Filings Drop at Texas Court After Patent Venue Ruling

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

The busiest U.S. patent court has seen a sharp decline in complaints following the U.S. Supreme Court’s recent ruling limiting where infringement suits can be filed.

Only 12 patent complaints were filed in the U.S. District Court for the Eastern District of Texas in the two weeks after the high court’s May 22 ruling in TC Heartland LLC v. Kraft Foods Grp. Brands LLC. That’s down 78 percent from the same two-week period a year earlier, according to Bloomberg Law data.

The U.S. District Court for the District of Delaware, which is expected to get many of the cases leaving Texas, saw 15 patent complaints, a more than 60 percent increase the same two-week period, as filings dried up in the Texas court. Delaware could be a popular patent venue because so many companies incorporate there.

For the full month of May, the Texas court received 106 patent infringement, two copyright, and two trademark complaints, down from the 131 patent infringement and three copyright complaints filed in April, according to a Bloomberg Law data analysis of U.S. intellectual property complaints.

The court ranked second after the U.S. District Court for the Central District of California, which received 92 copyright, 27 trademark, and 21 patent complaints in May.

The Eastern District of Texas has been the number one venue for all IP complaints for eight of the last 12 months. It was second behind the Central District of California for the other four months.

The Supreme Court ruled in TC Heartland that patentees can no longer file complaints solely based on where an alleged infringer sells a product in order to get their cases heard in purportedly friendly jurisdictions like the Eastern District of Texas.

Impact of TC Heartland

Academics and legal experts had predicted that the high court decision would result in about a two-thirds drop in the Texas court’s IP complaint caseload, Brian Love, assistant professor at Santa Clara University School of Law, told Bloomberg BNA. However, the court typically receives a large volume of complaints and, so, will still have a large caseload despite the expected decline, he said.

In May, the Texas court still had the highest number of patent complaints among federal courts—even as it saw a drop in complaints filed.

Fairfax, Va.-based patent holding company Hybrid Audio LLC, which filed 16 lawsuits, all in the U.S. District Court for the District of Massachusetts, was the top filer of patent lawsuits in May. Hybrid Audio, which has been filing patent infringement lawsuits against companies such as Apple Inc. since 2011, filed complaints last month against consumer electronic product makers such as Seagate Technology LLC over signal processing technology patents.

Cumberland Systems LLC was the third-largest patent filer in May, with all of its 11 lawsuits in the Eastern District of Texas. The patent holding company sued Verizon Communications Inc., Sony Pictures Entertainment Inc., and others, asserting one of its patents covering password encryption technology.

“In any event, there are still going to be a large number of cases filed in the Eastern District of Texas,” Love said. “It will likely still be the second most popular venue for patent suits at least for the foreseeable future, behind Delaware.”

In all courts, the total volume of IP infringement complaints rose 8 percent to 892 in May from April but fell 4 percent from a year ago, driven by a decline in patent infringement suits.

Millennium Films Continues Blitz

Copyright infringement filings in May totaled 311, up 50 percent from April and 14 percent from a year ago. Copyright volumes continue to fluctuate with on-again, off-again activity from adult film maker Malibu Media LLC.

In May, Hollywood studio Millennium Films, which accelerated litigation in 2016 against online piracy of its movies, kept up its filing streak, while Malibu Media held back from filing any lawsuits. Millennium Films was the top copyright filer, with 38 complaints related to downloads of “Mechanic: Resurrection” and “Boyka: Undisputed,” both action films held by affiliates ME2 Productions Inc. and UN4 Productions Inc.

Trademark complaints totaled 232 in May, rising 6 percent from April but declining 12 percent from the same period a year ago. The bulk of docket activity comprised counterfeit enforcement.

Yeti Coolers LLC was the top trademark complaint filer, with lawsuits filed against eight companies alleging trade dress infringement in its line of insulated drinkware. It sued Home Depot Co and others earlier in the year over similar allegations.

IPR Petitions Increase

Patent challengers filed 127 inter partes review (IPR) petitions in May at the Patent Trial and Appeal Board, an increase from 116 petitions filed in April. An IPR is a proceeding challenging a patent’s validity at the Patent and Trademark Office.

Samsung Electronics Co. Ltd. topped the list of IPR filers, with eight petitions challenging Huawei Technologies Co. Ltd.'s patents covering cellular communication technology, and eight petitions against ProMOS Technologies Inc.'s patents, including those covering data storage and semiconductor technology.

The popularity of the covered business method challenge continued to decrease. Six petitions were filed in May, with only 19 so far in 2017. Fifty-two covered business method petitions were filed in the first five months of 2016, by comparison.

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