East Texas Court King of the Hill Again, Just a Smaller Hill

By Malathi Nayak

A Texas federal district court regained its spot as the busiest U.S. patent court in September amid an overall drop in patent infringement suits filed in U.S. district courts that month.

In September, the U.S. District Court for the Eastern District of Texas received 44 patent infringement complaints, down 52 percent from the same period a year ago and 30 percent from August, according to Bloomberg Law data.

Overall, patent complaints filed in all federal district courts totaled 237 in September, down 25 percent from September 2016. The total was down more than 30 percent from August, when 351 patent lawsuits were filed.

The Eastern District of Texas has seen patent complaint filings fall by more than 60 percent year-on-year, according to Bloomberg Law data, for the four months since May’s landmark U.S. Supreme Court ruling in TC Heartland LLC v. Kraft Foods Grp. Brands LLC that curbed where patent owners can sue. Still, the court saw enough filings to rank as the nation’s second-busiest patent litigation venue during from June-September.

“Texas is still very much on the map,” Colleen Chien, associate professor of law at Santa Clara University School of Law, said.

Legal practitioners and academics had predicted that the TC Heartland ruling—requiring lawsuits be filed where a defendant “resides” or is incorporated and not just where it makes a sale—would cut into the number of cases filed in courts with patentee-friendly reputations, such as the Eastern Texas court.

Even so, plaintiffs who filed in the Eastern Texas court in September continued suing large retailers, electronics makers, financial institutions, and chain restaurant companies such as Target Corp. and Apple Inc. that are likely to have locations in the district.

Delaware Falls to Second Place

The U.S. District Court for the District of Delaware, which had been the top venue for patent complaints since the TC Heartland ruling, moved to second place in September with a sharp drop in complaints filed. The Delaware district court received 26 complaints, down 19 percent from a year ago and 67 percent from August.

Delaware was widely expected by attorneys and academics to see a surge in filings because many companies incorporate there. Even so, the concentration of patent infringement complaints in Delaware is a fraction of what it was in Texas before the TC Heartland ruling, Chien said.

Last month, short-handed judges in Delaware cited burdensome caseloads as the reason for transferring cases—including an infringement lawsuit against Apple Inc.—to other courts. They used their discretion to transfer, even though a broad interpretation of the TC Heartland ruling would have meant the Delaware court was a proper venue.

Looking ahead, a U.S. Court of Appeals for the Federal Circuit ruling in September may keep a lid on patent complaint filings at the Eastern District of Texas court, attorneys told Bloomberg BNA.

Te Federal Circuit Sept. 21 rejected an attempt by U.S. District Judge Rodney Gilstrap of the Eastern District to transfer an infringement case filed by Raytheon Co. against supercomputer maker Cray Inc.—after Gilstrap had previously denied Cray’s motion to transfer the case because a Cray work-at-home salesman lived in district. ( In re Cray Inc., 2017 BL 334363, Fed. Cir., 2017-129, 9/21/17).

The court said a home office, for venue purposes, wasn’t enough of a physical business presence to keep the case in the Eastern District. It remanded the case to Gilstrap to decide where to transfer Raytheon’s complaint.

Google Top IPR filer

In September, patent challengers filed 127 inter partes review (IPR) petitions contesting the validity of patents at the Patent and Trademark Office’s Patent Trial and Appeal Board, down slightly from 123 IPR petitions filed in August. Technology giant Alphabet Inc.'s Google, oilfield services company Halliburton Energy Services Inc., and computer networking equipment maker Cisco Systems Inc. were among the top IPR filers.

Google was the top filer, with 15 IPRs,challenging patent holding companies Uniloc Luxembourg SA and Brooklyn, N.Y.-based Alex is the Best LLC.

Uniloc has been a top filer of infringement suits in the Eastern District of Texas with 11 lawsuits, including complaints against Google over online voice communication patents. Alex is the Best has not yet sued Google, but has filed 22 infringement complaints since 2013 against other companies alleging infringement of its patented technology that helps users transfer images and videos from internet-connected cameras to archiving websites. It has filed lawsuits—some ongoing and others that were settled—against Samsung Electronics Co. Ltd. and Amazon.com Inc., among others.

New Top Copyright Suit Filer

September copyright infringement filings totaled 282, up 4 percent from a year ago. The filings increased 7 percent from August.

Adult film maker Strike 3 Holdings LLC kicked off a copyright infringement lawsuit blitz in September in district courts in New York. Strike 3 was the top filer of copyright complaints. It alleges illegal downloads of its content through the BitTorrent system that lets users share large files over the internet.

Hollywood film studio Voltage Pictures’ Venice PI LLC unit was the No. 2 copyright complaint filer, with 11 complaints filed in nine district courts, including Illinois and Colorado, in September. The company that filed 20 complaints in district courts in August continued to claim illegal downloads of its mid-June release “Once Upon a Time in Venice” film starring Bruce Willis.

Trademark complaints totaled 241 in August, relatively unchanged from the same period a year earlier but down 13 percent since August.

Counterfeit enforcement made up the bulk of docket activity. Sream Inc., the U.S. licensee of Roor, a German maker of water pipes for smoking, was among the top filers of trademark suits in August, alongside beauty products maker Mary Kay Inc.

To contact the reporter on this story: Malathi Nayak in Washington at mnayak@bna.com

To contact the editor responsible for this story: Mike Wilczek at mwilczek@bna.com

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