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

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## Record

- **Collection:** Supreme Court brief
- **Document type:** Amicus Curiae Brief
- **Published:** January 1, 2016

## Text

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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Ps << ob.o60 eb 66566 64.66 0/6 8% i, 6
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a —té‘(‘“‘é xR a a EE i, 13
ING | 6 ou 'n« os eele6e6 es Oke twa i)

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!

---

Source: Frix Law Library, https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40385016_0705%3A07. Public record. Not legal advice.