Amicus Curiae Brief — TC Heartland LLC v. Kraft Food Brands Grp. LLC., 137 S. Ct. 614 (2016) (No. 16-341)

RECORD a US

nee OCT 12 2016

BRIEFS, No. 16-341

_e

IN THE

Supreme Court of the United States

TC HEARTLAND, LLC D/B/A

HEARTLAND FOOD PRODUCTS GROUP,

Petitioner,

v.

KRAFT Foops GROUP BRANDs LLC,

Respondent.

ON PETITION FOR WRIT OF CERTIORARI

TO THE UNITED STATES COURT OF APPEALS

FOR THE FEDERAL CIRCUIT

BRIEF OF THE ELECTRONIC FRONTIER

FOUNDATION AND PUBLIC KNOWLEDGE AS

AMICI CURIAE IN SUPPORT OF THE PETITION

CHARLES DUAN VERA RANIERI

PUBLIC KNOWLEDGE Counsel of Record

1818 N Street NW, Suite 410 ELECTRONIC FRONTIER

Washington, DC 20036 FOUNDATION

(202) 861-0020 815 Eddy Street

cduan@publicknowledge.org San Francisco, CA 94109

(415) 436-9333

vera@eff.org

Counsel for amici curiae

QUESTION PRESENTED

Fourco Glass Co. v. Transmirra Products Corp. held

that 28 U.S.C. § 1400(b) “is the sole and exclusive pro-

vision controlling venue in patent infringement actions,

and . . . it is not to be supplemented by the provisions of

28 U.S.C. § 1391(c).” 353 U.S. 222, 229 (1957).

In 1988, Congress enacted a bundle of twenty-three

“miscellaneous provisions” that included an amendment

to § 1391—but not § 1400. Nevertheless, the Federal Cir-

cuit subsequently held that the amendment effected an

overruling of Fourco, such that Ҥ 1391(c) is to supple-

ment § 1400(b).” VE Holding Corp. v. Johnson Gas Ap-

pliance Co., 917 F.2d 1574, 1580 (Fed. Cir. 1990).

The question presented is:

Did the Federal Circuit err in holding Fourco over-

ruled by statute, such that § 1400(b) was no longer the

sole and exclusive provision controlling venue in patent

infringement actions?

(7)

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TABLE OF CONTENTS

QUESTION PRESENTED ..............02255- i

TABLE OF AUTHORITIES ................. iv

INTEREST OF AMICICURIAE .............. 1

SUMMARY OF ARGUMENT ................ 2

POPP TT ECT TE Tee 4

I. Prevailing Patent Venue Law Is Fundamentally Un-

fair and Contrary to Basic Principles of the Federal

PS 6 0 6 nc heb adsearaeeeeeears 4

A. Venue Is Premised on Fairness to Litigants, Es-

pecially Defendants.............2.555. 4

B. The Federal Circuit’s VE Holding Decision Al-

lows Patent Owners Nearly Unlimited Choice

Ge 6-0 666006640 06 KE Ds 5

C. There Is No Counterweight to This Substantial

Boon to Patentees, Due to Other Federal Cir-

Ge ¢ oe 86 a een eh me 6 ee ere ers 7

II. Unfairness in Patent Venue Has Serious Practical

Effects for Industry, the Judiciary, and the Public . . . 12

A. Scholarship Suggests that Patent Forum Shop-

ping May Be Spawning Troubling Practices

fp PSST CO Te ee 14

B. Prior Cases Demonstrate that Unlimited Venue

Produces Substantive Outcomes Unfairly Fa-

voring Patent Asserters ..............+. 17

III. Immediate Review of This Case Is Necessary to Pre-

vent the Ongoing Harms of This Unproductive Gam-

DEE oc cec ep cee eebate een enesen 21

EE hs -8 60 0 Sa deb ce hae ee eee 22

(112)

TABLE OF AUTHORITIES

CASES

Acer America Corp., In re,

F.3d 1252 (Fed. Cir.2010) .............4.. 13

Acorda Therapeutics Inc.

v. Mylan Pharmaceuticals Inc.,

817 F.3d 755 (Fed. Cir.2016) ............... 8&9

Alice Corp. Pty. Lid. v. CLS Bank International,

re ee ee ek ee he be eee ke l

Altera Corp. v. Papst Licensing GmbH & Co. KG,

Nos. 15-1914, -1919 (Fed. Cir. Dec. 21,2015) ....... 11

Apple, Inc., In re,

581 F. App’x 886 (Fed. Cir. 2014) (per curiam) ...... 13

Autogenomics, Inc. v. Oxford Gene Technology Ltd.,

566 F. 3d 1012 (Fed. Cir. 2008) ..............-. 10

Avocent Huntsville Corp. v. Aten International Co.,

552 F-3d 1324 (Fed. Cir. 2008) ............... 10

Beverly Hills Fan Co. v. Royal Sovereign Corp.,

Bi Fede 1668 (Ped. Cir. 1906)... es 8

Biosearch Technologies, Inc., In re,

452 F. App’x 986 (Fed. Cir.2011)............-., 13

Braden v. 30th Judicial Circuit Court,

EE ere 5

Brown v. Crawford County,

960 F:2d 1002 (lith Cir. 1982) .........-..05. 16

Commil USA, LLC v. Cisco Systems, Inc.,

rh es ke see 6h pe ee 8 ee ee 9

(v)

Denver & Rio Grande Western Railroad Co.

v. Brotherhood of Railroad Trainmen,

Di oc cceneseeeeeuesveanuesah 4

eBay Inc. v. MercExchange, LLC,

DP + ccocecereceszeceseses 9

Eclipse IP LLC v. Alfa Vitamin Labs, Inc.,

No. 2:15-cv-353 (E.D. Tex. Aug. 25,2015). ........ 19

Eclipse IP LLC v. PayByPhone Technologies, Inc.,

No. 2:14-cv-154 (C.D. Cal. May 29,2014) ....... 17-18

Eclipse IP, LLC

v. Pro-Source Performance Products, Inc.,

No. 2:15-cv-363 (E.D. Tex. June 11,2015). ...... 18-19

EMC Corp., In re,

677 F'3d 1351 (Fed. Cir.2012) ............... 13

Fourco Glass Co. v. Transmirra Products Corp.,

Pi oscecsueae 6606 64065 i, 6, 21

Genentech, Inc., In re,

566 F.3d 1338 (Fed. Cir. 2009) ............2.26. 13

Google Inc., In re,

588 F. App’x 988 (Fed. Cir.2014).............. 13

Google Inc., In re,

No. 15-138, 2015 WL 5294800 (Fed. Cir. July 16,2015) . . 13

Halo Electronics, Inc. v. Pulse Electronics, Inc.,

EE ox a 4 6 6 wo 6's be be 4b 6 wee 1

Hoffmann-La Roche Inc., In re,

587 F.3d 1333 (Fed. Cir. 2009) ............... 13

International Shoe Co. v. Washington,

i . . 7 os @ bes 6.56.8 6.0 kee eb )

(vi)

Leroy v. Great Western United Corp.,

ES ES 4

Microsoft Corp., In re,

GMM cos ceccescescees 13

Morgan Stanley, In re,

417 F. App’x 947 (Fed. Cir. 2011) (percuriam) ...... 13

Nautilus, Inc. v. Biosig Instruments, Inc.,

eT oe 1

Neirbo Co. v. Bethlehem Shipbuilding Corp.,

ae = I 4

Network Protection Sciences, LLC v. Fortinet, Inc.,

No. 12-cv-1106, 2013 WL 4479336 (N.D. Cal. Aug. 20,

th a i. hc. 6 eh eae ww Oe ko ea & Oe 10

Nintendo Co., In re,

544 F. App’x 934 (Fed. Cir.2013).............. 13

Nintendo Co., In re,

589 F.3d 1194 (Fed. Cir. 2009) ............... 13

Nintendo of America, Inc., In re,

EDS ow cc ce eee ee ees 13

Nuance Communications, Inc.

v. Abbyy Software House,

a 8

Octane Fitness, LLC v. Icon Health & Fitness, Inc.,

ee ae ee Le es ee ee &e 1

Oracle Corp., In re,

399 F. App’x 587 (Fed. Cir.2010).............. 13

Red Wing Shoe Co. v. Hockerson-Halberstadt, Inc.,

148 F.3d 1355 (Fed. Cir. 1998) ........... 10-11, 16

(vit)

Reuben H. Donnelley Corp. v. FTC,

ee ee 5

Shipping & Transit, LLC v. LD Products, Inc.,

No. 9:16-cv-81040 (S.D. Fla. complaint filed June 21,

i /olk math Oso & hoe ee bab © Oe 6 & 6 0862 20

Shipping & Transit, LLC v. Neptune Cigars, Inc.,

No. 2:16-cv-03836 (C.D. Cal. complaint filed June 1,

PP eee ae Ce eee ere Tere 20

SRI International, Inc.

v. Internet Security Systems, Inc.,

De Sb cgoeccecéceeescees 18

Stonite Products Co. v. Melvin Lioyd Co.,

CS os. eG a hoe 60 66 6 68s 5-7

Toa Techs, Inc., In re,

543 F. App’x 1006 (Fed. Cir. 2013) ............. 13

Toyota Motor Corp., In re,

747 F.3d 1338 (Fed. Cir.2014) ..........-..... 13

TS Tech USA Corp., In re,

6651 F.3d 1315 (Fed. Cir. 2008) ...........2.2-.. 13

VE Holding Corp. v. Johnson Gas Appliance Co.,

917 F.2d 1574 (Fed. Cir. 1990) ..... i, 2-7, 12, 16-17, 21

Verizon Business Network Services Inc., In re,

635 F'3d 559 (Fed. Cir. 2011) ............2265. 13

Xilinz, Inc. v. Papst Licensing GmbH & Co. KG,

113 F. Supp. 3d 1027 (N.D. Cal. 2015) ........... 11

Zimmer Holdings, Inc., In re,

609 F.3d 1378 (Fed. Cir. 2010) .............-.-. 13

(vii1)

STATUTES AND RULES

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Dé -066 69.040 06 bb heb.ewee.66eeeu 18

PS 2.6.6 0.0.6.6. 266646 640 66 6 Me md 18

eG. 60's \a 6.0.4 & 6.666.066 6 64 6016 6% 6 7

Act of Mar. 3, 1897, ch. 395,29 Stat.695 ........... 5

Pe ROU: wesc cece se eceeens 15

hb anes © e'6 oe 6S 6 6 8b oe 6.8 0 15

a's de 66's 6 6-e:4 s @ a © ©.6 eeres 16

Dis «bse cbee es peeteceeces 16

Judicial Improvements and Access to Justice Act, Pub. L.

No. 100-702, 102 Stat. 4642 (1988) ............... 6

Judiciary Act of 1789, ch. 20,1 Stat.73 ............ 5

Jurisdiction and Removal Act of 1875, ch. 137,18 Stat.470 . 5

OTHER SOURCES

Charles W. Adams, The Court of Appeals for the Federal

Circuit: More than a National Patent Court, 49 Mo. L.

Ls aa hea weal a bao oe © 6 48 8 3

J. Jonas Anderson, Court Competition for Patent Cases,

163 U. Pa. L. Rev. 631 (2015) ............-.4.-- 9,14

(iz)

Jeff Bounds, Patent Suits Flood East Texas Court, Dal-

las Morning News, Dec. 13, 2015, http://www.dallasnews.

com/ business / headlines / 20151213 - patent - suits - flood -

es, «og pce ese bh ewes eb eee

Brief of Public Knowledge and the Electronic Frontier

Foundation as Amici Curiae in Support of Neither Party,

Altera Corp. v. Papst Licensing GmbH & Co. KG, Nos.

15-1914, -1919 (Fed. Cir. Dec. 21, 2015), available at

https://www.eff.org/files/2015/12/21/brief-altera-v-papst.

Colleen V. Chien & Michael Risch, Recalibrating Patent

Venue, Patently-O (Oct. 6, 2016), http://patentlyo.com/

patent/2016/10/recalibrating-patent-venue.html......

Docket Control Order, Eclipse IP LLC v. Alfa Vitamin

Labs, Inc., No. 2:15-cv-353 (E.D. Tex. Aug. 24,2015)... .

Docket Control Order WJuly 6, 2015), http://www.txed.

uscourts.gov/pagel.shtmi7location .............

Lisa A. Dolak, Declaratory Judgment Jurisdiction in

Patent Cases: Restoring the Balance Between the Paten-

tee and the Accused Infringer, 38 B.C. L. Rev. 903 (1997)

Emergency Motion of Plaintiff Eclipse IP LLC to Strike

Defendant Pro-Source Performance Products, Inc.’s Mo-

tion to Dismiss, Eclipse IP, LLC v. Pro-Source Perfor-

mance Prods., Inc. (“Pro-Source’), No. 2:15-cv-363 (E.D.

Dn + ¢ 6 6.6056 e630 e466 ke E Oe 46

Brian C. Howard, Lex Machina 2014 Year in Review

(2014), available at http://pages.lexmachina.com/ rs/

lexmachina / images / 2014%20Patent%20Litigation®

Dts? 6ob keene hese ee OK eRe he eee

(x)

Daniel Klerman & Greg Reilly, Forum Selling, 89 S. Cal.

is - so a4 so oe ee} 6 eee wee 10, 14, 16

Megan M. La Belle, Patent Litigation, Personal Juris-

diction, and the Public Good, 18 Geo. Mason L. Rev. 43

Peet eotvoeevenseceoesebesbbnsesesees 10

John A. Laco, Venue in Patent Infringement Actions:

Johnson Gas Fouls the Air, 25 Loy. L.A. L. Rev. 1107

Deb eceseeree eect est esebns eae eees ese 6

Kimberly A. Moore, Forum Shopping in Patent Cases:

Does Geographic Choice Affect Innovation?, 79 NC. L.

3. 66S kdb Oe ee OS 6 OO we 7, 12-13

Order Coordinating and Staying Cases, Eclipse IP

LLC v. PayByPhone Techs., Inc. (“PayByPhone’),

No. 2:14-cv-154 (C.D. Cal. June 10,2014) ......... 17-18

Order Denying Motion to Strike, Eclipse IP, LLC v.

Pro-Source Performance Prods., Inc. (“Pro-Source’),

No. 2:15-cv-363 (E.D. Tex. July 6,2015)............ 19

Order Granting Joint Motion to Dismiss, Eclipse IP

LLC v. Alfa Vitamin Labs, Inc., No. 2:15-cv-353 (E.D.

LS ds 6&6 0 6 6:6-6.0.6.0.0.0'% 6.4.6.0.0% 19

Pro-Source’s Motion to Dismiss for Failure to State

a Claim, Eclipse IP, LLC v. Pro-Source Performance

Prods., Inc. (“Pro-Source’), No. 2:15-cv-363 (E.D. Tex.

oan das bs 6.6 68 abe eee 6 8 6" 18-19

Kaleigh Rogers, The Small Town Judge Who Sees a

Quarter of the Nation’s Patent Cases, Motherboard (May

5, 2016), http://motherboard.vice.com/read/the-smaill-

town-judge-who-sees-a-quarter-of-the-nations-patent-

(x1)

Ruling on Motion to Dismiss for Lack of Patentable Sub-

ject Matter, Eclipse IP LLC v. PayByPhone Techs., Inc.

(“Pay By Phone’), No. 2:14-cv-154 (C.D. Cal. Sept. 4, 2014)

(captioned Eclipse IP LLC v. McKinley Equip. Corp.) . .

Sample Discovery Order for Patent Cases Assigned to

Judge Rodney Gilstrap (July 2016), http://www.txed.

uscourts.gov /page1.shtml ? location=info:judge & judge=

eer ee eerie ree fe 2 Pee oe ae ee ee

Sample Docket Control Order for Patent Cases Assigned

to Judge Rodney Gilstrap (Nov. 2015), http://www.txed.

uscourts.gov/page1.shtml ? location=info:judge & judge=

Scheduling Conference Proceedings, Eclipse IP LLC v.

PayByPhone Techs., Inc. (“PayBy Phone’), No. 2:14-cv-

154 (C.D. Cal. May 29,2014) .................

Michael C. Smith, New ED Tex Tools for Handling Pre-

Markman 101 Motions, EDTexweblog (Nov. 11, 2015),

http://mesmith.blogs.com/ eastern _ district _of_ texas /

2015/11/new-ed-tex-tools-for-handling-pre-markman-

A ea a eee meee’ s

Cass R. Sunstein, Participation, Public Law, and Venue

Reform, 49 U. Chi. L. Rev. 976 (1982)............

Edgar Walters, Tech Companies Fight Back Against

Patent Lawsuits, N.Y. Times, Jan. 23, 2014, at A23A,

available at http://www.nytimes.com/2014/01/24/us/tech-

companies-fight-back-against-patent-lawsuits.html ... .

. 18

INTEREST OF AMICI CURIAE

The Electronic Frontier Foundation’ (“EFF”) is a

nonprofit civil liberties organization that has worked for

over 25 years to protect consumer interests, innovation,

and free expression in the digital world. EFF and its

more than 26,000 dues-paying members have a strong in-

terest in helping the courts ensure that intellectual prop-

erty law serves the public interest.

Public Knowledge is a non-profit organization that

is dedicated to preserving the openness of the Internet

and the public’s access to knowledge, promoting creativ-

ity through balanced intellectual property rights, and up-

holding and protecting the rights of consumers to use in-

novative technology lawfully. Public Knowledge advo-

cates on behalf of the public interest for a balanced patent

system, particularly with respect to new and emerging

technologies.

The Electronic Frontier Foundation and Public

Knowledge have previously served as amici in patent

eases. E.g., Halo Elecs., Inc. v. Pulse Elecs., Inc., 136 8.

Ct. 1923 (2016); Alice Corp. Pty. Ltd. v. CLS Bank Int'l,

134 S. Ct. 2347 (2014); Nautilus, Inc. v. Biosig Instru-

ments, Inc., 13848. Ct. 2120 (2014); Octane Fitness, LLC v.

Icon Health & Fitness, Inc., 134 S. Ct. 1749 (2014).

!Pursuant to Supreme Court Rule 37.2(a), all parties received ap-

propriate notice of and consented to the filing of this brief. Pursuant

to Rule 37.6, no counsel for a party authored this brief in whole or

in part, and no counsel or party made a monetary contribution in-

tended to fund the preparation or submission of the brief. No person

or entity, other than amici, their members, or their counsel, made a

monetary contribution to the preparation or submission of this brief.

1

SUMMARY OF ARGUMENT

The federal district courts have a purpose, expressed

in their very first Rule of Civil Procedure, “to secure the

just, speedy, and inexpensive determination of every ac-

tion and proceeding.” Yet in one area those district courts

are forced to fail at this mission: in the choice of forum in

patent litigation. They are forced to fail by a misreading

of the statute for venue in patent cases. Correction of that

misreading, which is the issue of this case, is an important

issue that requires this Court’s review.

Venue law has long sought to promote fairness and

justice to litigants by ensuring limits on the courts be-

fore which a defendant may be haled. Patent cases have,

for an almost equally long time, presented a special case

requiring a special statutory limitation on venue. This

Court has consistently found special limits on patent

venue proper. Yet the Federal Circuit in VE Holding

Corp. v. Johnson Gas Appliance Co., in reversing course

and opening up practically nationwide venue in patent

cases, ignored not only this consistent line of law but also

the basic notions of fairness that underlie the venue doc-

trine itself.

The error of VE Holding is exacerbated by the lack of

any other jurisprudential vehicle for protecting that req-

uisite fairness in judicial forum selection. Traditionally,

personal jurisdiction and declaratory judgment actions

serve in tandem with venue to counterbalance a plain-

tiff’s choice of forum in a lawsuit. But Federal Circuit

cases sharply limit the effectiveness of both personal ju-

risdiction and declaratory judgments in curtailing patent

plaintiffs’ choice of forum. Thus, venue law is especially

important in maintaining the guarantee of fairness that

the federal judiciary promises to all parties before it.

2

3

As a practical matter, unbridled venue under VE

Holding has led to a remarkable situation of forum shop-

ping in patent cases. Even more remarkably, evidence

suggests that this arrangement may be drawing courts

into competition to attract patent owners—the ones with

unilateral choice over forum—by adopting practices and

procedures favorable to patent owners. And evidence

suggests that this forum shopping has tangible, substan-

tive effects on outcomes, a result contrary to principles

of law and contrary to the very existence of the Court of

Appeals for the Federal Circuit, an institution designed

to eliminate a perceived problem with forum shopping for

favorable substantive patent law.”

VE Holding held that a minor, little noticed “miscella-

neous” amendment to the general venue statute 28 U.S.C.

§ 1391 controlled over the patent-specific venue statute

28 U.S.C. § 1400 Congress enacted decades earlier. In do-

ing so, VE Holding took a small, inconsequential change

and dramatically shifted the balance Congress had care-

fully crafted. It was incorrectly decided, and it is creat-

ing ongoing and increasing problems for the contempo-

rary patent system. This Court should grant certiorari,

overrule VE Holding and the decision below, and hold,

once again, that § 1400 is the exclusive venue statute for

patent cases.

2 See Charles W. Adams, The Court of Appeals for the Federal Cir-

cuit: More than a National Patent Court, 49 Mo. L. Rev. 43, 57 (1984).

ARGUMENT

I. PRFVAILING PATENT VENUE LAw Is F'UN-

DAMENTALLY UNFAIR AND CONTRARY TO

BASIC PRINCIPLES OF THE FEDERAL JUDICIAL

SYSTEM

The importance of the error of VE Holding Corp. v.

Johnson Gas Appliance Co., 917 F.2d 1574 (Fed. Cir.

1990), is made strikingly apparent in view of one of venue

law’s key purposes, namely to ensure fairness in choice

of forum. Returning the patent venue statute to a posi-

tion of greater fairness is a matter of special importance,

not just to litigants but also to the federal judicial system

overall, a matter warranting review on certiorari.

A. VENUE IS PREMISED ON FAIRNESS TO

LITIGANTS, ESPECIALLY DEFENDANTS

The fundamental policy underlying venue is fairness

to both sides of a civil suit. As this Court has said, “venue

is primarily a matter of convenience of litigants and wit-

nesses.” Denver & Rio Grande W.R.R. Co. v. Bhd. of

R.R. Trainmen, 387 U.S. 556, 560 (1967); see also Neirbo

Co. v. Bethlehem Shipbuilding Corp., 308 U.S. 165, 167—

68 (1939). “Venue rules traditionally have served to en-

sure that proceedings are held in the most convenient fo-

rum.” Cass R. Sunstein, Participation, Public Law, and

Venue Reform, 49 U. Chi. L. Rev. 976, 980 (1982).

Venue law is especially concerned with protecting de-

fendants from lawsuits in unfair places. “In most in-

stances, the purpose of statutorily specified venue is to

protect the defendant against the risk that a plaintiff will

select an unfair or inconvenient place of trial.” Leroy v.

Great W. United Corp., 443 U.S. 173, 183-84 (1979) (cit-

4

5

ing, e.g., Braden v. 30th Judicial Circuit Court, 410 U.S.

484, 493-94 (1973)); see also Reuben H. Donnelley Corp. v.

FTC, 580 F.2d 264, 269 (7th Cir. 1978) (“Historically,

venue has been geared primarily to the convenience of

the defendant ... .”).

These concerns of fairness for defendants have moti-

vated jurisprudence on patent venue. In Stonite Prod-

ucts Co. v. Melvin Lloyd Co. it was noted that the original

Judiciary Act had a permissive venue provision “allowing

suit wherever the defendant could be found.” 315 U.S.

561, 563 (1942) (citing Judiciary Act of 1789, ch. 20, § 11, 1

Stat. 73, 79; Jurisdiction and Removal Act of 1875, ch. 137,

§ 1, 18 Stat. 470, 470). In response to the “abuses en-

gendered by this extensive venue,” subsequent statutes

repeatedly cut back on expansive venue until the Act of

Mar. 3, 1897, which defined venue for patent suits. See

ch. 395, 29 Stat. 695; Stonite, 315 U.S. at 563-66. That

patent venue statute specifically “was a restrictive mea-

sure, limiting a prior, broader venue.” Stonite, 315 U.S.

at 566. Stonite thus reaffirms, in the specific patent con-

text, the general principle that venue serves to protec®

defendants from plaintiffs’ unbounded choice of court.

B. THE FEDERAL Crecurit’s VE HOLDING

DECISION ALLOWS PATENT OWNERS NEARLY

UNLIMITED CHOICE OF VENUE

Patent venue law in view of VE Holding entirely up-

ended the principles of fairness and protection of defen-

dants, by allowing patent plaintiffs in most cases to have

unilateral choice of any district court in the nation.

For generations patent venue was exclusively con-

trolled by a patent-specific statute, most recently 28

U.S.C. § 1400. This Court has long rejected any reading of

6

specific patent venue statutes that incorporated the pro-

visions of other, more general venue statutes. See Stonite,

315 US. at 563; Fourco Glass Co. v. Transmirra Prods.

Corp., 353 U.S. 222, 229 (1957).

The 1988 amendments to 28 U.S.C. § 1391(c) made no

indication that they affected Stonite or Fourco—indeed

they left no indication that they affected § 1400 at all.

Judicial Improvements and Access to Justice Act, Pub.

L. No. 100-702, sec. 1013, 102 Stat. 4642, 4669 (1988).3 In-

stead, the House report treated the changes to § 1391(c)

as “miscellaneous amendments” regarding “relatively mi-

nor discrete proposals” to the venue statute. H.R. Rep.

No. 100-889, at 66 (1988). Nevertheless, VE’ Holding ex-

trapolated from these “relatively minor” amendments a

Sweeping change to venue law, abrogating this Court’s

precedents and changing the meaning of § 1400 to incor-

porate for the first time § 1391(c).

The result of VE Holding is anything but “relatively

minor.” One commentator at the time described the hold-

ing “dramatically alter[ing] longstanding common and

statutory law” that had long been advocated for by a

“vocal group,” yet consistently rejected by the Supreme

Court. John A. Laco, Venue in Patent Infringement Ac-

tions: Johnson Gas Fouls the Air, 25 Loy. L.A. L. Rev.

1107, 1107, 1117-18 (1992). As a result of VE Holding,

a patent owner may sue an accused corporate infringer

wherever personal jurisdiction exists. See VE Holding,

51f anything, the amendments seem to have been intended to con-

dense the scope of corporate venue, not expand it. See H.R. Rep.

No. 100-889, at 70 (1988) (finding it improper that “a corporation that

confines its activities to Los Angeles (Central California) should not

be required to defend in San Francisco (Northern California)”). VE

Holding’s conclusion that the amendments expanded patent venue ix

especially curious in view of Congress’s apparently opposite intent.

7

917 F.2d at 1583. As discussed below, for many patent

defendants this is practically no limit. Thus patent own-

ers can select the most desirable forum for their purposes;

as then-Professor (now Federal Circuit judge) Kimberly

Moore wrote, “Anything Goes.” Kimberly A. Moore, Fo-

rum Shopping in Patent Cases: Does Geographic Choice

Affect Innovation? , 79 N.C. L. Rev. 889, 894 (2001).

The decision in VE Holding runs directly contrary

to these longstanding Congressional and Supreme Court

policies surrounding venue, especially those concerned

with fairness and convenience for patent defendants who

currently may be haled before virtually any federal court

in the land.* The harm of that error potentially reaches

all facets of industry, rendering this issue an important

one ripe for review.

C. THERE Is No COUNTERWEIGHT TO THIS

SUBSTANTIAL BOON TO PATENTEES, DUE TO

OTHER FEDERAL Circuit LAW

The importance of a correct venue standard is height-

ened because the other ordinary safeguards of fairness

in choice of foram—personal jurisdiction and declaratory

judgments—are ineffective in the patent context.

“That corporations in non-patent suits may be subject to broad

venue is no justification for patent defendants to be subject to the

same. Patent venue has been a special case for over a century, see

Stonite, 315 U.S. at 565-66, and several reasons justify that special

treatment. For example, patent infringement can occur without any

knowledge of a patent or its infringement. See 35 U.S.C. § 271(a).

Thus there is a particular need to protect a defendant who is com-

pletely unaware that it may be violating patent rights. Addition-

ally, personal jurisdiction often serves as a real limitation on choice

of forum in non-patent cases, but it does not in patent cases. Ser

Section 1.C(1) infra p. 8.

8

1. Under current personal jurisdiction law of the

Federal Circuit, a company that sells an allegedly infring-

ing product nationally can generally be sued in any dis-

trict in the nation, thus making venue proper in any dis-

trict in the nation.

In Beverly Hills Fan Co. v. Royal Sovereign Corp.,

the Federal Circuit. although declining to specifically

adopt a “stream-of-commerce” theory, held that personal

jurisdiction was proper where “defendants, acting in con-

sort, placed the accused fan in the stream of commerce,

they knew the likely destination of the products, and

their conduct and connections with the forum state were

such that they should reasonably have anticipated being

brought into court there.” 21 F.3d 1558, 1566 (Fed. Cir.

1994). Subsequent cases have held that purposefully ship-

ping an accused product into a forum state through an es-

tablished distribution channel, with the expectation that

the goods would be sold in that state, is sufficient for per-

sonal jurisdiction. See, ¢e.g., Nuance Commce'ns, Inc. v.

Abbyy Software House, 626 F.3d 1222, 1234 (Fed. Cir.

2010).

Indeed, the Federal Circuit held that the mere like-

lihood of future distribution was sufficient. In Acorda

Therapeutics Inc. v. Mylan Pharmaceuticals Inc., the

Federal Circuit held that a patent defendant was sub-

ject to personal jurisdiction in Delaware by virtue of a

drug approval application filed with the government. See

817 F.3d 755, 764 (Fed. Cir. 2016). While the defendant

had never sold an allegedly infringing item in Delaware,

the Federal Circuit found personal jurisdiction on the

grounds that the drug approval application expressed

intent to sell the drug nationally, and the defendant’s

planned future conduct gave rise to the requisite mini-

9

mum contacts in Delaware (and, by extension, every ju-

risdiction in the country). See id. at 762-63.

In sum, personal jurisdiction provides little limit on

the courts before which a patent defendant may be

brought, because current law regularly permits nation-

wide personal jurisdiction.

2. Declaratory judgments under 28 U.S.C. § 2201(a)

might also counterbalance the ability of a patent owner to

choose the forum of any litigation. Generally, the Declara-

tory Judgment Act allows an accused infringer in some

circumstances to initiate legal proceedings first; encom-

passed in this ability is that the accused infringer “can

preempt the venue choice of the plaintiff.” J. Jonas An-

derson, Court Competition for Patent Cases, 163 U. Pa.

L. Rev. 631, 644 (2015); see Lisa A. Dolak, Declaratory

Judgment Jurisdiction in Patent Cases: Restoring the

Balance Between the Patentee and the Accused Infringer,

38 B.C. L. Rev. 908, 911 (1997).

Yet patent owners can manipulate the selection of ju-

dicial forum even with declaratory judgment cases. Many

such cases are filed against patent assertion entities,

firms that “use patents . . . primarily for obtaining licens-

ing fees.” Commil USA, LLC v. Cisco Sys., Inc., 1358. Ct.

1920, 1930 (2015) (quoting eBay Inc. v. MercE xchange,

LLC, 547 U.S. 388, 396 (2006) (Kennedy, J., concurring)).

Such entities have as their only business activity the send-

ing of patent demand letters and the filing of patent in-

fringement suits.

A declaratory action may be filed in a court with per-

sonal jurisdiction over the declaratory defendant (here,

the patent assertion entity). Ordinarily, personal juris-

diction is a case-specific determination incorporating no-

tions of “fair play and substantial justice.” Int'l Shoe Co. v.

10

Washington, 326 U.S. 310, 316 (1945). But the Federal

Circuit instead applies a bright-line rule that the send-

ing of patent demand letters can never give rise to per-

sonal jurisdiction. See Red Wing Shoe Co. v. Hockerson-

Halberstadt, Inc., 148 F-3d 1355, 1360 (Fed. Cir. 1998); see

also Avocent Huntsville Corp. v. Aten Int'l Co., 552 F.3d

1324, 1333 (Fed. Cir. 2008); Autogenomics, Inc. v. Oxford

Gene Tech. Ltd., 566 F. 3d 1012, 1020 (Fed. Cir. 2009).

In other words, when a declaratory judgment suit is

filed against a patent assertion entity, the only court with

personal jurisdiction over that entity may very well be

the court of the entity’s place of incerporation. See Megan

M. La Belle, Patent Litigation, Personal Jurisdiction,

and the Public Good, 18 Geo. Mason L. Rev. 43, 71 (2010).

Unsurprisingly, then, patent assertion entities go to

extraordinary lengths to force jurisdiction down the fo-

rum that they prefer (and that accused infringers avoid*).

Some have even opened sham head quarters in “empty of-

fices with telephone lines that no one answers” to manu-

facture facts that favor their jurisdiction of choice. Edgar

Walters, Tech Companies Fight Back Against Patent

Lawsuits, N.Y. Times, Jan. 23, 2014, at A23A, available

at URL supra p. xi; see also Network Prot. Scis., LLC v.

Fortinet, Inc., No. 12-cv-1106, 2013 WL 4479336, at *7

(N.D. Cal. Aug. 20, 2013) (patent owner “manufactured

venue in Texas via a sham”).

®Qne study found that declaratory action filers preferred the

Northern and Central Districts of California, the District of

Delaware, and the Northern District of Illinois received the most

declaratory judgment actions, at 11.4%, 6.5%, 6.1%, and 4.4% of suits

filed, respectively. By contrast, the forum overwhelmingly preferred

by patent holders, the Eastern District of Texas, received a mere

2.5% of declaratory actions. See Daniel Klerman & Greg Reilly, Fo-

rum Selling, 89 S. Cal. L. Rev. 241, app. 5, at 315 (2016).

11

Lest it seem that this declaratory judgment problem

is limited to a specific class of patent owners, consider

that any patent owner—operating company or not—

can manipulate declaratory jurisdiction through trans-

actional strategy. In Xilinx, Inc. v. Papst Licensing

GmbH & Co. KG, a patent was owned by a company in

the Northern District of California, and the accused in-

fringers were companies in the Northern District of Cali-

fornia. See 113 F. Supp. 3d 1027, 1031-32 (N.D. Cal. 2015),

appeal filed sub nom. Altera Corp. v. Papst Licensing

GmbH & Co. KG, Nos. 15-1914, -1919 (Fed. Cir. Dee. 21,

2015). But rather than litigating in the obvious forum,

the patent owner entered a complex assignment and li-

censing arrangement that ultimately placed the patent

with a German patent assertion entity. See id. at 1032.

When the accused infringers sought a declaratory judg-

ment in the Northern District of California, the district

court found no personal jurisdiction under Red Wing

Shoe. See Xilina, 113 F. Supp. 3d at 1037-38. Xilinx thus

demonstrates that any company can effectively circum-

vent declaratory jurisdiction by transferring the patent

to a patent assertion entity.®

Although perhaps questionable, the Federal Circuit’s

holdings both on broad personal jurisdiction over alleged

infringers and on narrow declaratory judgment jurisdic-

tion over patent owners are the current law for all patent

cases. Correction of patent venue law is the most feasible

SEFF and Public Knowledge are participating in Xilinz as am-

ici, and have asked the Federa! Circuit to revisit its law surrounding

personal jurisdiction in (leclaralery judgment actions. See Brief of

Public Knowledge and the Electronic Frontier Foundation as Amici

Curiae in Support of Neither Party, Altrru Corp. v. Papst Licens-

iny GinhH & Co. KG, Nos. 15-1914, -1919 (Fed. Cir. Dec. 21, 2015),

available at URL supra p. ix.

12

and direct way to restore a degree of fairness in forum se-

lection.

II. UNFAIRNESS IN PATENT VENUE HAS SERIOUS

PRACTICAL EFFECTS FOR INDUSTRY, THE

JUDICIARY, AND THE PUBLIC

It is not just legal theory that suggests the unfairness

of patent venue law under VE Holding. Practical experi-

ence, borne out in past cases and known litigation trends,

shows that the unlimited venue regime has substantially

contributed to negative and concerning practices in the

patent system. The decisions have given rise to the phe-

nomenon of district court forum shopping, and equally

and perhaps more important, district court forum selling.

Perhaps in no other area of law is forum shopping

more prominent than in patent litigation. A single

district—the Eastern District of Texas—heard 44% of all

new district court patent cases filed in 2015. See Kaleigh

Rogers, The Small Town Judge Who Sees a Quarter of the

Nation’s Patent Cases, Motherboard (May 5, 2016), URL

supra p. x. In November, 2015 alone, a record 467 patent

lawsuits were filed there, nearly 55% of all cases filed na-

tionally that month. See Jeff Bounds, Patent Suits Flood

East Texas Court, Dallas Morning News, Dec. 13, 2015,

URL supra p. ix. One judge within that district heard

almost one fourth of all patent cases in the entire coun-

try. See Rogers, supra. This is despite the fact that the

district has a small population and no major corporate or

technology industry.

It is clear that parties are engaged in forum shopping.’

It is also clear that the Eastern District of Texas is not

"See Moore, supra, at 892; Colleen V. Chien & Michael Risch, Re-

calibrating Patent Venue, Patently-O (Oct. 6, 2016), URL supra p. ix

13

an appropriate forum for many of those that are sued

for patent infringement. Since 2008, the Federal Circuit

has granted mandamus petitions related to venue arising

from that district at least 19 times.’ Motions to transfer,

and often mandamus, have become the recourse of those

sued in the Eastern District of Texas that have no ability

to argue § 1400(b) controls the forum at the outset. This

strongly suggests that it is frequently improper—and as

discussed below, harmful—for venue to lie in the Eastern

District of Texas.

The practice of forum shopping is “troubling” in itseif

because it “forces the acknowledgment that the promise

of equal, consistent, and uniform application of justice .. .

is unattainable.” Moore, supra, at 893. But it should be

(finding that 83% of the time, patent defendant has no place of busi-

ness at location of suit).

®See In re Google Inc., No. 15-138, 2016 WL 5294800 (Fed. Cir.

July 16,2015), In re Apple, Jnc., 581 F. App’x 8&6 (Fed. Cir. 2014) (per

curiam); In re Nintendo of Am., Inc., 756 F.3d 1363 (Fed. Cir. 2014);

ln re Toyota Motor Corp., 747 F.3d 1338 (Fed. Cir. 2014); In re Toa

Techs, Inc., 543 F. App’x 1006 (Fed. Cir. 2013); In re Nintendo Co.,

544 F. App’x 934 (Fed. Cir. 2013); Jn re Google Inc., 588 F. App’x 988

(Fed. Cir. 2014); In re Oracle Corp., 399 F. App’x 587 (Fed. Cir. 2010);

In re EMC Corp., GTT F.3d 1361 (Fed. Cir. 2012); Jn re Genentech,

Inc., 566 F-3d 1338 (Fed. Cir. 2009); Jn re TS Tech USA Corp., 561

F.3d 1315 (Fed. Cir. 2008); Zn re Hoffmann-La Roche Inc., 587 F.3d

1383 (Fed. Cir. 2009); Jn re Nintendo Co., 689 F.3d 1194 (Fed. Cir.

2009); In re Acer Am. Corp., 626 F.3d 1262 (Fed. Cir. 2010); Jn re Zim-

mer Holdings, Inc., 609 F.3d 1378 (Fed. Cir. 2010); In re Biosearch

Techs., Inc., 452 F. App’x 986 (Fed. Cir. 2011); Jn re Morgan Stanley,

417 F. App’x 947 (Fed. Cir. 2011) (per curiam); J» re Verizon Bus. Net-

work Serus. Inc., 635 F.3d 559 (Fed. Cir. 2011); 7x re Microsoft Corp.,

630 F-3d 1361 (Fed. Cir. 2011). These orders directed the Eastern

District of Texas to consider a motion to transfer; to give proper con-

sideration to certain facts on a motion to transfer; or to transfer the

case contrary to the district court’s previous refusal.

14

even more troubling for at least two reasons: it opens up

the possibility that courts have sought to attract patent

owners by implementing friendly procedures; and it has

demonstrable and substantive effects on outcomes of

cases.

A. SCHOLARSHIP SUGGESTS THAT PATENT

FORUM SHOPPING MAy BE SPAWNING

TROUBLING PRACTICES AMONG COURTS

If patent owners have their complete pick of the lot for

forum, then courts seeking to expand their patent dock-

ets may, consciously or not, implement procedures and

practices favorable to patent owners. Indeed, several aca-

demic commentators contend that this very well may be

happening today.

“Forum selling,” described in Daniel Klerman and

Greg Reilly’s paper of the same name, refers to the phe-

nomenon of judges creating procedural and substantive

laws that favor patent owners, in order to attract cases

to their district. Daniel Klerman & Greg Reilly, Forum

Selling, 89 S. Cal. L. Rev. 241, 243 (2016).? Klerman and

Reilly find significant evidence that the Eastern District

of Texas has engaged in forum selling. Jd. at 247-70; see

also id. at 277-80 (rebutting alternative explanations);

Anderson, supra, at 659-66 (similarly discussing judicial

incentives to attract patent cases).

°Several scholars hypothesize as to court motivations for engag-

ing in forum selling, and identify evidence supporting these motiva-

tions. See id. at 270-77; Anderson, supra, at 661-65. Regardless of

actual motivations, the mere possibility that courts engage in forum

selling is so detrimental to public confidence in our judicial system

that courts should take measures to avoid even the appearance of

forum selling.

15

Many judges in the Eastern District of Texas have

adopted certain procedural and substantive rules that

benefit patent owners—particularly those with weak

patents and no products—to the detriment of small inno-

vators and those accused of infringement. These rules

drive up costs to defendants and work to increase settle-

ment pressure untethered to the merits of a particular

claim for patent infringement.

For example, two judges of that district—who collec-

tively in 2015 heard almost 40% of district court patent

cases in the country'’—until very recently forbade par-

ties from moving for summary judgment absent prior per-

mission from the court. See Sample Docket Control Or-

der for Patent Cases Assigned to Judge Rodney Gilstrap

4 (Nov. 2015) [hereinafter Gilstrap DCO], URL supra

p. xi.’ These judges also continue to require the produc-

tion of all relevant documents without regard to the needs

of the case in light of such things as resources or amounts

in controversy, and without request from the other side,

despite recent changes and clarifications made to Federal

Rule of Civil Procedure 26. See Sample Discovery Order

for Patent Cases Assigned to Judge Rodney Gilstrap 3

(July 2016), URL supra p. xi. The judges furthermore

limit the ability of a party to move for a stay pending the

disposition of a summary judgment motion or a motion to

dismiss. Gilstrap DCO, supra, at 5."

See Brian C. Howard, Lex Machina 2014 Year in Review 1, 15

(2014), available al URL supre p. ix.

‘! Judge Schroeder’s standing orders also previously contained the

same relevant rules as Judge Gilstrap’s standing orders. Judge

Schroeder’s orders may be found at Docket Control Order (July 6,

2016), URL supra p. ix.

TL ix likely that many, if not all, of these requirements are incon-

sistent with the Federal Rules of Civil Procedure. See Fed. R. Civ. P.

16

These rules, although facially neutral, give significant

advantages to patent owners with minimal assets, dubi-

ous patents or infringement claims, or a goal of extracting

undeserved settlements.'* Non-practicing entities whose

sole business is asserting patents—those given broad lat-

itude by the rule of VE Holding and insulated by the rule

of Red Wing Shoe—often have little by way of documents

to produce, making the burden of automatic, virtually un-

limited document discovery fall primarily on the accused

infringer. Similarly, roadblocks to summary judgment

and motions to stay favor those with weak patents or

claims of infringement, who often seek to delay merits de-

cisions while simultaneously increasing litigation costs on

defendants, in order to extract settlements that, although

significant, still fall below the cost of trial.

If the meaning of “resides” in § 1400 were restored

to its original and unchanged intent, the ability of patent

owners to forum shop would be undercut. Importantly,

courts could not “compete” for patent litigation as choice

12, 26, 56 & 83. With respect to the judges’ previous rules regarding

moving for summary judgment, the Eleventh Circuit has specifically

held that an “advance screening” requirement violates both substan-

tive and procedural rights. See Brown v. Crawford County, 960 F-2d

1002, 1006—10 (11th Cir. 1992). Also, the rigid and remarkably broad

discovery rules contradict the requirement that “the court must limit

the frequency or extent of discovery” in appropriate situations, Fed.

R. Civ. P. 26(b)(2)(C), and the requirement that discovery “be propor-

tional to the needs of the case,” id. at 26(b)(1). It can be hypothesized

that one reason the judges’ rules have gone unchallenged is that de-

nials of summary judgment and general discovery orders are gener-

ally not appealable, and mandamus is a rare remedy. See Klerman &

Reilly, supra, at 302 n.338.

'8The dearth of declaratory judgment filings in the Eastern Dis-

trict of Texas suggests that accused infringers also believe that the

jurisdiction’s rules are unfavorable. See Klerman & Reilly, supra, at

2TT-78.

17

of forum would likely be dictated by factors controlled by

general business advantage and not litigation advantage.

The negative incentive structure caused by VE Holding

suggests the error in that case.

B. PRIOR CASES DEMONSTRATE THAT UN-

LIMITED VENUE PRODUCES SUBSTANTIVE

OUTCOMES UNFAIRLY FAVORING PATENT

ASSERTERS

The reality of today’s patent litigation shows exactly

how important venue has become. Case studies of patent

owner litigation strategies provides strong evidence that

patent owners take advantage of nationwide venue and

specifically seek out districts such as the Eastern District

of Texas in order to leverage litigation advantages that

may not otherwise accrue based on merit.

1. Cases show that patent owners have used forum

choice to obtain favorable substantive results.

Eclipse IP is a high-volume repeat patent assertor.

Between 2010 and 2014, Eclipse IP filed over a hundred

lawsuits in the Central District of California. Scheduling

Conference Proceedings at 1, Eclipse IP LLC v. PayBy-

Phone Techs., Inc. (“PayBy Phone”), No. 2:14-cv-154 (C.D.

Cal. May 29, 2014). Judge Wu, of that district, found that

Eclipse IP “appears to generally seek modest lump-sum

licensing payments,” perhaps suggesting that “Eclipse is

leveraging the cost of litigation, rather than the strength

of its patents.” Jd. Judge Wu subsequently stated that he

was “concerned that at least some of the Eclipse Cases

have the potential for resolution to be driven primarily

by the costs of defense.” Order Coordinating and Stay-

ing Cases at 2, PayByPhone, No. 2:14-cv-154 June 10,

2014). Consequently, he stayed all but a small portion of

18

the cases, and ordered Eclipse IP to file a notice of re-

lated cases for any further cases filed related to the same

patents. Id. at 2-3.

In only three months from issuing that order, Judge

Wu invalidated claims from three different Eclipse IP

patents on a motion to dismiss, holding that they claimed

ineligible subject matter and failed to meet the require-

ments of 35 U.S.C. § 101. See Ruling on Motion to Dismiss

for Lack of Patentable Subject Matter, PayByPhone,

No. 2:14-cy-154 (Sept. 4, 2014) (captioned Eclipse IP LLC

v. McKinley Equip. Corp.).

Rather than appealing the merits of that now-final

order, Eclipse IP apparently attempted to jurisdiction-

ally end-run around it. Using familially-related" patents,

Eclipse IP filed another round of 53 lawsuits. None were

filed in the Central District of California; 40 were filed in

the Eastern District of Texas."

One Texas defendant moved to dismiss Eclipse IP’s

suit, arguing that the claims at issue in Texas were “mate-

rially indistinguishable” from those invalidated by Judge

Wu and similarly failed to meet the requirements of § 101.

See Pro-Source’s Motion to Dismiss for Failure to State a

Claim at 1, Eclipse IP. LLC v. Pro-Source Performance

4A patent owner may, under certain circumstances, obtain a so-

called “continuation” patent that is generally similar in content and

legal treatment to the original patent. See 35 U.S.C. § 120. However,

a legal determination as to the original patent will not necessarily

affect the continuation, which is what allowed Eclipse IP to assert

patents in a second forum after the Central District of California had

invalidated others. Cf. SRI Int'l, Inc. v. Internet Sec. Sys., Inc., 511

F.3d 1186, 1198 (2008) (of several familially-related patents, holding

one anticipated by prior art and others not).

1 Amici determined this by searching PACER for cases filed with

“Eclipse IP” as plaintiff and “patent” as nature of suit.

19

Prods., Inc. (“Pro-Source”), No. 2:15-cy-363 (E.D. Tex.

June 11, 2015).

Eclipse IP moved to strike the motion, arguing it was

not allowed by Judge Gilstrap’s rules. See id.; Emergency

Motion of Plaintiff Eclipse IP LLC to Strike Defendant

Pro-Source Performance Products, Inc.’s Motion to Dis-

miss at 2, Pro-Source, No. 2:15-cv-363 (June 24, 2015)."®

Though the motion to strike was denied, see Order Deny-

ing Motion to Strike, Pro-Source, No, 2:15-cv-363 (July

6, 2015), the principal motion, as well as several “me-too”

motions filed by other defendants, languished for months.

In the interim, the parties engaged in significant discov-

ery, and were required to complete substantially ali doc-

ument. discovery. See Docket Control Order, Eclipse IP

LLC v. Alfa Vitamin. Labs, Inc., No. 2:15-cv-353 (E.D.

Tex. Aug. 24, 2015) (consolidated case with Pru-Source;

setting case deadlines). Over time, each defendant set-

tled as litigation costs mounted. On February 25, 2016,

over 9 months after the first motion to dismiss was filed,

the case ended when the last defendant settled. Order

Granting Joint Motion to Dismiss, Eclipse IP, No. 2:15-

ev-353 (Feb. 25, 2016). The court never ruled on any of

the motions to dismiss. Jd.

Eclipse IP’s litigation activities are evidence of a de-

sire to take advantage of the forum-specific procedural

and substantive rules offered by the Eastern District of

Texas. By filing in that district, Eclipse IP was able to

execute on a goal of “leveraging the cost of litigation” to

16 At the time, Judge Gilstrap did not allow defendants to file mo-

tions to dismiss that argued the patent failed to claim patentable sub-

ject matter, absent prior leave of court. This Judge’s directive has

since been superseded by a new procedure. See Michael C. Smith,

New ED Tex Tools for Handling Pre-Markman 101 Motions, ED-

Texweblog (Nov. 11, 2015), URL supra p. xi.

20

obtain “modest lump sum payments,” something it failed

to do in the Central District of California.

2. Cases also show that patent owners choose the

most costly and inconvenient fora for defendants.

Consider a situation where two small companies, one

in Florida and another in California, are accused of sep-

arately infringing a patent. Most convenient to the de-

fendants would be for the Florida company to be sued in

Florida, and the California company to be sued in Cali-

fornia. It might be reasonable for both companies to be

sued in California, or both in Florida. But one would

truly struggle to justify suing the California company in

Florida and the Florida company in California.

Yet that is precisely what one patent owner did. Ship-

ping and Transit, LLC is one of the most prolific patent

lawsuit filers, having opened over 120 cases in the last

twelve months.'’ The Florida-based patent asserter

has in at least one instance sued a California-based e-

commerce retailer in Florida, see Shipping & Transit,

LLC v. LD Prods., Inc., No. 9:16-cv-81040 (8.D. Fla. com-

plaint filed June 21, 2016), and a Fle sida-based corpora-

tion in California, see Shipping & Transit, LLC v. Nep-

tune Cigars, Inc., No. 2:16-cv-03836 (C.D. Cal. complaint

filed June 1, 2016).

The result is that both companies must now expend

additional resources to defend their respective cases on

the opposite coast of the country—a result likely to nudge

those defendants toward settlement irrespective of the

merits of the case. This is a result made possible only by

an overbroad reading of the venue statute that results in

In the interest of disclosure, amicus EFF notes that it cur-

rently represents parties in litigation against Shipping and Transit,

although in an action unrelated to those mentioned here.

21

dispensing considerations of fairness from the choice of

forum.

Ill. IMMEDIATE REVIEW OF THIS CASE Is

NECESSARY TO PREVENT THE ONGOING

HARMS OF THIS UNPRODUCTIVE GAMING OF

VENUE

The ability of patent owners to manipulate venue so

as to significantly increase costs on defendants—an abil-

ity highly constrained by the rule of Fourco, and undone

by VE Holding-—suggests Congress did not intend this

massive shift in the meaning of its specific venue statute

when it made a “miscellaneous” change to the wording of

the general venue statute.

The effect of this venue free-for-all for patent own-

ers especially harms small companies and American con-

sumers. They are the ones least able to secure distant

counsel, travel to a distant forum, and learn the proce-

dures of a new jurisdiction. They are also the ones most

likely to succumb to undue settlement pressure made

only greater by patent owners’ ability to exploit district

court differences in procedural and substantive rules. In-

sofar as the viability of such companies and consumers is

central to the economic and innovative output of this na-

tion, it is especially important to ensyre that venue rules

work toward fairness and justice for all parties rather

than toward unilateral benefits for some. Those inter-

ests of fairness and justice favor review of this case and

a granting of a writ of certiorari.

CONCLUSION

For the foregoing reasons, this Court should grant the

writ of certiorari.

Respectfully submitted,

VERA RANIERI

Counsel of Record

ELECTRONIC FRONTIER

FOUNDATION

815 Eddy Street

San Francisco, CA 94109

(415) 436-9333

vera@eff.org

CHARLES DUAN

PUBLIC KNOWLEDGE

1818 N Street NW, Suite 410

Washington, DC 20036

(202) 861-0020

cduan@publicknowledge.org

Counsel for amici curiae

October 2016

Rev. Oe) See!