Eastern Texas Court Sees August Bump in Patent Complaints

Access practice tools, as well as industry leading news, customizable alerts, dockets, and primary content, including a comprehensive collection of case law, dockets, and regulations. Leverage...

By Malathi Nayak

A Texas federal district court with a patentee-friendly reputation is no longer the busiest patent court in the U.S., but saw a rise in patent infringement filings in August, including claims against Target Corp., Apple Inc., and Samsung Electronics Co. Ltd., Bloomberg Law data show.

The U.S. District Court for the Eastern District of Texas saw a drop in filings following a U.S. Supreme Court ruling in May that curbed where patent owners can sue. Still, the court moved up to second after dropping in July to the nation’s third-busiest patent litigation venue.

The U.S. District Court for the District of Delaware remained the top venue for patent complaints for a third month in a row since the ruling. It received 79 complaints, increasing 76 percent from a year ago and up 16 percent from July. Delaware was widely expected by attorneys and academics to see a surge in filings because many companies incorporate there.

Plaintiffs who filed in the Eastern Texas court in August continued suing large retailers, electronics makers and chain restaurant companies that are likely to have locations in the district, such as Starbucks Corp. and Omni Hotels Corp.

Legal practitioners and academics had predicted that the the high court’s ruling in TC Heartland LLC v. Kraft Foods Grp Brands LLC —allowing lawsuits to be filed where a defendent “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.

Patent infringement complaints filed in the Eastern District of Texas nearly doubled to 63 from a July low of 32, reversing the decline that started after the TC Heartland ruling. The volume of filings was still down about 60 percent from the same period a year ago, Bloomberg Law data show.

The U.S. patent venue statute specifies that a company can be sued in the district where it “resides,” or where it committed an infringing act and has a “regular and established place of business.” Retail outlets, such as an Apple store or Starbucks at the local mall, are being used to justify the Eastern Texas court as a proper venue.

Some attorneys and lobbying groups representing restaurant and retail businesses that operate from bricks-and-mortar locations in multiple states have told lawmakers in recent congressional hearings that they are still being sued in Texas despite TC Heartland. What counts as a “regular and established place of business” needs to be resolved, they have said.

California Falls to Third Place

The U.S. District Court for the Central District of California fell from its No. 2 rank among the busiest patent courts from last month. It saw patent complaints drop by 39 percent to 28 filings in August from July. Filings in the California court were down more than 17 percent from the same time last year.

Overall, patent complaints filed in all federal district courts totaled 351 in August, down 13 percent from the same period a year ago.

Plano, Texas-based patent-holding company Coding Technologies LLC and Warren, Mich.-based Mirror Imaging LLC, which provides document storage and retrieval services to financial institutions, were August’s top two filers of patent lawsuits. They both filed a majority of their August complaints in Eastern Texas.

Coding Technologies LLC, sued restaurant chain Dickey’s Barbecue Pit and American Airlines Inc., which have nationwide locations including Eastern Texas, claiming infringement of its patented technology covering code pattern technology. The technology helps businesses let customers use quick response, or QR, code that can be scanned with smartphones to make payments and access online information.

Patent challengers in August filed 123 inter partes review petitions contesting the validity of patents at the Patent and Trademark Office’s Patent Trial and Appeal Board, falling from 138 IPR petitions filed in July. Oilfield services company Halliburton Energy Services Inc., online retailer Amazon.com Inc., and electronics maker Huawei Technologies Co. Ltd. were among the top IPR filers.

Monthly Rise in Copyright and Trademark Filings

August copyright infringement filings totaled 263, down 16 percent from a year ago, but up slightly, around three percent, from July.

Hollywood movie company Voltage Pictures’ Venice PI LLC unit held onto the top copyright filer spot from last month, with 20 complaints filed in nine district courts, including Hawaii and Colorado in August. It claimed illegal downloads of its “Once Upon a Time in Venice” film starring Bruce Willis, released in mid-June.

Millennium Films, which accelerated litigation in 2016 against online piracy of its movies, was another top copyright filer, with 12 complaints related to downloads of two action films, “Mechanic: Resurrection” and “Boyka: Undisputed.”

Trademark complaints totaled 277 in August, falling 7 percent from the same period a year earlier, but rising 15 percent from July.

Counterfeit enforcement dominated 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 French perfume and beauty products maker Chanel 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

Copyright © 2017 The Bureau of National Affairs, Inc. All Rights Reserved.

Request Intellectual Property on Bloomberg Law