In May 2017, the Supreme Court issued TC Heartland v. Kraft Foods Group Brands, a decision that many expected would significantly limit forum shopping in patent cases (see our previous blog post " The Ongoing Evolution of Patent Venue"). Prior to TC Heartland, patentees could file infringement lawsuits in any court with personal jurisdiction over the accused infringer, so most corporations were subject to suit in every district court. The Supreme Court in TC Heartland ruled that venue for a corporate defendant is only proper in districts where (the defendant is incorporated, or where the defendant infringed the patent and has a regular and established place of business. As a result, patentees now face a choice between filing in the defendant's state of incorporation – which is the District of Delaware for the vast majority of corporations – or in a district in which the defendant has a regular and established place of business.
The patentee-friendly Eastern District of Texas had been a hotbed for patent litigation for several years prior to TC Heartland. Cottage industries sprouted in many small towns in the district – including Marshall, Beaumont, and Tyler – to support the massive number of lucrative patent trials. Perhaps in an effort to protect this industry, or perhaps out of a desire to continue to serve as the most important venue for patent litigation, judges in the Eastern District have expansively interpreted what constitutes a "regular and established place of business" following TC Heartland. For example, in SEVEN Networks v. Google, Judge Gilstrap decided that the mere presence of Google's global cache servers in the district, in space leased from internet service providers, subjected Google to suit in the district. That decision was issued in July 2018, more than a year after TC Heartland was decided.
Even with such treatment, the Eastern District of Texas has declined significantly from its top spot among patent litigation venues over the past two years. According to data provided by Lex Machina, in the 12 months prior to TC Heartland, the Eastern District of Texas handled 36% of all patent litigation, followed by the District of Delaware (12%) and the Central District of California (6%). Now, the District of Delaware holds the top spot, while patent litigation in the Eastern District of Texas has fallen dramatically. In the 12 months following TC Heartland, for example, 23% of all cases were filed in Delaware, while only 13% were filed in the Eastern District of Texas. The Central District of California, still holding on to third place, rose to 9% during that same period.
Not surprisingly, the rate of successful motions to transfer has likewise changed since TC Heartland, according to statistics obtained through Docket Navigator. District courts granted 49% of motions to transfer in the 22 months before TC Heartland. The grant rate increased to 59% in the 22 months since TC Heartland. In the Eastern District of Texas, however, the difference has not been as dramatic. The grant rate has only risen from 44% to 48%. This is likely due in part to the judges' desire to keep cases in their district, employing an expansive interpretation of the "regular and established place of business" for a corporate defendant, as reflected in the SEVEN Networks decision.
The grant rate for motions to stay pending inter partes review has also steadily increased following TC Heartland. For example, according to statistics available through Docket Navigator, the grant rate of motions to stay increased from 68.6% in 2017 to 70.5% in 2018, to 73.1% in 2019 so far.
In addition, according to data obtained from Docket Navigator, the time to reach key milestones (including claim construction, summary judgment, and trial) has uniformly decreased since TC Heartland. For example, the average time to claim construction has decreased from 17.4 months to 12.5 months; the average time to a decision that a patent is enforceable has decreased from 14.2 months to 6.1 months; and the average time to stay has decreased from 10.3 months to 6.3 months. However, it is possible that these figures are being skewed by the fact that post-TC Heartland cases have not had as much time to progress as pre-TC Heartland cases, and these figures may even out as more time passes since the decision was handed down.
As we approach the two-year anniversary of TC Heartland, here is what we glean from the statistics:
- The number of motions to transfer venue has steadily increased, as have their grant rate, but not at the expense of a speedy resolution. Over the past 22 months, the average time to resolution has actually gone down for several key milestones, in some cases by 9-10 months;
- Delaware has become the most likely venue for patent litigation, although it has not garnered the share of cases experienced by the Eastern District of Texas in its heyday. Instead, patent cases are more evenly distributed across other districts than they were prior to TC Heartland;
- The total number of patent actions filed in the United States has declined year-over-year in each of the past two years. This decline, along with the more even distribution of cases, has likely contributed to the overall decrease in average time to resolution; and
- The grant rate of motions to stay patent litigation continues to increase year-over-year, after being far less frequently granted in the Eastern District of Texas during the 22 months preceding TC Heartland.
As each defendant (and corresponding act of infringement) invokes its own unique considerations, it is important to consult with a skilled patent attorney before deciding where to file a complaint and whether a motion to transfer or stay is advisable.
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