, 631 (E.D. Va., 2003).
6Beverly Hills Fan v. Royal Sovereign Corp., 21 F.3d 1558, 1566 (Fed. Cir. 1994).
7North American Philips v. American Vending Sales, Inc., 35 F.3d 1576, 1579 (Fed. Cir. 1994).
8Plaintiffs sometimes move for a change of venue, but it is much more common for a defendant to do so.
9See, e.g., Van Dusen v. Barrack, 376 U.S. 612 (1964) (“Although both sections were broadly designed to allow transfer instead of dismissal, 1406(a) provides for transfer from forums in which venue is wrongly or improperly laid, whereas, in contrast, 1404(a) operates on the premise that the plaintiff has properly exercised his venue privilege.”).
10Hoffman v. Blaski, 363 U.S. 335 (1960).
11See http://www.uscourts.gov/fcmstat.
12See ICPSR’s website at http://www.icpsr.umich.edu for more information.
13The data for this table as well as other tables herein is taken from one or more of the following four ICPSR databases (hereinafter “ICPSR Databases”): (1) Federal Judicial Center. FEDERAL COURT CASES: INTEGRATED DATA BASE, 1970-2000 [PARTS 115-118: CIVIL DATA, 1996-2000] [Computer file]. 2nd ICPSR version. Washington, DC: Federal Judicial Center [producer], 2000. Ann Arbor, MI: Inter-University Consortium for Political and Social Research [distributor], 2001; (2) Federal Judicial Center. FEDERAL COURT CASES: INTEGRATED DATA BASE, 2001 [Computer file]. 2nd ICPSR version. Washington, DC: Federal Judicial Center [producer], 2001. Ann Arbor, MI: Inter-University Consortium for Political and Social Research [distributor], 2002; Federal Judicial Center. FEDERAL COURT CASES: INTEGRATED DATA BASE, 2002 [Computer file]. 2nd ICPSR version. Washington, DC: Federal Judicial Center [producer], 2002. Ann Arbor, MI: Inter-University Consortium for Political and Social Research [distributor], 2004; and (4) Federal Judicial Center. FEDERAL COURT CASES: INTEGRATED DATA BASE, 2003 [Computer file]. 4th ICPSR version. Washington, DC: Federal Judicial Center [producer], 2003. Ann Arbor, MI: Inter-University Consortium for Political and Social Research [distributor], 2004.
14“Speed to disposition” was determined from the ICPSR Databases by calculating the difference of the Termination Date, defined in the ICPSR Database as “[t]he date the district court received the final judgment or the order disposing of the case” and the Filing Date, defined by the ICPSR Databases as “[t]he date on which the case was filed in the district.”
15Note that this speed is for Patent Cases only, identified in the ICPSR Database as having a “Nature of Suit” under category 830: Patent. For a general speed to disposition for all cases in a particular district, see the Federal Court Management Statistics at http://www.uscourts.gov/fcmstat.
16The median is a statistical parameter typically utilized in court case disposition statistics. It effectively takes out of the mix those cases that are both very short in duration (e.g., cases dismissed after only a couple of days) and those that are extremely long (e.g., six or seven years of pendency).
17The ICPSR Database has four separate listings for “judgment in favor of” for a particular case: (1) plaintiff; (2) defendant; (3) both; or (4) unknown. Another caveat to be noted in reviewing this table is that no indication is given as to whether the suit was one for infringement or for a declaratory judgment of non-infringement. For another statistical analysis of percentage of wins by type of verdict (for example, by invalidity, enforceability, infringement, and willfulness) see Patent Forum Shopping, supra note 3, at 921. Yet another patent statistical resource is patstats.org, hosted by the University of Houston Law Center’s Institute of Intellectual Property and Information Law, available at http://www.patstats.org.
18See Patent Forum Shopping, supra note 2 at 916.
19See http://www.cand.uscourts.gov.
20See http://www.txed.uscourts.gov/patent.htm.
21See http://www.gand.uscourts.gov/localrules.htm.
22See http://www.pawd.uscourts.gov.

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