Can Accused Infringers Finally Escape Marshall?

Recently, patent owners have been filing infringement suits in the seemingly patent-friendly courts in the Eastern District of Texas.  This may, however, be coming to an end.

In a rare proceeding, the Federal Circuit ordered Judge Ward of the Eastern District of Texas to transfer a patent infringement case to the Southern District of Ohio.  Lear Corp., a company located in Southfield, Michigan, had sued TS Tech, located in Reynoldsburg, Ohio, in the Eastern District of Texas.  TS Tech moved to have the case transferred to Ohio because none of the parties, witnesses, or evidence had significant connections to Texas.  Judge Ward disagreed, holding that Lear’s choice of bringing suit in Texas outweighed any inconvenience to witnesses and TS Tech, and that several vehicles that included the allegedly infringing product had been sold in Texas.

The Federal Circuit held that Judge Ward abused his discretion.  Following the recent Fifth Circuit case, In re Volkswagen of America, the Federal Circuit ordered that the case be transferred.  In the Volkswagen case, the Fifth Circuit held that venue should be transferred upon a showing that the new venue is “clearly more convenient” than the venue chosen by the plaintiff.  In this case, the Federal Circuit found that the factors weighed heavily in favor of transfer.

Why this case is significant.

In the last few years, the Eastern District of Texas has led the nation in patent infringement filings, despite the lack of large technology companies or research firms in towns like tiny Marshall, Texas.  In fact, the Eastern District does not include any of the major cities of Texas, like Houston, Dallas, or Austin.  In 2003, 14 patent cases were filed in the district.  In 2004, the number was up to 59.  By 2006, the number of filings grew to an estimated 234.  And in the year ending Sept. 30, 2007, 358 cases were filed.

One reason was that the district was perceived as being a “rocket docket,” meaning that cases were resolved quickly.  Judge Ward was integral to the increase of patent filings.  He would set quick trial dates and discovery deadlines to keep cases moving; the judges in the district were said to actually like patent cases.  The increase in filings, however, may be taking a toll on the speed of cases, as some trial dates are being set for late 2011 or early 2012.

Another reason for the increase is the perceived bias towards plaintiffs in these suits.  In 2007, a jury in Beaumont rendered a $156 million verdict against AT&T.  While this verdict was later set aside by the judge, it shows the perception towards plaintiffs may not be wrong.

Are the good times for patent owners coming to an end in E.D. Tex.?

For years, patent owners have had free reign to file infringement suits against defendants in virtually any district where at least one infringing product was sold.  The Volkswagen case from the Fifth Circuit and now the TS Tech case from the Federal Circuit would seem to indicate that the end may be near, at least in Texas.  Add to this the new slowdown in case progression and Marshall no longer looks like such a great venue for patent owners.  It should be noted, however, that the plaintiff in the Volkswagen case has asked the Supreme Court to review the Fifth Circuit’s decision.  If the Supreme Court deigns to hear the case, it may be a year or more before we know the final answer.

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