Forum Shopping for Litigation
in the USA
AIPLA
IP PRACTICE IN EUROPE COMMITTEE
February/March 2011
Joseph A. Calvaruso
Orrick, Herrington & Sutcliffe LLP
Desirable Characteristics of a Forum
• Generally, patent holders want:
• A court that is pro-patentee
• To go to trial
• Speedy resolution
• Alleged infringers generally want the opposite of what
patent holders want
2
Personal Jurisdiction in Patent
Infringement Cases
General Jurisdiction
• Exists even when the plaintiff’s claim is unrelated to the
defendant’s particular activities in the state
• Requires continuous and systematic contacts
• Place of business, substantial sales of
products, distribution network, substantial
Internet-based commerce
3
Personal Jurisdiction in Patent
Infringement Cases (cont’d)
Specific Jurisdiction
• Exists when the plaintiff’s claim arises from or is related
to the defendant’s particular activities in the jurisdiction
• Two requirements:
• 1) Jurisdiction must be proper under the forum
state’s long-arm statute
• 2) Such jurisdiction must comport with the due
process clause by having minimum contacts
4
Personal Jurisdiction in Patent
Infringement Cases (cont’d)
Specific Jurisdiction (cont’d)
• Minimum contacts:
— Defendant has purposefully directed his
activities at residents of the forum
— The claim arises out of or relates to those
activities
— Assertion of personal jurisdiction is
reasonable and fair
5
Venue in Patent Infringement Cases
28 U.S.C. § 1400(a)
• Venue is proper in the district where the defendant
resides
• A corporate defendant resides in any judicial
district where the corporation is subject to
personal jurisdiction
28 U.S.C. § 1404(a)
• “For the convenience of parties and witnesses, in the
interest of justice, a district court may transfer any civil
action to any other district or division where it might
have been brought.”
6
Transfer of Venue
Forum non conveniens weighs private and public interests
• Private interests
• Relative ease of access to sources of proof
• Availability of compulsory process to secure
witnesses
• Cost of attendance for willing witnesses
• All other practical problems that make a trial
easy, expeditious, and inexpensive
7
Transfer of Venue (cont’d)
Forum non conveniens (cont’d)
• Public interests
• The administrative difficulties flowing from
court congestion
• Local interest in having localized interests
decided at home
• Familiarity of the forum with the law that will
govern the case
• Avoidance of unnecessary problems of conflicts
of law or in the application of foreign law
8
Federal Circuit Efforts to Curb Forum
Shopping
Federal Circuit forum non conveniens decisions
• No weight should be given to sham efforts to make a
forum appear more convenient in anticipation of
litigation
• In re Microsoft Corp., __ F.3d __ (Fed. Cir.
Jan. 5, 2011): plaintiff incorporated in the E.D.
Texas prior to filing and was operated from the
UK by the patent’s co-inventor
9
Federal Circuit Efforts to Curb Forum
Shopping (cont’d)
Federal Circuit forum non conveniens decisions (cont’d)
• No weight should be given to sham efforts to make a
forum appear more convenient in anticipation of
litigation
• In re Hoffman-La Roche Inc., 587 F.3d 1333
(Fed. Cir. Dec. 2, 2009): 75,000 pages of
documents relating to conception and reduction
to practice were converted to electronic format
and transferred to litigation counsel in E.D.
Texas
10
Federal Circuit Efforts to Curb Forum
Shopping (cont’d)
Federal Circuit forum non conveniens decisions (cont’d)
• Local interest, convenience to witnesses, and location
of evidence emphasized; plaintiff’s choice of forum
minimized
• In re Nintendo Co., Ltd., 589 F.3d 1194
(Fed. Cir. Dec. 17, 2009): No parties, witnesses,
or evidence had any material connection to the
chosen venue; the district court improperly
substituted its centralized location for a
meaningful application of the factors; plaintiff’s
choice of forum was not a factor to be weighed
11
Patent Cases Since 2000
12
Patent Cases Since 2000 (cont’d)
Rank
13
District
Total Number
of Patent Cases
1
C.D. California
2289
2
N.D. California*
1424
3
N.D. Illinois*
1233
4
E.D. Texas*
1024
5
S.D. New York
1018
6
D. Delaware
1017
7
D. New Jersey*
987
8
D. Minnesota*
600
9
D. Massachusetts*
584
10
S.D. California*
519
*has local patent rules
Patent Holder Win Rate Percentage (%)
Patent Holder Win Rate
14
60
50
40
30
20
10
0
55.1
46.3 46.2 45.3 45.2
40.3
37.0 36.3
32.6
21.0 20.0
17.6 17.1
11.5
Percentage of Cases that go to Trial
12
Percentage to Trial (%)
10
8
6
4
11.8
8.0
7.4
6.4
6.2
2
1.6
0
15
1.6
1.5
0.8
0.8
0.6
0.5
0.0
Time to Trial
3.5
Years to Trial
3
2.5
2
1.5
1
0.5
0
16
1.7
0.7
1.0
2.0
2.0
2.1
2.5
2.5
2.9
3.2
3.3
3.3
3.4
3.5
Local Patent Rules
Local rules are beneficial
17
•
Demonstrate familiarity with patent law and practice
•
Less time and money educating the court
•
Ensure orderly and timely process for resolving
purely legal disputes such as requiring Markman
hearings before trial
•
Preliminary infringement contentions received early
in the case
Local Patent Rules
Courts with Local Patent Rules
N.D. Cal.
D.N.J.
S.D. Cal.
N.D. Ohio
N.D. Ga.
W.D. Pa.
N.D. Ill.
E.D. Tex.
D. Mass.
S.D. Tex.
D. Minn.
W.D. Wash.
E.D.N.C.
18
General Observations
E.D. Tex.
D. Del.
E.D. Va.
•Perceived to be
patent friendly
•Perceived to be
patent friendly (45%
win rate)
•True rocket docket
(1 year to trial)
•Jury pro-plaintiff
•High damages
•Potential risk of
•Judge Sue
transfer without
•No longer a rocket Robinson’s practice
contacts
docket (2.1 years to is to bifurcate trial on
damages and
trial)
liability
•Experienced judges
•Middle of the road
on patent cases
•More educated jury win rate for patent
holders (30%)
pool
•Predictable rules
19
General Observations (cont’d)
C.D. Cal.
W.D. Wisc.
•Middle of the road
time to trial (2.5
years)
•Very fast (0.7 years
to trial)
•Jury pool generally
pro-plaintiff
•Potentially large
damages awards
20
•More educated jury
pool
•Potential risk of
transfer
International Trade Commission
21
International Trade Commission (cont’d)
The ITC has become more popular in recent years
22
•
Rocket docket district courts are victims of their
own success
•
ITC investigations are completed in 15-18 months
•
Increasing awareness of the ITC and its remedies
(exclusion and cease and desist orders)
•
Injunctions in district court are no longer automatic
•
Infrequent grant of summary determination
International Trade Commission (cont’d)
However, the ITC has some downsides for complainants
23
•
The respondent has the right to stay a co-pending
district court action
•
The tight schedule means that parties are under
extreme time and cost pressure
•
Patent trolls and other NPEs may find it difficult to
satisfy the economic prong of the domestic industry
requirement
International Trade Commission:
Domestic Industry
Economic prong of the domestic industry requirement
24
•
(A) significant investment in plant and equipment;
•
(B) significant employment of labor or capital; or
•
(C) substantial investment in its exploitation,
including engineering, research and development,
or licensing.
International Trade Commission:
Domestic Industry (cont’d)
•
Burden for showing significant/substantial investment
has traditionally been low, but recent decisions have
raised the bar
•
25
Coaxial Cable Connectors, Inv. No. 337-TA-650,
Comm. Op. (Mar. 31, 2010): litigation expenses
may count towards domestic industry only if the
complainant can apportion such expenses and
prove they are related to licensing
International Trade Commission:
Domestic Industry (cont’d)
•
Burden for showing significant/substantial investment
has traditionally been low, but recent decisions have
raised the bar (cont’d)
•
26
Printing and Imaging Devices, Inv. No. 337-TA-690,
Comm. Op. (Feb. 17, 2011): complainants failed to
prove that its expenses in domestic service and
repair activities for articles protected by the patents
(and manufactured abroad) were “significant” in
comparison with its foreign activities for such articles
Thank You
Joseph A. Calvaruso
Orrick, Herrington & Sutcliffe LLP
51 West 52nd Street
New York, NY 10019
jcalvaruso@orrick.com
1-212-506-5140
www.orrick.com/ip