The "Long Arm of the Law" May No Longer Reside in the Eastern District of Texas for Patent Infringement Cases

Scared of getting sued for patent infringement in the Eastern District of Texas? That fear may no longer be warranted.

For several years, patent plaintiffs found a friendly forum in the so called “rocket docket” Eastern District of Texas. That district was considered so “plaintiff friendly” that rough estimates place patent infringement cases filed there at over 50%. Despite cases where neither party was incorporated, had an office or distribution in the Eastern district, but merely only sold product in the district, the Eastern District would routinely refuse to transfer venue in patent infringement cases. Given that patent infringement awards can routinely run in the many millions of dollars, defendants hauled into the Eastern District of Texas had reason for concern.

Concern about this unique district court willfully taking on all patent infringement cases even made its way into the patent reform bill that is was reintroduced before the Congress. The Senate counterpart of the bill (S. 1145 -110th Congress) would prohibit judicial districts from taking cases where:

1. the defendant of a patent infringement case (or in a declaratory judgment action) does not have its principal place of business or is incorporate or formed;
2. the defendant has not committed substantial acts of infringement and does not have a regular and established physical facility that the defendant controls and that constitutes a substantial portion of the operations of the defendant; and
3. where the primary plaintiff does not reside.

A defendant may request the case be transferred where:

1. any of the parties has substantial evidence or witnesses that otherwise would present considerable evidentiary burdens to the defendant if such transfer were not granted;
2. transfer would not cause undue hardship to the plaintiff; and
3. venue would be otherwise appropriate under 28 U.S.C. §1391.

However, even the proposed change appears to be no longer necessary in order for the defendant to obtain relief from blatant forum shopping. At the very end of 2008, on a writ of mandamus, the Federal Circuit Court of Appeals ruled that the Eastern District of Texas had abused its discretion by failing to transfer a patent infringement case to a more convenient forum, namely the Southern District of Ohio. In re TS Tech USA Corporation, 551 F.3d 1315 (Fed. Cir. Dec. 29, 2008).

In the underlying litigation (Lear Corp. v. TS Tech, No. 2:07-CV-406), Lear, a Delaware corporation with its principal place of business in Southfield, Michigan, filed its patent infringement suit against TS Tech USA, an Ohio corporation with its principal place of business in Reynoldsburg, Ohio, in the Eastern District of Texas based on the allegation that TS Tech had been making and selling infringing pivotal headrest assemblies to Honda Motor Co., Ltd. and further that TS Tech knowingly and intentionally induced Honda to infringe the patent at issue by selling the headrest assemblies in Honda vehicles throughout the United States, including the Eastern District of Texas. When TS Tech filed a motion pursuant to 28 U.S.C. §1404(a) to transfer venue of the case to the Southern District of Ohio, the district court refused because several (Honda) vehicles with TS Tech’s allegedly infringing headrest assembly had been sold in the district and that the citizens of that district has a substantial interest in having the case tried locally.

For those that feared being hauled into the plaintiff friendly Eastern District of Texas for patent infringement merely because they sell a product or provide a service that can be found in Eastern District of Texas, the Federal Circuit has signaled “enough is enough” and are willing to grant the extraordinary remedy of a writ of mandamus if the district court refuses to transfer the case and there is good reason to do so. This case may indeed have much greater impact across the country—at least with regard to patent infringement cases. Even though the Federal Circuit applied only 5th Circuit law, the logic may be used for other blatant patent forum shopping cases. But for now, defendants can make a venue challenge with greater certainty in patent cases filed in the Eastern District of Texas where the parties have no offices in the district, do not do business (beyond mere conduit) in the district, and in which no key witnesses reside in the district and not merely because the plaintiff wishes the case to be there.