Courts May Now Have More Leeway In Moving Patent Lawsuits Away From East Texas
Date : 03 10 2008 Category : Business
Techdirt
Slowly, but surely, the courts are fixing many (though, not nearly all) of the most egregious problems with the patent system. The Supreme Court has been a big part of this with a series of decisions in the last few years that are pushing to re-establish at least some of the patent system's original purpose from what it has turned into. The Court of Appeals for the Federal Circuit (CAFC), which is the appeals court that handles patent suit appeals (and is often considered one of the reasons why the patent system has gone so astray) appears to finally be getting the message. Earlier this year, we noted that CAFC was finally going to re-evaluate the patentability of software and business models. And, now, it looks like CAFC is looking to alleviate all the jurisdiction shopping that happens in the lower courts, leading to so many patent lawsuits being filed in Marshall, Texas.
What's slightly ironic, of course, is that one of the main reasons CAFC was created in the first place was to put an end to jurisdiction shopping in the past. What used to happen, prior to CAFC, was that patent attorneys knew which districts and which appeals courts tended to favor patent holders, and would rush to file in those districts. In forming CAFC, the idea was that all appeals would go to a central court. What they didn't expect was that CAFC would become dominated by former patent attorneys who were always in favor of more patents -- and that the jurisdiction shopping would just shift down to the district court level.
However, last week, CAFC came out with a ruling that appears to say that district courts should pay more attention to making sure patent lawsuits are held in districts that are convenient. Right now, in order to file in East Texas, all you need to do is claim that the companies "do business" in the district and to have a local lawyer (of which there are plenty willing to help). So you get absolutely ridiculous situations where two California companies right down the street from one another, find themselves in court in Texas for no reason other than the fact that the Texas district court is known to be both quick and likely to favor patent holders. This latest ruling certainly won't fix things entirely, but it does suggest that CAFC is at least sympathetic to the problem of patent holders picking a favorable jurisdiction, often at odds with the most reasonable location -- and suggesting that perhaps that doesn't make sense any more.
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What's slightly ironic, of course, is that one of the main reasons CAFC was created in the first place was to put an end to jurisdiction shopping in the past. What used to happen, prior to CAFC, was that patent attorneys knew which districts and which appeals courts tended to favor patent holders, and would rush to file in those districts. In forming CAFC, the idea was that all appeals would go to a central court. What they didn't expect was that CAFC would become dominated by former patent attorneys who were always in favor of more patents -- and that the jurisdiction shopping would just shift down to the district court level.
However, last week, CAFC came out with a ruling that appears to say that district courts should pay more attention to making sure patent lawsuits are held in districts that are convenient. Right now, in order to file in East Texas, all you need to do is claim that the companies "do business" in the district and to have a local lawyer (of which there are plenty willing to help). So you get absolutely ridiculous situations where two California companies right down the street from one another, find themselves in court in Texas for no reason other than the fact that the Texas district court is known to be both quick and likely to favor patent holders. This latest ruling certainly won't fix things entirely, but it does suggest that CAFC is at least sympathetic to the problem of patent holders picking a favorable jurisdiction, often at odds with the most reasonable location -- and suggesting that perhaps that doesn't make sense any more.
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