Patent Litigation Shows Shift Towards Delaware, Decrease in High-Volume Plaintiff Filings

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Legal data analytics provider Lex Machina recently published a post featuring data points regarding the filing of patent infringement cases in the year following the U.S. Supreme Court’s decision in TC Heartland v. Kraft Foods Group Brands. In that decision, the Court held that the patent venue statute (28 U.S.C. § 1400(b)) meant that domestic companies could only file patent infringement suits in the judicial district where they were incorporated. Lex Machina’s one-year data update shows that TC Heartland has toppled the Eastern District of Texas as the top forum for patent infringement filings among U.S. district courts. The decision has also affected the filing behaviors of high-volume plaintiffs (HVPs), or those entities filing 10 or more patent infringement cases in U.S. district courts within one calendar year.

The months following SCOTUS’ TC Heartland decision last May saw interesting developments regarding the patent venue statute and its application in U.S. district court. In Eastern Texas, In re: Cray, Judge Rodney Gilstrap created a four-part test for determining residence which was struck down months later on appeal to the Federal Circuit. Last November, the Federal Circuit issued a precedential decision which held that the TC Heartland ruling changed controlling law and can be applied retroactively, allowing defendants in patent infringement cases to file new motions to transfer venue even when such motions were previously denied.

Perhaps the biggest takeaway from Lex Machina’s one-year update on patent suit filing habits post-TC Heartland is a dramatic reduction of case filings in Eastern Texas. In the year prior to the decision, the jurisdiction of Eastern Texas received 36 percent of all patent complaints filed, more than one-third of patent infringement suits filed in the U.S. that year. Since TC Heartland, only 13 percent of patent suits were filed in Eastern Texas, dropping it to second-place overall and bringing it much closer to filings seen in other districts like the Central District of California (9 percent) and the Northern District of California (7 percent).

The dominant venue for patent infringement filings in the year since TC Heartland has turned out to be the District of Delaware, which saw 23 percent of patent filings in the past year. That’s a fairly sizable increase over the 12 percent of patent cases filed in that district in the year before TC Heartland. According to Lex Machina IP Legal Data Expert Geneva Clark, this shift towards Delaware becoming the dominant jurisdiction for patent infringement filings is not all that surprising. “Delaware has a long history of being active with patent law,” Clark said. “Because they’ve established a history of how the court behaves in patent litigation, parties can have some sense as to how they’ll be treated there as opposed to not knowing.” She added that many companies and corporations are incorporated in Delaware or otherwise have ties to that state, further explaining why the Supreme Court’s interpretation of the patent venue statute would shift litigation towards that district.

While there has been a shift in cases being filed in Delaware, Clark noted that the total number of patent filings does not support the idea that Delaware is making up for any number of suits that aren’t being filed in Eastern Texas. “Delaware is replacing the Eastern District of Texas in terms of being the leading venue for patent infringement filings but it is not replacing Eastern Texas in equal numbers,” Clark said. Indeed, overall patent litigation filings seem to have dipped significantly in the year following TC Heartland, from 4,487 patent suits initiated in the year leading up to the decision down to 3,936 cases filed in the year after it. Whereas Eastern Texas saw a total of 1,627 patent suits filed in the year before TC Heartland, Delaware saw 907 cases filed in the year after the decision, a drop of more than 700 cases between those leading patent litigation jurisdictions.

This reduction in cases filed into the top patent infringement jurisdiction, whether Eastern Texas before TC Heartland or Delaware post-TC Heartland, correlates fairly strongly with a decrease in the number of cases filed by high-volume plaintiffs, which Lex Machina has defined as plaintiffs filing more than 10 cases in one calendar year. High-volume plaintiffs filed a total of 1,902 cases in the year prior to TC Heartland and in the year after the decision, these plaintiffs filed a total of 1,296 cases, a decrease of more than 600 cases year-over-year. “While there are certainly ways to measure which patents are involved in litigation at any time, there are many issues that may impact filings over time, examples include successful challenges of one or a group of patents, jumps and shifts in technology and company goals.  These and many more factors impact filings in patent litigation.” Clark said, adding that high-volume plaintiff issues can be related to specific issues like Hatch-Waxman litigation. “It’s significant that they’re filing fewer cases and that it may be the cause of most of the general drop in patent suit filings post-TC Heartland.”

The shift of the top jurisdiction where high-volume plaintiffs are filing cases mirrors the shift in overall cases and, in fact, the overall shift could be attributable to the behavior of high-volume plaintiffs. High-volume plaintiffs filed 1,139 patent infringement suits in Eastern Texas during the year leading up to the TC Heartland decision. That’s a majority of all patent cases filed in Eastern Texas that year and 60 percent of all high-volume plaintiff filings during that period. In the year after TC Heartland, high-volume plaintiffs filed 331 cases in Delaware. That’s a little more than one-third of all patent cases filed that year and 26 percent of all high-volume plaintiff filings during the period.

The Lex Machina data shows that the docket of Judge Rodney Gilstrap, the Eastern Texas judge who held the largest single docket of patent cases of any U.S. district court judge by a mile for a long time, has also dropped significantly. In the year prior to TC Heartland, Judge Gilstrap saw 1,067 cases filed, almost one-quarter of all patent cases filed that year. In the year after the decision, Judge Gilstrap’s docket dropped dramatically to 342 patent cases, 9 percent of all patent cases filed during that period. The same story bears out when looking at cases filed by high-volume plaintiffs. Judge Gilstrap received 39 percent (747 cases) of high-volume plaintiff suits in the year before TC Heartland while only receiving 15 percent (192 cases) in the year after the decision.

Looking forward, “In the first quarter prior to TC Heartland, there was a sharp drop off in HVP filings. In the first quarter of 2018, there was a rebound of sorts, relative to a drop in the fourth quarter. We should look to see if HVP filings continue to grow nationally as those plaintiffs find their footing in the new venue landscape, or if they remain at a lower level long term following TC Heartland, and where,” Clark concluded.


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Join the Discussion

2 comments so far.

  • [Avatar for John Wu]
    John Wu
    June 13, 2018 02:00 pm

    Many other nations moved in a direction of helping inventors: Russian created a patent court; Japan tried to increase damages; China slowly added teeth to patent procedures. The U.S. has helped the world to build an international patent landscape. Then, it started doing the opposite.

    Plaintiff filing number is not a sensitive indicator to the real adverse impacts sustained by inventors and patent owners. TC Heartland’s impacts are hard to tell. It is probably far more than what the filing data tell. Many plaintiffs will not file cases against one or few infringers (many companies will not try). The total number of cases do not reflect the deduction of cases because some cases are split and filed in multiple states.

  • [Avatar for Mike]
    June 13, 2018 10:23 am

    From the TC Heartland oral argument:

    Breyer: [T]hese amici briefs — they’re filled with this thing about a Texas district which they think has too many cases. What’s this got to do with this [case]?

    Dabney: From the Petitioner’s point of view, the relevance of litigation behaviors in the United States is important evidence of why Section 1400(b) was a wise statute that Congress passed and that it should be upheld.

    Ginsberg: Well, why, when you’re complaining about a forum that’s friendly to infringers if many corporations are incorporated in Delaware? That’s also said to be a friendly forum.

    And so now, as anticipated, the shift is going to Delaware.

    What needs to happen is venue reform that at least allows bringing an action in a district where inventor research was performed. The VENUE Act has this component, and it would help prevent throwing out the baby (researchers, universities, independent inventors) with the bathwater.