Eastern District of Texas to lose spot as top patent court post-TC Heartland

June 8, 2017

An industry group has predicted that patent filings in the highly favored United States District Court for the Eastern District of Texas will fall dramatically this year as patent suits are forced to find venue under the stricter guidelines found in the recent United States Supreme Court ruling in TC Heartland LLC v. Kraft Foods Grp. Brands LLC, No. 16-341, 2017 WL 2216934 (U.S. May 22, 2017)

In 1990, the Federal Circuit held that the specific statutory requirement found in 28 U.S.C.A. § 1400 allowed for patent cases to be filed in virtually any federal district court in the country.  That decision, VE Holding Corp. v. Johnson Gas Appliance Co., 917 F.2d 1574 (Fed. Cir. 1990), paved the way for a shift in litigation to a tiny federal court in the Eastern District of Texas.

The Eastern District of Texas is a very remote district court located in Marshall, Texas, favored for its speedy trial dates (earning it the nickname “the rocket docket”), its higher than average cost of litigation, and the fact that plaintiff’s win almost 80% of the patent cases filed in that court. This combination has often been wielded, with great effect, as a sword to force settlement. In 2017, the Eastern District of Texas was the most popular court for patent filings and was projected to handle more than 1400 patent related suits.

The Supreme Court of the United States’ decision in TC Heartland, LLC v. Kraft Foods Grp. Brands, LLC changed the landscape for patent filings dramatically, as well as specifically abrogating the Federal Circuit’s ruling in VE Holding Corp. v. Johnson Gas Appliance Co. The US Supreme Court ruled that, for venue purposes, a corporation “resides” in its state of incorporation instead of looking to 28 U.S.C.A. § 1391(c). This ruling severely limits the choices for patent infringement filings moving forward, allowing only venues in the state of incorporation and the more traditional place where patented items are sold and acts of infringement occurred.

This means there will be a major shift away from favorable courts to courts that are located near technology and industry centers around the country.

It is now estimated that the Eastern District of Texas will only be host to around 400 patent filings, a 69% drop in filings year over year. This will drop the Eastern District of Texas down to second place amount district courts with patent filings. The new number one court of patent filings will likely be the District of Delaware, which is expected to see an increase of about 500 patent filings over last year’s totals. The Northern District of California will also see a huge spike in filings, with a likely 300 additional suits filed in the court closest to the country’s technology hub. Other courts with expected impacts are projected to be the Northern District of Texas as well as the Southern District of New York. Most other courts will not see any major impact due to the rule change when it comes to patent filings.

The projections were generated by a collaboration of Unified Patents and Professors Colleen Chien and Michael Risch writing for the Maryland Law Review.

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