Study Proposes Modifications to Patent Venue
Sidney Rosenzweig, a visiting fellow at the Progress and Freedom Foundation, published a paper yesterday addressing issues related to patent reform and the venue statutes. Specifically, Rosenzweig identifies numerous deficiencies in the House and Senate bills. Essentially, he argues that, while recent congressional proposals are meant to prevent plaintiff forum-shopping, the proposals are "vaguely written and contain substantial gaps that will ensure that some cases cannot be brought in any venue. The effect of the enactment of either bill will be to cause a tidal wave of venue-related disputes to drown the federal courts."
As a result, Rosenzweig proposes the following revision to 28 U.S.C. § 1400(b) to address the only concrete problem identified by Congress, "namely the lax standard for venue against corporate defendants":
Notwithstanding subsection 1391(c) of this title, any civil action for patent infringement may be brought against a corporation only in a judicial district--
(1) where the defendant has its principal place of business or where the defendant is incorporated;
(2) where the defendant has committed a substantial portion of the acts of infringement and has a regular and established physical facility that it controls;
(3) where any defendant has committed a substantial portion of the acts of infringement and has a regular and established physical facility that it controls, if there is no other district in which the action may be brought under subsections (1) or (2); or
(4) where any defendant has its principal place of business, where any defendant is incorporated, where any defendant may be found, or where any defendant has committed acts of infringement, if there is no other district in which the action may be brought under subsections (1), (2) or (3).
Read/download the entire (20 page) report here.
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well let's see...which district has the longest time to trial and the highest SJ rate for defendants? guess where the thieves will be moving to.
Independent Inventors Venue Summary:
"By focusing on the plaintiff’s status at the time suit is brought, the effect will be for plaintiffs to game the system by waiting until after suit is brought to consummate a license of the patent asserted in litigation."
1) Who in the real world agrees to license to independent inventors previous to litigation (please, show me those press releases)?
"Given that patent litigation is always expensive, and given the questionable need for home-court venue for independent inventors who have not actually licensed their patents, the provision should be stricken."
2) Because litigation is expensive and independent inventors struggle to afford it we should move it further out of their reach by denying home venue?
Lack of previous licensing demonstrates patent non-infringment/invalidity (see 1 above)?
How out of touch can these guys be?
But wait, there's more....
"Providing for certain benefits for micro-entities may be sensible as a matter of patent procurement, but it makes little sense for litigation."
3) So its makes sense as a bait and switch tactic to lure someone into the illusion of obtaining intellectual property rights up front when those rights are eventually realized as non existent (see 1 and 2 above).
So much for think tank logic.
This legislative proposal is clean, straightforward and makes a lot more sense than many of the proposals that went through Congress last year.
The biggest strength of this approach is its singular focus on the defendant's location as the basis for proper venue, and a disregard of the plaintiff's location or preferences. That shift is the reason this proposal doesn't need complex provisions to prevent forum-shopping manipulation by plaintiffs (such as forming Texas-based LLC shell companies for the sole purpose of manufacturing venue).
One criticism against the proposal, however, is allowing the defendant to be sued where it is incorporated. The state of incorporation has no logical connection to proper venue in patent cases. This provision may have the secondary effect of causing technology companies to avoid incorporating in certain places like Delaware or Texas, so they won't get sued there.
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