Will Venue Decision Make Texas Less Appealing to Patent Trolls? - U.S. Fifth Circuit
U.S. Fifth Circuit - The FindLaw 5th Circuit Court of Appeals Opinion Summaries Blog

Will Venue Decision Make Texas Less Appealing to Patent Trolls?

Texas. It's the land of steak, pick-up trucks, football, and for far too long, patent holding companies and trolls.

The Eastern District of Texas's high success rate for patent holders (57.5 percent, per a recent study [PDF] by PricewaterhouseCoopers) and decently high rankings for median damages and time to trial, are just some of the reasons why non-practicing entities (NPEs, or patent trolls) love incorporating in Texas and bringing suit in that district. Other reasons include judges' frequent deferral to juries on patent issues (meaning trials happen often, rather than summary judgment) and reticence to grant venue transfers.

That last habit may change, however, after the Federal Circuit applied the Fifth Circuit's venue transfer rule, one that is far, far more friendly to defendants than the standard initially applied by the trial court in the Eastern District of Texas.

'Clear,' 'Far,' Wherever the Witnesses Are

At the district court level, the court initially refused to transfer a case because the relevant public and private factors did not make Toyota's proposed forum "far more convenient."

The Federal Circuit reversed, and held that the proper standard, taken from the Fifth Circuit, is "clearly more convenient," a standard that is easier for defendants to meet.

Though the opinion is short, and well worth the read if patents and venue transfer are relevant to your practice, here is the most important takeaway: when one side of the case (the patent troll) has no real connection to the area (Eastern District of Texas), while the other side has reasons for a transfer (witnesses, evidence are located elsewhere), a venue transfer is likely to be granted under the Federal Circuit's interpretation of the Fifth Circuit's "clearly more convenient" standard.

AWS, the patent holder, only had a recently opened office in the district weighing in favor of keeping the case in Texas. The district court rightfully considered that to be a non-consideration. Toyota had several factors in favor of its favored district, the Eastern District of Michigan, including non-party witnesses in that district.

[N]othing favors the transferor forum, whereas several factors favor the transferee forum. The analysis may not show that the transferee forum is far more convenient. But that is not what is required. With nothing on the transferor-forum side of the ledger, the analysis shows that the transferee forum is "clearly more convenient."

Does This Empty the Courthouse?

It might. There are still issues that could make alternate venues not quite "clearly more convenient," such as the relevant evidence and witnesses being local or mobile, a lack of a single better venue (perhaps the witnesses are spread out nationwide, instead of clustered in a single district), or even more likely, co-defendants from different jurisdictions.

Then again, that last factor shouldn't be as much of an issue, post-America Invents Act. The AIA brought what is colloquially known as a "one defendant, one lawsuit" rule, which forces trolls to attack defendants one-by-one. And if venue transfers are granted more frequently, it might force trolls to attack defendants on their home courts, all across the country. Perhaps, then, this opinion will also contribute to fighting patent trolls, in addition to somewhat curbing venue shopping.

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