Marshall, Schmarshall! Bring Your Patent Cases to Portland
Or Eugene, Medford or Pendleton -- the four divisions of the U.S. District Court for the District of Oregon. The Eastern District of Texas has become a tremendously popular venue for patent owners wishing to bring suit, but, surprisingly, it is not the district where patent owners have the greatest percentage of prevailing.
As reported by Patently-O, a draft paper entitled "Where to File Your Patent Case" by Stanford Professor Mark A. Lemley reports that the patentee win rate in the Eastern District of Texas is 40.3%, whereas it is 45.3% in the District of Oregon. That puts the District of Oregon in an approximate tie for the second best patent win rate (a four-way near tie with Nevada, Middle Florida, and Delaware) among districts with a statistically significant number of patent cases. Only the Northern District of Texas had an appreciably higher patentee win rate (55.1%).
So why file your patent infringement case in Marshall, Texas, when you are likely to fare better in Portland, or Eugene, or Medford, or Pendleton?
Of course, there is more to choosing a venue than just the odds of prevailing. A couple other important factors are (1) the size of jury verdicts and (2) the likelihood of a stay pending reexamination
Large Jury Verdicts in Oregon.
Texas jurors are famous -- some would say infamous -- for handing out large verdicts . . . like it was somebody else's money. Well, there have been large verdicts in Oregon too. Although this has nothing to do with patent law, a Portland jury very recently handed out an $18.4 million punitive award against Boy Scouts of America in a sexual abuse case, as reported in the Oregonian. That was the largest verdict -- by far -- of that type against the Boy Scouts.
Another largest-of-its-kind verdict was the $304.6 million verdict that a Portland jury awarded to Adidas two years ago in its trademark infringement case against Payless Shoes. (Reported here by the Oregonian).
Back in the patent world, there have certainly been some large verdicts against infringers in Oregon. For example, Translogic won a verdict of about $86 million a few years ago, although that was reversed on appeal because a parallel reexamination killed the patent (which the Portland jury had upheld in view of the same prior art).
Stays Pending Reexamination
Speaking of reexamination, it is becoming increasingly common for a defendant to request reexamination and then seek a stay of the district court litigation. According to LegalMetric's "Stay Pending Reexamination" Reports (which is an invaluable resource, by the way), defendants' win rate for contested stay motions in the District of Oregon are less than the nationwide average, with some judges in the district granting those motions sparingly or never.
As I said, Marshall schmarshall. Patent owners would be wise to at least consider bringing their patent cases in Oregon.
Nike Sprints from the E.D. of Texas
On October 20, 2008 Levert Lyons (a Michigan resident) sued Beaverton-based Nike, Inc. in the Eastern District of Texas claiming infringement of U.S. Patent No. 5,513,448 titled "athletic shoe with compression indicators and replaceable spring cassette."
Although Nike admitted venue was proper in the E.D. of Texas, Nike filed a motion to transfer venue [PDF] under 28 U.S.C. § 1404(a) to a more convenient venue -- the District of Oregon.
In its motion, Nike argued that private and public interest factors strongly supported transfer to the District of Oregon. Specifically, Nike claimed that Oregon was home to a vast majority of the witnesses, including those who helped designed the accused products -- the Air Jordan XXI and Air Jordan XXII -- and these witnesses would be substantially inconvenienced in traveling to Texas. Nike also argued that apparently it would not be inconvenient for Mr. Lyons to travel to Oregon given that he filed the suit in the E.D. of Texas, which is nearly 1,000 miles from his residence.
Mr. Lyons responded to Nike's motion [PDF] arguing that the court should give little weight to the potential inconvenience of Nike's witnesses because these witnesses were not non-party witnesses; rather they were employees of Nike.
In its order [PDF], the E.D. of Texas granted Nike's motion to transfer venue. In particular, the E.D. of Texas cited a string of recent cases of the U.S. Court of Appeals for the Federal Circuit that considered whether to transfer venue out of the E.D. of Texas. See In re TS Tech USA Corp., 551 F.3d 1315 (Fed. Cir. 2008) (ordering transfer); In re Volkswagen of Am., Inc., 566 F.3d 1349 (Fed. Cir. 2009) (denying transfer); In re Genentech, Inc., 566 F.3d 1338 (Fed. Cir. 2009) (ordering transfer).
In these cases, the Federal Circuit applied the law of the U.S. Court of Appeals of the Fifth Circuit, which involves consideration of private and public interest factors to determine whether to transfer venue.
The private interest factors include:
- "The relative ease of access to sources of proof
- The availability of compulsory process to secure the attendance of witnesses
- The cost of attendance for willing witnesses
- All other practical problems that make a trial easy, expeditious and inexpensive." In re TS Tech USA, 551 F.3d at 1319.
The public interest factors include:
- "The administrative difficulties flowing from court congestion
- The local interest in having localized interests decided at home
- The familiarity of the forum with the law that will govern the case
- The avoidance of unnecessary problems of conflicts of laws." Id.
In his patent blog PatentlyO, Dennis Crouch summarizes how the Federal Circuit applied these factors in re Genetech and Volkswagen.
In this case, the E.D. of Texas found that the private interests weighed in Nike's favor. First, many of the potential witnesses lived in Oregon while none lived in the E.D. of Texas. Second, the alleged infringing shoes where primarily designed in Oregon. Moreover, aside from Nike selling shoes and having one store in the E.D. of Texas, Nike and Mr. Lyons had no other connections with the E.D. of Texas. Finally, Mr. Lyons failed to show that Oregon would be a less convenient forum than Texas.
In this case, the E.D. of Texas applied Fifth Circuit law in determining whether to transfer the case. In the District of Oregon, the law of the Court of Appeals for the Ninth Circuit governs transfer of venue decisions. Like the Fifth Circuit, the Ninth Circuit considers public and private factors.
Specifically, the public factors include:
- "Administrative difficulties flowing from court congestion
- Imposition of jury duty on people of a community that has no relation to the controversy
- Local interest in having localized controversies decided at home
- The interest in having a diversity case tried in a forum familiar with the law that governs the action
- The avoidance of unnecessary problems in conflicts of law." Dunn & Fenely, LLC v. Diederich, No. 06-6243-TC, slip op. at 4-5 (Or. Jan. 13, 2010).
The private factors include:
- "Relative ease of access to sources of proof;
- The availability of compulsory process for attendance of unwilling witnesses, and cost of obtaining willing witnesses;
- Possibility of viewing subject premises; and
- All other factors that render trial of a case expeditious and inexpensive." Id. at 5.
In its motion to transfer venue, Nike mentioned some interesting statistics that demonstrate the relative popularity of the E.D. of Texas among patent owners.
In 2008, over 300 patent cases were filed in the E.D. of Texas compared to 20 patent cases in the District of Oregon, yet these districts have a similar number of judges. However, Mr. Lyons pointed out that the median time to a jury trial is 17 months in the E.D. of Texas compared to 27 months in the District of Oregon.
