Patent Infringement Cases: Selecting The Right Venue Can Be Critical

Sunday, July 1, 2007 - 00:00

Editor: Could you describe the factors affecting venue choice. Which are most important?

McKool: Time to trial is an important factor for practitioners to consider when determining where a patent infringement case should be litigated. There are many other factors that should be considered, but time to trial is the driving force behind many decisions to select a particular venue. This is evident from the large number of cases heard by the Eastern District of Texas, Eastern District of Virginia and the Western District of Wisconsin, which offer the shortest times to trial.

Editor: Is this true for both plaintiffs and defendants?

McKool: I think so. If a defendant has a strong case, he would want the case resolved as quickly as possible. Plaintiffs almost always want a fast track to trial because prolonged cases are more expensive, and, of course, plaintiffs obtain relief only upon conclusion of the case. A longer wait to trial increases the potential that something may go wrong for the plaintiff. Memories fade by the time of trial, and the jury may not perceive the case to be as important as the facts recede into the past.

Editor: How significant is the potential for transferring a case to a different venue?

McKool: A defendant typically makes a motion to transfer a case to its home forum in order to benefit from advantages it may offer, particularly a friendly jury pool.

The motion to transfer typically alleges that the forum selected by the plaintiff is inconvenient because it is burdensome to send all the witnesses and documents there. Plaintiffs do not want these motions to succeed because it will usually leave them in a worse venue. One reason that the Eastern District of Virginia does not have more patent filings is because there is a 15 percent chance of a defendant succeeding in a motion to transfer. So a plaintiff's selection of this court does not guarantee a fast time to trial because a defendant's successful motion will take the case to a different venue.

Editor: Do multi-district litigation rules have an impact in this area?

McKool: When a plaintiff sues various defendants in different venues alleging violation of the same patents, the defendants may request a Multi-District Litigation (MDL) panel to consolidate those cases into one. The venue chosen by the MDL panel does not have to be one of the venues selected by the plaintiff. In fact, I am working on a case where a plaintiff sued 180 defendants, including my client, in five district courts. The case was transferred to the Central District of California, a venue that had not been selected by the plaintiff.

Editor: Is the likelihood of summary judgment a contributing factor in forum selection?

McKool: Most summary judgment verdicts are in favor of the defendant so the likelihood of a successful motion creates an additional risk for the plaintiff. Losing a motion for summary judgment takes away the ability to have a case heard by a jury. The statistics indicate that with the exception of the Western District of Wisconsin, patentee plaintiffs have well over a 50 percent chance of winning a summary judgment motion.

Editor: Does the quality of the jury pool affect these decisions?

McKool: Statistics indicate that the Eastern District of Virginia and the Eastern District of Texas have a more favorable jury pool for plaintiffs than the other venues. In these courts, plaintiffs have more than an 80 percent chance of success at a jury trial. Most of the other popular venues are located in big cities such as Chicago, Los Angeles, San Francisco, Wilmington, and New York. Then you have the Eastern District of Virginia and the Eastern District of Texas at the opposite end of the spectrum, with these courts sitting in smaller towns. This demonstrates to me that plaintiffs are better off arguing their cases in small towns. This may be due to a sense in smaller towns that the Patent Office's issuance of a patent carries a lot of weight.

Editor: Are there certain court rules that plaintiffs and defendants consider advantageous?

McKool: The rules may effect the time to trial, which is important to both sides. The Eastern District of Texas adopted the Northern District of California's rules but implemented a compressed timing that results in a faster process.

Parties also should take into consideration the court's discovery rules. Plaintiffs tend to prefer broad discovery rules because plaintiffs want access to all of the defendant's records pertaining to allegations of product or method infringement. Disclosure of prior art relied on by the defendant is important for plaintiffs because it often indicates the claim construction position that the defendant will take. Plaintiffs prefer to have this information ahead of a Markman hearing so that they are more familiar with the defendant's position.

Editor: Do court rules that schedule Markman hearings before summary judgment motions tend to favor one side over another?

McKool: Defendants benefit more from courts that have these rules. A Markman hearing is an opportunity for each side to develop and present its claim construction position. Holding this hearing before a summary judgment motion focuses the claims and allows the parties to understand what the claims mean before the motion is heard. This is very good for defendants who make motions for summary judgment.

Editor: If you were to take your favorite district, which appears to be the Eastern District of Texas, what would you say about that district in terms of being patentee friendly or defendant friendly?

McKool: It has a fast track, but has slowed down a bit recently because of the amount of patent cases filed there. The court recently added a new magistrate judge, which should ease the burden on the court.

It also has really talented, smart judges who understand patent issues. Plaintiffs like that because there is less chance of a decision being reversed and having to be retried. These judges know what they are doing and do not favor plaintiffs or defendants, so parties can expect to receive a fair trial. During a Markman hearing, the court's expertise further guarantees that a reversal by an appellate court is less likely.

Editor: Does the experience of the judiciary affect the court's expertise?

McKool: Districts with judges having less experience tend to attract fewer cases per judge and this in turn offers the judges in that District a reduced opportunity to gain experience. For instance, in the Eastern District of Virginia fewer than three cases per judge were filed in 2006. On the other hand, in the District of Delaware - where the judges have significant experience - more than 47 cases per judge were filed in 2006 and in the Eastern District of Texas that number was 27. This aspect of forum selection is invaluable because an experienced judge reduces the possibility of error.

Editor: What role does the likelihood of an injunction play in the selection of a court?

McKool: The eBay decision by the Supreme Court last year affected the possibility of an injunction. Some courts have interpreted that case to indicate that a company that does not compete in the market may not obtain an injunction against a defendant. This is not the case in the ITC (International Trade Commission) where the test is simply whether an imported product is infringing a U.S. patent. The result of eBay is that the value of patents held by buyers of patents may decline because patent holders do not have a guarantee that their patent will be protected by an injunction.

Editor: Would you tell our readers about the venue legislation pending in Congress?

McKool: One aspect of legislation that has been proposed is a provision that would limit the venues in which a matter could be heard. Currently, when a consumer product is at issue in a patent infringement case, plaintiffs often can file suit in any federal court in the country because the test for venue is the market in which the product is sold. Under the proposed legislation, venue could be limited to the districts in which the plaintiff or defendant have significant operations. If passed, there will be a significant reduction in the number of choices a plaintiff has to file a suit.

There have also been several sub-committee suggestions and bills introduced. One calls for the creation of several rocket dockets so cases would not be stuck in the venues that do not provide a fast time to trial. The districts would have to have at least 10 judges and they would have to opt in to qualify for that proposal. If these requirements were met, the District would then introduce schedules to speed up the handling of cases.

Editor: To what extent have strategies been affected by the recent Supreme Court decision in the MedImmune case?

McKool: The decision in MedImmune has made it easier for defendants to seek a declaratory judgment. Now, it appears that declaratory judgment suits will be easier to sustain.

Editor: Are there benefits to making motions for ex parte re-examination of the patent at issue?

McKool: The rules now allow the defendant to request that the patent office re-examine a patent that was issued to the plaintiff. This strategy can be a two-edged sword. The motion can result in a stay of the case that can last 18 months or more. Plaintiffs do not like this because it puts their patent in jeopardy and increases their litigation expenses. On the other hand, if the patent office reaffirms the patent, the plaintiff will be in a stronger position going forward.

Please email the interviewee at mmckool@mckoolsmith.com with questions about this interview.