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

No. 16-341 FEB 6 - 2017

a rats. OFFICE OF THE

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 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 PETITIONER

VERA RANIERI CHARLES DUAN

ELECTRONIC FRONTIER Counsel of Record

FOUNDATION PUBLIC KNOWLEDGE

815 Eddy Street 1818 N Street NW, Suite 410

San Francisco, CA 94109 Washington, DC 20036

(415) 436-9333 (202) 861-0020

vera@eff.org cduan@publicknowledge.org

Counsel for amici curiae

TABLE OF CONTENTS

pe | 8 TF) OS),

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

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

RE i ET Ree a re a

I. Venue Law Is Concerned with Fairness, Especially

for Those Who Do Not Choose the Forum .......

A. General Venue Jurisprudence Regularly Ap-

peals to Notions of Fairmess.............

B. The Development of Patent Venue Law Re-

flects This Concern for Fairness ..........

Il. Unfairness Is the Evident Result of Broad Patent

Venue Under VE Holding ................

A. Broad Venue Has Enabled Remarkable Forum

Shopping in Patent Cases ..............

B. Broad Venue Has Encouraged Imbalance in Lo-

cal Patent Procedural Rules.............

C. Forum Shopping and Procedural Tilts Espe-

cially Harm Small Companies and Innovators

III. Policy Arguments and Interests of Patent Owners

Do Not Outweigh These Fairness Concerns ..... .

A. Multidistrict Litigation, Not Broad Venue, Is

the Right Tool for Suing Multiple Infringers .. .

B. Supposed Judicial Specialization Does Not Jus-

EE a

C. Patent Owners Currently Do Not Often De-

pend on Benefits of Home District Litigation . .

IV. Patent Law Merits Unique Venue Rules Distinct

a re i aa

St. was 4 a i 6b 6 We et oe ee eee

. 22

TABLE OF AUTHORITIES

CASES

Acer America Corp., In re,

Wedd 1268 (Ped. Cir. 3010)... ww ee eee 13

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

NS 203i o Gk Ss 6 Oe & 666s 1, 24

Apple Inc., In re,

374 F. App’x 997 (Fed. Cir.2010)......-....... 2

Apple, Inc., In re,

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

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

ee eee eee 24

Biosearch Technologies, Inc., In re,

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

Braden v. 30th Judicial Circuit Court,

cw... 7s sl es ee Oe OO 6

Brite Smart Corp. v. Google Inc.,

No. 2:14-cv-760, 2015 WL 4638215 (E.D. Tex. Aug. 3,

Ee he eas kk Se ee ea 68 6 hoe ka 17

Brunette Machine Works, Lid.

v. Kockum Industries, Inc.,

ee ed eh eke 8 oe ee eee 23

Carnival Cruise Lines, Inc. v. Shute,

a a a, 5-6

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

Nee eee aa we oe a we 12

Cortez Byrd Chips, Inc.

v. Bill Harbert Construction Co.,

es 5 a6 a ot 2 806 6 oe ele es 24

(2212)

Denver & Rio Grande Western Railroad Co.

v. Brotherhood of Railroad Trainmen,

IS a 5

Earl v. Southern Pacific Co.,

EE 7

EMC Corp., In re,

GT7 F.3d 1361 (Ped. Cir.2012) ..............- 13

Eon-Net LP v. Flagstar Bancorp,

653 F.3d 1314 (Fed. Cir. 2011) ............... 18

Fourco Glass Co. v. Transmirra Products Corp.,

Ww a ae eh a eee 6 ee « 9, 23, 25

Fox Broadcasting Co. v. Personal Audio, LLC,

No. 1:13-cv-11794 (D. Mass. filed July 26,2013) ..... 2

Genentech, Inc., In re,

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

General Electric Co. v. Marvel Rare Metals Co.,

RE 8

Gonzalez v. Infostream Group, Inc.,

No. 2:14-cv-906, 2016 WL 1643313 (E.D. Tex. Apr. 26,

iO. chee Sed cS aoe Oak ee WO ee ha eS 16

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,

Duh Cun sid k bie alk aes 665 6} 13, 16-17

Gorham Manufacturing Co. v. Watson,

poe ee GT ee ee 7

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

SS a a ne 1, 18, 25

Hoffmann-La Roche Inc., In re,

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

Hohorst, In re,

I a as iin le kaha a omc 7, 23

Iris Connex, LLC v. Dell, Inc.,

No. 2:15-cv-1915, 2017 WL 365634 (E.D. Tex. Jan. 25,

Pr nee oe aa a ae ale a a 0 6 es we 14, 16, 18

Keasbey & Mattison Co., In re,

EE ee 7, 23

Leroy v. Great Western United Corp.,

oe ae a eb 66s oes 6, 10, 19

Markman v. Westview Instruments, Inc.,

SE 24

Medtronic, Inc. v. Mirowski Family Ventures, LLC,

es 5S oss 6's 'd 06 ook 68 oe 8 23

Microsoft Corp., In re,

630 F.3d 1361 (Fed. Cir.2011) ............... 13

Misraje v. Carolla,

No. BC499379 (Cal. Super. Ct. filed Jan. 17,2013). ... 2

Morgan Stanley, In re,

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

National Button Works v. Wade,

72 F. 298 (C.C.S.D.N-Y. 1896) ..........-22008- 7

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

CS ais 6 6 6 bee 6 ee 6 eee 0 3 8 l

Neirbo Co. v. Bethlehem Shipbuilding Corp.,

a ae in ee ob aS See 6 6 8 0 8 5,9

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

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

ie che es a eee 2k So 6.6 ok eS ER ee 22

Nintendo Co., In re,

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

(v)

Nintendo Co., In re,

589 F-3d 1194 (Fed. Cir.2008) ............-... 13

Nintendo of America, Inc., In re,

766 F-3d 1968 (Fed. Cir.2014) ..............-. 13

Noonan v. Chester Park Athletic Club Co.,

76 F. 334 (C.C.S.D. Ohio 1896) ............... 7

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

EE Le os bk be eae oa ee A 1,16

Oracle Corp., In re,

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

Personal Audio, LLC

v. ACE Broadcasting Network, LLC,

No. 2:13-cv-14 (E.D. Tex. filed Jan.7,2013) ....... 2

Pure Oil Co. v. Suarez,

n,. .. se bh ekcue es ele eee 9, 24

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

148 F.3d 1355 (Fed. Cir. 1998) ............... 24

Reuben H. Donnelley Corp. v. FTC,

580 F.2d 264 (7th Cir. 1978). ........-.22--6: 6

Schnell v. Peter Eckrich & Sons, Inc.,

IS bu eg ie wa be Sib ele ce Bin 9, 23

Stonite Products Co. v. Melvin Lloyd Co.,

ws a ar aacG Ge A Se ae ee 9, 23

Toa Techs, Inc., In re,

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

Toyota Motor Corp., In re,

747 F.3d 1838 (Fed. Cir.2014) .............-.4. 13

TS Tech USA Corp., In re,

551 F.3d 1315 (Fed. Cir. 2008) ............... 13

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

917 F.2d 1574 (Fed. Cir. 1990) ......... 10, 18-21, 25

(vi)

Verizon Business Network Services Inc., In re,

635 F.3d 559 (Fed. Cir.2011) .........-...46-. 13

Westinghouse Air-Brake Co.

v. Great Northern Railway Co.,

~~~ cob eee eceeces ec cececes 7

Zimmer Holdings, Inc., In re,

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

STATUTES

ee 2)

Se ) ) re 21

De Cece deo eee eee eee eees 8

DEC he ebe cece ever oesccces 20

EE 20

Deak ee b ey bees eee és ete eee. 20

EE ee ee 16

Gea. ides ese be ec ec ceeeess 6

DCE hs a ob dc ee esc ese eee. 12, 16, 19

ee ce tse pee ep eens 21

Act of Aug. 13, 1888, ch. 866,25 Stat.433........... 7

Act of Mar. 3, 1887, ch. 373, 24 Stat. 552 (formerly Sec. 51

of the Judicial Code codified at 28 U.S.C. § 112 (1940)) ... 7

Act of Mar. 3, 1897, ch. 395,29 Stat.695 ........ 7-9, 23

Judiciary Act of 1789 (1789 Act), ch. 20,1 Stat.73..... 7-9

Patent Cases Pilot Program Act, Pub. L. No. 111-349, 124

ees. ee pee eee ese. 21, 24

(vit)

OTHER SOURCES

29 Cong. Rec. 1900 (Feb. 16, 1897)............. 8, 23

Am. Intellectual Prop. Law Ass’n, 2015 Report of

the Economic Survey: Summary Report (2015), avail-

able at http://www.aipla.org/about/newsroom/PR/Pages/

ne . op od ebsocebhcaeeeees 18

J. Jonas Anderson, Court Competition for Patent Cases,

ee en. «cab eb teens hes 15

Bloomberg Inc., Company Overview of Lex Machina

Inc. (Jan. 17, 2017), http://www.bloomberg.com/research/

stocks/private/snapshot.asp?privcapid=119082530 ..... 11

Robert A. Cahn, A Look at the Judicial Panel on Multi-

district Litigation, 72 F.R.D. 211 (1977). ........... 20

Colleen V. Chien & Michael Risch, Recalibrating Patent

Venue (Santa Clara Univ. Legal Studies, Research Pa-

per No. 10-1, Oct. 6, 2016), available at https-//ssrn.com/

TTT cieosvcnestacdeckhvavess 18, 22

Brian C. Howard, Announcing the Patent Litigation

Year in Review 2015, Lex Machina (Mar. 16, 2016),

https:/lexmachina.com/14318/ .... 2... 62 ee ee eee 11

Brian C. Howard, Lex Machina Q4 2016 Litigation Up-

date, Lex Machina (Jan. 12, 2017), https://lexmachina.

com/q4-litigation-update/..........-.-565086-. 11-12

OPED Gc cccceoceceeececes 21

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

CEE So ce cdcdevsccesesveeceuectn 15

John A. Laco, Venue in Patent Infringement Actions:

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

DS 60 é 6 6666668 600 604 66h oe woes 10

(vii)

Letter Brief Requesting Leave to File Summary Judg-

ment of Invalidity, Gonzalez v. Infostream Group, Inc.,

No. 2:14-cv-906, 2016 WL 1643313 (E.D. Tex. July 16,

Ph. ton ween bo Ok es Cb Se Me OOS Oe oe 16

Yan Leychkis, Of Fire Ants and Claim Construction, 9

EES cc ipaececesewoes cece. 2

Brian J. Love & James Yoon, Predictably Expensive: A

Critical Look at Patent Litigation in the Eastern District

of Texas, 20 Stan. Tech. L. Rev. 1 (2017) ....... 11, 14, 16

Matthew Sag, /P Litigation in US. District Courts:

1994-2014, 101 lowa L. Rev. 1065(2016) ......... 12, 15

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

Reform, 49 U. Chi. L. Rev. 976 (1982) ............. 5

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.... . 22

James Ware & Brian Davy, The History, Content, Ap-

plication and Influence of the Northern District of Cali-

fornia’s Local Patent Rules, 25 Santa Clara Computer &

rn . 6 6s swe» a 6'e 60 6 6 6 8 0:8 24

When Patents Attack!, This Am. Life (July 22, 2011),

http://www.thisamericanlife.org/radio-archives/episode/

O6ifeteem-pebemie-ditads .. eee 22

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 35,000 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

cases. 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., 1384S. Ct. 2120 (2014); Octane Fitness, LLC v.

Icon Health & Fitness, Inc., 134 8. Ct. 1749 (2014).

'Pursuant to Supreme Court Rule 37.3(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

As loud and bombastic as it may be while on the air,

Adam Carolla’s podcast is a small operation. Started in

2009 by the well-known comedian and friends, the Adam

Carolla Show is recorded, produced, and distributed out

of a studio in Glendale, California.

When in 2013 Personal Audio brought a patent in-

fringement suit against Carolla’s company, the ACE

Broadcasting Network, the Southern District of Califor-

nia would have been a logical choice of venue. Or the

District of Massachusetts, since Personal Audio’s key em-

ployees and witnesses were there, Personal Audio itself

was founded in Massachusetts, and the named inventors

on the patent are three New Englanders.

Yet the venue of the suit was neither. Personal Au-

dio v. ACE Broadcasting was filed over 1,500 miles from

either California or Massachusetts, in a small Texas town

perhaps best known for its annual Fire Ant Festival.”

It is almost comedic that for a lawsuit between a Mas-

sachusetts patent holder and a California audio show, the

venue is Texas. It is a result that should not occur un-

der this Court’s precedents, which have sharply limited

venue in patent cases for over a hundred years. Yet it is

a result that happens every day now, because the Court

of Appeals disregarded those controlling precedents and

devised a new, far broader rule of patent venue.

2This account is drawn from court documents in Pers. Audio,

LLC v. ACE Broad. Network, LLC, No. 2:13-cv-14 (E.D. Tex. filed

Jan. 7, 2013), Fox Broad. Co. v. Pers. Audio, LLC, No. 1:13-cv-11794

(D. Mass. filed July 26, 2013), and Misraje v. Carolla, No. BC499379

(Cal. Super. Ct. filed Jan. 17, 2013). See also In re Apple Inc., 374 F.

App’x 997 (Fed. Cir. 2010); Yan Leychkis, Of Fire Ants and Claim

Construction, 9 Yale J.L. & Tech. 193, 195 (2007).

2

3

Petitioner meticulously and correctly lays out the his-

torical and statutory interpretation reasons for rejecting

the Federal Circuit’s attempt to rewrite patent venue

law. But the error is reflected at another, more basic

level: the underlying purpose of venue itself.

Venue law is intended to promote convenience for the

parties and fairness in the adjudicatory system. But

on the contrary, the Federal Circuit’s decision enabling

broad patent venue exacerbates unfairness and inconve-

nience. That decision should be reversed.

1. This Court has long recognized that venue should

promote fairness. The case law reflects predominant con-

cerns about convenience and reasonableness to parties,

primarily defendants, who may be haled into a court uni-

laterally chosen by another litigant.

Patents are no exception to this accepted rationale for

venue. The legislative history of the patent venue statute

reflects Congress’s objective of fairness, especially for de-

fendants. This Court’s analysis of that statute has drawn

from that fairness reasoning as well.

2. Yet venue in patent cases today reflects anything

but fairness. Patent owners have practically unfettered

ability to choose the forum offering the most advantage.

This ratchets up costs, particularly where judges have

adopted procedural rules that impose those costs early

and often. As a result, defendants—especially those of

smaller means—often must settle patent lawsuits based

on the cost of litigation rather than the merits. Such a

result of broad venue is neither convenient nor fair.

A wide and growing body of evidence, reviewed in de-

tail in this brief, reveals the remarkable scope of unfair-

ness and prejudice engendered by broad patent venue.

This strongly suggests that the patent venue statute, un-

4

der the Federal Circuit’s interpretation, fails to live up

to its intended purpose. A correct interpretation of that.

statute will thus realign statutory effect with intent.

3. Any supposed “benefits” of the Federal Circuit’s

misinterpretation of patent venue are of minimal conse-

quence. The ability of patent owners to consolidate mul-

tiple defendants in a single proceeding, for example, is

best left to multidistrict litigation procedure rather than

broad venue. The value of district court “specialization”

in patent law resulting from forum shopping is also bet-

ter addressed by Congress, and indeed already has been

addressed by act of Congress. And though one might

worry about burdening patent owners with an obligation

to travel to distant forums, the empirical evidence shows

that patent owners themselves do not worry about this

much, often voluntarily filing their cases in distant fo-

rums.

And lest it be wondered why patent law enjoys a spe-

cial venue statute in the first place, there is good reason

to treat venue in patent cases differently. The unique and

complex nature of patent litigation, and in particular the

distinct procedural rules applied only in patent cases, sug-

gest a need for distinct venue rules.

Ultimately, the above attempts to save the Federal

Circuit’s rule do not outweigh the fundamental concern.

Venue law in patent cases, which ought to promote fair-

ness and convenience, now breeds forum shopping, ques-

tionable local rules, and twisted triangulations of court lo-

cation like the California-Massachusetts-Texas situation

of Adam Carolla. The error is easy to fix: This Court must

simply apply its own precedents and reverse the Federal

Circuit. Nothing should stand in the way of doing so.

ARGUMENT

I. VENUE LAW Is CONCERNED WITH FAIRNESS,

ESPECIALLY FOR THOSE WHO Do Not CHOOSE

THE FoRUM

Fairness concerns have long guided judicial venue.

Rules designating the appropriate forum for litigation

seek to ensure convenience and reasonableness for the

parties, especially defending parties who do not choose

or negotiate for the desired forum. This Court’s jurispru-

dence on general venue affirms this fairness principle,

and the development of venue law specifically relating to

patent cases comports with the fairness principle as well.

A. GENERAL VENUE JURISPRUDENCE REGU-

LARLY APPEALS TO NOTIONS OF FAIRNESS

The fundamental policy underlying venue is fairness

and convenience to both sides of a civil suit. As this Court

has said, “venue is primarily a matter of convenience of

litigants and witnesses.” 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 ensure that proceedings are held in the most

convenient forum.” Cass R. Sunstein, Participation, Pub-

lic Law, and Venue Reform, 49 U. Chi. L. Rev. 976, 980

(1982); see also Carnival Cruise Lines, Inc. v. Shute, 499

US. 585, 595 (1991) (holding that even where parties

agree to a venue by contract, “forum-selection clauses

contained in form passage contracts are subject to judi-

cial scrutiny for fundamental fairness” such as whether a

particular forum was chosen “as a means of discouraging

[plaintiffs] from pursuing legitimate claims”).

5

6

Venue law is especially concerned with protecting par-

ties without the means or ability to choose the forum, so

those parties are not subject to lawsuits in unfair places.

“In most instances, 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 US. 173, 183-

84 (1979) (citing, 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 . . . .”); cf. Carnival Cruise,

499 US. at 595 (noting that fairness concerns may arise

for the plaintiff where defendant seeks to enforce venue

clause in form contract written by defendant).

In contrast, the convenience of the party choosing the

forum is generally not considered sufficient to justify an

expansive view of venue. For example, the fact that a

patent owner may have to sue in multiple districts in or-

der to reach all alleged infringers is not a concern tradi-

tionally addressed by venue. “The desirability of consoli-

dating similar claims in a similar proceeding,” this Court

has said, does not justify interpreting a venue statute “to

give the plaintiff the right to select the place of trial that

best suits his convenience.” Leroy, 443 U.S. at 184.8

Venue law thus aims to ensure fairness between the

litigants in a case, and more specifically aims to protect

defendants’ interests in convenience and reasonableness

of choice of forum.

3Indeed, Congress recently enacted a law making it harder for

patent owners to join multiple defendants into a single suit, a law

certainly not enacted for the convenience of patent owners. See 35

US.C. § 299.

7

B. THE DEVELOPMENT OF PATENT VENUE LAW

REFLECTS THIS CONCERN FOR FAIRNESS

Venue in patent cases has been no exception to those

general principles of fairness and protection of defen-

dants. Appeals to fairness may be found both in the leg-

islative history of patent venue law and in this Court’s

interpretation of that law.

1. The legislative history of patent venue adopts fair-

ness toward defendants as a primary rationale. The statu-

tory provision for patent venue, as Petitioner notes, origi-

nates in the Act of Mar. 3, 1897, which permitted a patent

suit in the defendant’s place of incorporation or in any

of the defendant’s places of business where infringement

had occurred. Ch. 395, 29 Stat. 695; see Br. Pet’r 2-3.

Proponents of the 1897 Act viewed it as constrict-

ing patent venue. Up until then, venue in patent cases

was arguably‘ based on the Judiciary Act of 1789, which

broadly permitted suit against a defendant in any dis-

trict “in which he shall be found at the time of serving

* Uncertainty arose in view of two intervening statutes that gen-

erally imposed even more limited venue than that in the 1897 Act.

Act of Mar. 3, 1887, ch. 373, 24 Stat. 552 (formerly Sec. 51 of the Ju-

dicial Code codified at 28 U.S.C. § 112 (1940)); Act of Aug. 13, 1888,

ch. 866, 25 Stat. 433. Ifthose general venue statutes applied to patent

cases, then the later 1897 Act would have acted as a broadening of

venue. However, two cases cast into doubt the applicability of the

1887 and 1888 Acts to patent suits. See In re Hohorst, 150 US. 653,

661-62 (1893); In re Keasbey & Mattison Co., 160 US. 221, 230 (1895).

Lower courts thereafter generally did not apply the 1887 and 1888

Acts to patent cases. See Nat’l Button Works v. Wade, 72 F. 298, 299

(C.C.S.D.N-Y. 1896); Noonan v. Chester Park Athletic Club Co., 75

F. 334, 335 (C.C.S.D. Ohio 1896); Earl v. S. Pac. Co., 75 F. 609, 610

(C.C.N.D. Cal. 1896); Westinghouse Air-Brake Co. v. Great N. Ry.

Co., 88 F. 258, 261 (2d Cir. 1898). But see Gorham Mfg. Co. v. Wat-

son, 74 F. 418, 418-19 (C.C.D. Mass. 1896).

8

the writ.” Ch. 20, § 11(b), 1 Stat. 73, 79. During debate

in the House, Representative Mitchell observed that “a

great many patent lawyers” agreed that the bill to be-

come the 1897 Act would “limit that jurisdiction” of the

circuit courts in patent cases. 29 Cong. Rec. 1900 (Feb. 16,

1897). He later rebutted a contention that the bill would

enlarge patent venue by saying that the bill “does not ex-

tend, but on the contrary that it defines, the jurisdiction

of the courts.” Jd. at 1901.

This constriction of venue had a recognized purpose

of protecting defendants in patent lawsuits. Represen-

tative Mitchell compared the 1897 Act to then-prevailing

law and explained that “this act makes it easier for the de-

fendant, and really limits to that extent the jurisdiction of

the court.” 29 Cong. Rec. at 1901. Representative Lacey,

who introduced the bill, also noted that defendants would

be safe from suits in undue places, as “[iJsolated cases of

infringement would not confer this jurisdiction.” Jd. at

1900.

The history of the 1897 Act thus reflects congressional

intent to promote fairness in venue, particularly with re-

spect to patent defendants. Since the language of that

act is the basis of the current 28 U.S.C. § 1400(b), see Br.

Pet’r 2-6, that legislative history continues to be relevant

today.

2. This Court’s decisions also confirm that fairness

for defendants has motivated patent venue law. Patent

venue “confers upon defendants in patent cases a privi-

lege in respect of the places in which suits may be main-

tained against them.” Gen. Elec. Co. v. Marvel Rare Met-

als Co., 287 U.S. 430, 435 (1932). The key observation is

that venue is a “privilege” for “defendants.”

9

Stonite Products Co. v. Melvin Lloyd Co. recognized

the importance of fairness to litigants in its comprehen-

sive review of the history of venue law. See 315 US. 561,

563-66 (1942). Beginning with the broad venue provision

of the 1789 Act that originally controlled patent cases,

the Court observed that the “abuses engendered by this

extensive venue” prompted Congress to enact “a restric-

tive measure,” namely the 1897 Act specifically govern-

ing patent venue. Stonite, 315 U.S. at 563, 566.

A later case would put a gloss upon Stonite’s refer-

ence to “abuses engendered,” connecting that concern

with “the policy behind the applicable venue statute.”

Schnell v. Peter Eckrich & Sons, Inc., 365 U.S. 260, 262

(1961) (quoting Neirbo, 308 U.S. at 168) (quotation marks

omitted); see also Pure Oil Co. v. Suarez, 384 U.S. 202, 207

(1966) (discussing the “particular reasons why Congress

had passed” the patent venue statute). Stonite and its

progeny thus recognized that restrictive patent venue

had the purpose of curbing abuses, presumably by patent

plaintiffs bringing suits in inconvenient or inappropriate

forums. And when this Court revisited the holding of

Stonite, it cited with approval the “reasons and purposes

for” the patent venue statute discussed therein. Fourco

Glass Co. v. Transmirra Prods. Corp., 353 U.S. 222, 225

(1957).

Legislative history and case law thus both tend to

the conclusion that patent venue law, like all venue law,

strives for fairness to litigants and especially to defen-

dants. The Federal Circuit’s abrogation of this Court’s

longstanding precedents on patent venue may thus be

evaluated not only for errors of law but also for depart-

ing from this policy of fairness.

10

Il. UNFAIRNESS IS THE EVIDENT RESULT OF

BROAD PATENT VENUE UNDER VE HOLDING

Venue law’s traditional concern for fairness is point-

edly at issue in this case because experience has shown

that the Federal Circuit’s reinterpretation of venue, for

patent defendants, is patently unfair.

In VE Holding Corp. v. Johnson Gas Appliance

Co., the Court of Appeals interpreted the patent venue

statute “as a matter of first impression,” disregarding as

abrogated this Court’s decades of consistent rulings on

the subject. 917 F.2d 1574, 1579 (Fed. Cir. 1990). The

result of that novel statutory interpretation was broad

venue in patent cases: Under VE Holding, “corporate

patent infringement defendants may be sued in an almost

unlimited number of venues.” John A. Laco, Venue in

Patent Infringement Actions: Johnson Gas Fouls the Air,

25 Loy. L.A. L. Rev. 1107, 1131 & n.206 (1992) (citing VE

Holding, 917 F.2d at 1584).

In the years since VE Holding, practical experience

has shown what commentators predicted, that this ex-

panded venue “increased the cost and inconvenience of

litigation for corporate patent infringement defendants.”

Laco, supra, at 1131. This is a reversal of the ordinary

role of venue in protecting defendants from increased

costs and inconvenience. See Leroy, 443 US. at 184;

Lacs, supra, at 1131 n.207 (citing Leroy). See generally

Section I supra p. 5.

Three elements of those practical consequences are

addressed below: (1) rampant forum shopping in patent

cases, (2) certain district courts’ creation of local rules

favoring patent owners and adverse to defendants, and

(3) harms and difficulties imposed upon small companies

sued in these procedurally-adverse forums.

11

A. BROAD VENUE HAS ENABLED REMARKABLE

FORUM SHOPPING IN PATENT CASES

It is common knowledge by now that patent litigation

suffers from an unprecedented degree of forum shopping,

and in particular shopping for one infamous forum: the

Eastern District of Texas.

In 2015, almost 44% of patent cases were filed in that

district, a sparsely populated area of Texas with little

technology industry and no major city center. Brian

C. Howard, Announcing the Patent Litigation Year in

Review 2015, Lex Machina (Mar. 16, 2016), URL supra

p. vii. In 2016, that percentage dropped to 30% in the

first quarter, but trended upwards to 40% by the end of

the year. Brian C. Howard, Lex Machina Q4 2016 Liti-

gation Update, Lex Machina (Jan. 12, 2017) [hereinafter

Howard 2016], URL supra p. vii. Perhaps more re-

markably, approximately 25% of all federal district court

patent cases in 2015 and 2016 were heard by a single

judge, whose docket reportedly saw over 1,600 patent

cases in 2015, with an additional 1,119 cases in 2016.6

The concentration of patent cases in the Eastern Dis-

trict is made more remarkable by the concentration of

particular types of plaintiffs in that district. Since 2014,

over 90% of patent cases filed in the Eastern District are

by non-practicing entities, those companies that make no

products and have no business other than licensing and

litigating their patents. Brian J. Love & James Yoon, Pre-

dictably Expensive: A Critical Look at Patent Litigation

in the Eastern District of Texas, 20 Stan. Tech. L. Rev. 1,

®1.ex Machinais a litigation analytics tool operated by LexisNexis

Group, Inc. See Bloomberg Inc., Company Overview of Lex Machina

Inc. (Jan. 17, 2017), URL supra p. vii.

®Data available from Lex Machina, last accessed January 30, 2016.

12

9 tbl.2 (2017); cf. Commil USA, LLC v. Cisco Sys., Inc.,

135 S. Ct. 1920, 1930 (2015) (expressing concern about

systemic harms of non-practicing entities). In addition,

“high-volume” plaintiffs, namely those who file more than

10 patent cases in a given year, markedly prefer the East-

ern District of Texas, whereas patent holders filing lower

numbers of lawsuits generally have not shown a partic-

ular tendency to file in any one district. Howard 2016,

supra.

Patent forum shopping stands in marked contrast

even to other types of intellectual property litigation.

One study comprehensively reviewed geographic litiga-

tion trends among patent, trademark, and copyright

cases between 1994 and 2014. See Matthew Sag, JP Lit-

igation in US. District Courts: 1994-2014, 101 Iowa L.

Rev. 1065, 1087 (2016). Venue in trademark and copy-

right cases could largely be explained in terms of general

economic fundamentals, and patent venue also “would

look remarkably stable”—except for the Eastern District

of Texas, which went from the 50th most popular forum

in 1994 to the dominant forum today. /d. at 1095, 1098."

Statistical analysis thus confirms what the raw numbers

imply: that forum shopping in patent cases, particularly

for one district court, is wholly unparalleled.

Perhaps the concentration of cases in the Eastern Dis-

trict of Texas would be acceptable if that court turned

out to be the right venue, but often it is not. Since 2008,

the Federal Circuit has granted mandamus petitions aris-

ing from that district relating to transfer under 35 U.S.C.

"The District of Delaware also notably rose in popularity, but the

study found that the rise of the Eastern District of Texas “dwarfs all

other changes.” Jd. at 1098.

13

§ 1404 at least 19 times.* That number is all the more re-

markable given the “difficult burden” of obtaining man-

damus relief relating to a statute that itself permits judi-

cial discretion. See In re TS Tech USA Corp., 551 F.3d

1315, 1322 (Fed. Cir. 2008). This strongly suggests that

it is frequently improper, harmful even, for cases to be

heard in a venue that has little or no connection to the

underlying dispute.

B. BROAD VENUE HAS ENCOURAGED IMBALANCE

IN LOCAL PATENT PROCEDURAL RULES

Concerns about forum shopping are magnified by the

growing body of evidence showing that district courts are

encouraging forum shopping, through adoption of proce-

dural rules that attract patent plaintiffs.

In complex litigation like patent cases, procedure and

timing can have more substantive effect than the legal

substance itself. The judge who presides over every

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

July 16,2015); In re Apple, Inc., 581 F. App’x 886 (Fed. Cir. 2014) (per

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

In 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); In re Google Inc., 688 F. App’x 988 (Fed.

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

re EMC Corp., 677 F.3d 1351 (Fed. Cir. 2012); In re Genentech, Inc.,

566 F.3d 1338 (Fed. Cir. 2009); In re TS Tech USA Corp., 551 F.3d

1315 (Fed. Cir. 2008); In re Hoffmann-La Roche Inc., 587 F.3d 1333

(Fed. Cir. 2009); In re Nintendo Co., 589 F.3d 1194 (Fed. Cir. 2009);

In re Acer Am. Corp., 626 F.3d 1252 (Fed. Cir. 2010); In re Zimmer

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

Inc., 452 F. App’x 986 (Fed. Cir. 2011); In re Morgan Stanley, 417 F.

App’x 947 (Fed. Cir. 2011) (per curiam); In re Verizon Bus. Network

Servs. Inc., 635 F.3d 559 (Fed. Cir. 2011); In re Microsoft Corp., 630

F.3d 1361 (Fed. Cir. 2011).

14

fourth patent case nationwide has observed that a patent

lawsuit “often ends before it begins”:

Early disposition typically results from a set-

tlement between the parties before there is

any appearance by counsel in open court.

Often the first and last filing requiring the

Court’s attention is the submission of an

agreed order of dismissal.

Tris Connex, LLC v. Dell, Inc., No. 2:15-cv-1915, 2017 WL

365634, at *1 (E.D. Tex. Jan. 25, 2017). This sort of situ-

ation means that procedural rules even slightly favoring

one side or the other will have important, potentially dis-

positive, effects on outcomes.

1. Legal scholars have devoted entire articles to re-

viewing these local procedural rules and practices, and

their effect on the concentration of patent cases in one

district. The conclusions they reach are concerning for a

system that strives for fairness in litigation.

Most recently, two commentators conducted a holistic

review of patent litigation procedure in a variety of dis-

tricts, and concluded: “Rather than any one explanation,

we conclude that what makes the Eastern District so at-

tractive to patent plaintiffs is the accumulated effect of

several marginal advantages—particularly with respect

to the relative timing of discovery deadlines, transfer de-

cisions, and claim construction—that make it predictably

expensive for accused infringers to defend patent suits

filed in East Texas.” Love & Yoon, supra, at 1.

Preceding those commentators were two scholars of

law and history, who reviewed patent practice in the

Eastern District of Texas. They identified eight “proce-

dural deviations” in that district, practices they called “fo-

15

rum selling.” Daniel Klerman & Greg Reilly, Forum Sell-

ing, 89 S. Cal. L. Rev. 241, 250 (2016).° Ultimately, they

determined that the “cumulative effect” of these prac-

tices “tilts the handling of patent cases in the Eastern

District of Texas in favor of patentees.” Jd.

A further scholar reviewed the history of forum shop-

ping in patent cases from 1970 through today. He con-

cludes that “forum shopping in patent law is driven, at

least in part, by federal district courts competing for liti-

gants.” J. Jonas Anderson, Court Competition for Patent

Cases, 163 U. Pa. L. Rev. 631, 634 (2015).

Reviewing this and the previously discussed study,

another scholar found the special procedural rules in the

Eastern District of Texas so concerning that he described

patent procedure as “an unimpeded field for federal dis-

trict courts to ‘race to the bottom’ by selling their courts

as plaintiff-friendly environments for patent litigation,” a

race held “at the expense of our national innovation pol-

icy.” Sag, supra, at 1105.

2. In many cases, the patent owner benefits of the

Eastern District of Texas arise not from its substantive

decisions but from the timing of those decisions. The dis-

trict is famous as a “rocket docket,” demanding rapid dis-

covery and trial from the parties. See, e.g., Klerman &

Reilly, supra, at 265-68. But not everything is rapid in

the district: Certain motions that would otherwise save

defendants substantial costs and resources are regularly

®°These included summary judgment practice, predictable assign-

ment of judges, liberal joinder of unrelated parties, case management

rules unfavorable to joined defendants, refusal to transfer cases out

for inconvenience, refusal to stay proceedings during copending re-

examination of the patents, tight deadlines for discovery and other

pretrial matters, and automatic rules requiring up-front, costly doc-

ument production. See id. at 250—70.

16

delayed there. Summary judgment takes a median of

1053 days from case filing, compared to a national median

of 911 days. See Love & Yoon, supra, at 10 tbl.6. In one ex-

treme case, summary judgment of invalidity was granted

after trial, despite a request to have that motion heard

almost a year earlier. Compare Gonzalez v. Infostream

Group, Inc., No. 2:14-cv-906, 2016 WL 1643313 (E.D. Tex.

Apr. 26, 2016), with Letter Brief Requesting Leave to

File Summary Judgment of Invalidity, Gonzalez, 2016

WL 1643313 (July 16, 2015).

Delays in venue transfer motions under § 1404 are also

troublingly long. The national average for deciding such

motions is 232 days from case filing, but in the Eastern

District of Texas the median is 340 days. See Love &

Yoon, supra, at 17 tbl.5. That difference is more concern-

ing because the judge with the largest patent docket in

that district requires completion of discovery in 292 days

from filing—meaning that the entire cost of discovery is

often borne before a decision on whether the forum was

inconvenient. See id. at 21 fig.1.

Case after case shows that § 1404 motions bear little

fruit in this one district. In [ris Connex, a venue transfer

motion sat pending and unresolved all the way through

final judgment and even disposition of an attorney fee mo-

tion.”” See 2017 WL 365634, at *27 n.16. In In re Google

Inc., the same district court sat on a transfer motion while

The possibility of an attorney fee award does not alleviate the

harms of improper venue. For one thing, another characteristic dis-

crepancy of the Eastern District of Texas is that it does not award

attorney fees with the same frequency as other districts. See Love

& Yoon, supra, at 33 & tbl.13. Furthermore, attorney fee awards are

only proper in “exceptional cases,” and improper venue can cause

costly harm even in mine-run cases. 35 U.S.C. § 285; Octane Fitness,

LLC »v. Icon Health & Fitness, Inc., 134 8. Ct. 1749, 1756 (2014).

17

eight months of “extensive discovery” proceeded; it took

a writ of mandamus from the appellate court to force a rul-

ing on the transfer motion. No. 15-138, 2015 WL 5294800,

at *1-2 (Fed. Cir. July 16, 2015); see Brite Smart Corp. v.

Google Inc., No. 2:14-cv-760, 2015 WL 4638215 (E.D. Tex.

Aug. 3, 2015).

Procedural discrepancies like these force defendants

to engage in litigation that could have been avoided

and would have been avoided in other districts through

quickly-disposed motion practice. Such discrepancies

work to the advantage of patent owners, attracting them

to the courts that offer those discrepancies.

No malice or ill intent need be ascribed to courts en-

gaged in the practices thus described. But even absent

bad faith, some district courts will inevitably tend to fa-

vor one side and some will tend toward the other. When

patent owners have complete pick of the lot, the cases will

inevitably gravitate to the most favorable forums.

This may be the natural result, but it is not a fair one.

Venue law exists to remedy exactly this situation, and to

strive toward ideals of fairness rather than tendencies of

common nature.

C. FORUM SHOPPING AND PROCEDURAL TILTS

ESPECIALLY HARM SMALL COMPANIES AND

INNOVATORS

The concentration of cases in front of one court (and

largely one judge) especially harms small innovators.

Small companies, innovators, and end users are the ones

least able to travel to a distant forum and learn the proce-

dures of a new jurisdiction. They are thus most likely to

succumb to undue settlement pressure made only greater

by the ability of patent owners to forum-shop.

18

Patent litigation can be extremely costly. Even small

lawsuits with less than $1 million in controversy can cost

an average of $400,000 through discovery alone, by one

estimate. See Am. Intellectual Prop. Law Ass’n, 2015 Re-

port of the Economic Survey: Summary Report 37 (2015),

available at URL supra p. vii. Large companies can stom-

ach these costs, however unpleasant they may be. But

small companies often cannot.

As a result, patent owners force small defendants into

settlements based on expected costs of litigation, even

on the most borderline frivolous claims—a phenomenon

that many courts have seen first-hand. See Eon-Net LP v.

Flagstar Bancorp, 653 F.3d 1314, 1326 (Fed. Cir. 2011)

(describing this practice as having “indicia of extortion”);

Iris Connex, 2017 WL 365634, at *3, 14 (noting that 17

defendants had settled a case that was “not only implau-

sible but nonsensical”); see also Halo Elecs., Inc. v. Pulse

Elecs., Inc., 136 8. Ct. 1923, 1935 (2016) (describing enti-

ties who practice this strategy as “[t ]rolls, in the patois of

the patent community”).

A patent owner seeking a higher settlement payout,

then, would seek to ratchet up the cost of litigation, and

one of the easiest ways to do so is to file suit in a distant

and costly venue. This is exactly what happens today. Of

patent case defendants making less than $10 million in

revenue a year, 69% should have had their cases filed else-

where under this Court’s controlling precedents. Colleen

V. Chien & Michael Risch, Recalibrating Patent Venue

42 (Santa Clara Univ. Legal Studies, Research Paper No.

10-1, Oct. 6, 2016), available at URL supra p. vii. Yet

due to VE Holding, these small defendants are stuck in

a wrong and inconvenient forum, often the Eastern Dis-

trict of Texas.

19

A small defendant stuck there has little hope of get-

ting out. As noted above, venue transfer under § 1404

is a losing cause in the Eastern District of Texas. Well-

funded companies can pay for mandamus petitions and

attendant jurisdictional discovery to force a venue trans-

fer, but small companies—who in all likelihood have the

most meritorious cases for transfer—may not be able to

afford the costs.

Erroneously broad venue thus plays directly into the

ongoing problem of abusive patent assertion that under-

mines small businesses and innovators. This practical

consequence of VE Holding bolsters the need to reverse

that decision and return to this Court’s previously con-

trolling precedents.

III. PoLicy ARGUMENTS AND INTERESTS OF

PATENT OWNERS Do Not OUTWEIGH THESE

FAIRNESS CONCERNS

Respondent and supporting amici will likely proffer

policy justifications for acquiescing in the Federal Cir-

cuit’s error enabling broad patent venue. But these ar-

guments do not withstand scrutiny, especially in light of

the harms of forum shopping and forum selling.

A. MULTIDISTRICT LITIGATION, NoT BROAD

VENUE, IS THE RIGHT TOOL FOR SUING

MULTIPLE INFRINGERS

There is a legitimate concern that patent owners, fac-

ing multiple infringers in different locations, may need to

file lawsuits in multiple districts in order to obtain relief.

However, this Court has already rejected a bid to inter-

pret venue permissibly to accommodate this exact con-

cern. See Leroy, 443 U.S. at 184 (discussed supra p. 6).

20

Instead, Congress currently provides a mechanism to

lessen these risks: multidistrict litigation. See 28 U.S.C.

§ 1407. “When civil actions involving one or more common

questions of fact are pending in different districts, such

actions may be transferred to any district for coordinated

or consolidated pretrial proceedings.” § 1407(a).

Multidistrict litigation procedure was designed with

patent cases in mind. Prior to VE Holding, the Executive

Attorney for the Judicial Panel on Multidistrict Litiga-

tion listed “patent, copyright, |and| trademark” as among

the “[t ]ypical subject-matter areas of Panel involvement.”

See Robert A. Cahn, A Look at the Judicial Panel on Mul-

tidistrict Litigation, 72 F.R.D. 211, 214 (1977).

Importantly, the Judicial Panel on Multidistrict Lit-

igation helps ensure fairness in venue to both sides of

the “vy”: it considers the “convenience of parties and wit-

nesses” in choosing a consolidated pre-trial forum. 28

US.C. § 1407(a). It also ensures no one forum is over-

whelmed with patent cases. See § 1407(b). Thus, besides

addressing patent owners’ multiple-lawsuit concern, mul-

tidistrict litigation further emphasizes the relevance of

fairness in venue law.

B. SUPPOSED JUDICIAL SPECIALIZATION DOES

Not JUSTIFY FORUM SHOPPING

One might see a silver lining in the concentration of

patent cases into a single judicial district: That district

court would develop specialization in patent law. Yet,

even assuming that this is true and assuming that the

resulting “specialization” would be unbiased, judicial spe-

cialization would not justify a rewriting of venue law be-

cause Congress has specifically sought to avoid single-

tribunal specialization.

21

In 2011, Congress created the “patent pilot program,”

designed to “encourage enhancement of expertise in

patent cases among district judges.” Patent Cases Pilot

Program Act, Pub. L. No. 111-349, pmbl., 124 Stat. 3674

(2011) (codified at 28 U.S.C. § 137, hist. n.). Significantly,

the Act guarantees a diversity of opinions and venues:

The Act requires the program to encompass at least six

different districts from at least three different judicial cir-

cuits. Id. § 1(b).

The Federal Circuit may be cited as another example

of judicial specialization in patent law, but legislative in-

tent belies that assumption. In establishing the new ap-

peals court, the House report specifically took note that:

The proposed new court is not a “specialized

court.” Its jurisdiction is not limited to one

type of case, or even to two or three types

of cases. Rather, it has a varied docket span-

ning a broad range of legal issues and types of

cases.

H.R. Rep. No. 97-312, at 19 (1981). Consistent with this,

the Federal Circuit also hears appeals of veterans’ cases

and certain administrative agency appeals. See 38 U.S.C.

§ 7292(c); 28 U.S.C. § 1295(a)(2){14). The creation of the

Federal Circuit shows that Congress viewed specialist

courts as undesirable and a thing to be avoided.

Subject matter expertise is certainly valuable, but

so is diversity of thought and breadth of knowledge.

Congress has worked to ensure that different voices can

raise differing ideas regarding the sometimes idiosyn-

cratic rules of patent litigation. By concentrating a fourth

of cases in front of a single judge, the judicially-created

venue rule of VE Holding works to undermine Congress’

measured approach.

22

C. PATENT OWNERS CURRENTLY Do Not OFTEN

DEPEND ON BENEFITS OF HOME DISTRICT

LITIGATION

It might be argued that expansive venue is needed

in patent cases to assist small inventors unable bear the

high costs of bringing an infringement lawsuit in a for-

eign district. Obviously the small-entity concern cuts

both ways—narrow venue assists small business defen-

dants lacking funds to defend in a foreign district—but it

is worth considering whether the value of home-district

litigation to patent owners might outweigh the costs of

unfairness and inconvenience to defendants.

But the empirical data tells an opposite story, that

home-district advantage is of minimal value to patent

owners. A recent study estimated that operating compa-

nies asserting patents sue in their own district less than

half the time. Chien & Risch, supra, at 31.

Although non-practicing patent owners bring suit

more often in their home district, the numbers are likely

inflated by the well-known practice of patent owners set-

ting up sham offices in the Eastern District of Texas. Jd.;

see Edgar Walters, Tech Companies Fight Back Against

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

available at URL supra p. viii (describing “empty offices

with telephone lines that no one answers”); Network Prot.

Scis., LLC v. Fortinet, Inc., No. 12-cv-1106, 2013 WL

4479336, at *7 (N.D. Cal. Aug. 20, 2013) (patent owner

“rented a windowless file-cabinet room with no employees

in Texas”); When Patents Attack! , This Am. Life July 22,

2011), URL supra p. viii. Venue gamesmanship like this

contradicts the idea that patent owners derive substan-

tial benefit from bringing suit in their home districts.

23

IV. PATENT LAW MERITS UNIQUE VENUE RULES

DISTINCT FROM OTHER LITIGATION

Certainly as a general matter patent law is not ex-

ceptional, and rules of general applicability ordinarily

should apply equally to patent law. See Medtronic, Inc. v.

Mirowski Family Ventures, LLC, 134 8. Ct. 843, 849

(2014). But in the case of venue, there is good reason

to abide by the longstanding view that patent cases are

treated under a different rule than general litigation.

1. At the outset, it must be observed that the di-

vergence of patent venue from general venue enjoys a

long, unbroken pedigree. This Court first suggested that

patent cases might fall under a different venue rule than

other cases in In re Hohorst, 150 U.S. 653 (1893), and In re

Keasbey & Mattison Co., 160 U.S. 221 (1895). The lower

courts thereafter treated venue in patent cases under dif-

ferent rules than the general venue statute. See note 4

supra p. 7. Congress responded to this development by

enacting a patent venue statute specifically designed to

diverge from, not reconcile with, the general venue law.

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

Thereafter, this Court has consistently held that

“Congress placed patent infringement cases in a class by

themselves, outside the scope of general venue legisla-

tion.” Brunette Mach. Works, Ltd. v. Kockum Indus.,

Inc., 406 U.S. 706, 713 (1972); see Stonite, 315 US. at 566-

67; Fourco, 353 US. at 228-29; Schnell, 365 U.S. at 262;

In debate over that act, Representative Payne was “not able to

see why ca~cs of infringement of patents should be taken out of the

law and a xpccial rule alopierl as to them.” 29 Cong. Rec. at 1901.

The bill’s sponsor did not dispute this, but contended that the diver-

gence of patent venue was uxeful in view of cconomic development

in the western United States; this observation apparently satizfied

the criticism. See id. at 1902 (statements of Reps. Lacey and Payne).

24

Pure Oil, 384 US. at 206-07; Cortez Byrd Chips, Inc. v.

Bill Harbert Constr. Co., 529 U.S. 193, 204 (2000).

Given this century-long line of law, stare decisis and

the aversion to implicit legislative abrogation suffice to

affirm this line and to reverse the Federal Circuit.

2. But it is not just judicial history and practice that

favor reversal: The unique nature of patent cases also

suggests a need for unique venue rules. Petitioner iden-

tifies at least two attributes of patent litigation support-

ing this result, namely the Federal Circuit’s expansive

rules of personal jurisdiction,’ see Br. Pet’r 35-36, and

the strict liability nature of patent infringement, see id. at

33-34. A third reason may be found in the special patent

rules that many district courts apply.

Patent-specific procedural rules are pervasive in dis-

trict courts. Congress has encouraged adoption of patent

local rules, and at least eleven district courts have them.”

These rules are unsurprising, given the litany of spe-

cial proceedings and hearings in patent cases: Markman

hearings,‘ invalidity and infringement contentions, mo-

tions to dismiss under Alice," and so on.

- 12% elaborate briefly: The Federal Circuit expansively construes

personal jurisdiction with regard to alleged infringers, but narrowly

construes personal jurisdiction with regard to declaratory judgment

defendants. See Beverly Hills Fan Co. v. Royal Sovereign Corp., 21

F.3d 1558, 1566 (Fed. Cir. 1994); Red Wing Shoe Co. v. Hockerson-

Halberstadt, Inc., 148 F.3d 1355, 1361 (Fed. Cir. 1998). These two

decisions enhance the patent plaintiff’s power to control choice of fo-

rum. See generally Br. Am. Cur. EFF & PK (Pet. Stage) 7-14.

‘Patent Cases Pilot Program Act § 1(b)(2)(AXii); see James Ware

& Brian Davy, The History, Content, Application and Influence of

the Northern District of California's Local Patent Rules, 25 Santa

Clara Computer & High Tech. L.J. 965, 1012 (2009).

4 Markman v. Westview Instruments, Inc., 517 U.S. 370 (1996).

'§ Alice Corp. Pty. Ltd. v. CLS Bank Int'l, 134 S. Ct. 2347 (2014).

25

Experience and dialogue among the courts is what al-

lows procedural rules to develop and evolve to levels of

fairness for all parties. With general-purpose rules of pro-

cedure, all district courts participate in and contribute to

that experience and dialogue. But with local patent rules,

only those courts that are actually trying patent cases will

learn how those rules may be improved.

That learning depends on a diversity of forums before

which patent cases are tried. Patent venue law applied

under Fourco and its precedents helps to guarantee that

diversity, but broad venue under VE Holding, which en-

courages forum shopping and gravitation to a single tri-

bunal of plaintiffs’ choice, does not.

In a patent case decided last Term, this Court rec-

ognized that judicial discretion could lead to unfairness

and abuses, but felt confident that case law development

would “channel the exercise of discretion” to avoid unfair

results. Halo, 136 S. Ct. at 1935. That channel can be

hewn only through a national conversation among courts,

a conversation cut short when venue law instead channels

all patent cases into one courthouse and all exercises of

discretion into a handful of judges. Limited patent venue,

as prevailed for a century before VE Holding, encourages

that conversation, encourages practices that balance the

interests between patent plaintiffs and defendants, and

ultimately encourages fairness and justice for all.

CONCLUSION

For the foregoing reasons, the decision of the Court of

Appeals should be reversed.

Respectfully submitted,

CHARLES DUAN

Counsel of Record

PUBLIC KNOWLEDGE

1818 N Street NW, Suite 410

Washington, DC 20036

(202) 861-0020

cduan@publicknowledge.org

VERA RANIERI

ELECTRONIC FRONTIER

FOUNDATION

815 Eddy Street

San Francisco, CA 94109

(415) 436-9333

vera@eff.org

Counsel for amici curiae

February 2017

Rev 312038