“In 2017, the Supreme Court struck a blow against forum shopping in patent-infringement cases by imposing strict limits on appropriate venue for such claims. But to date the Federal Circuit has failed to adhere to those limits; that needs to change.”
—Richard Samp, WLF Chief Counsel
WASHINGTON, DC—Washington Legal Foundation (WLF) last evening urged the U.S. Court of Appeals for the Federal Circuit (the appeals court that hears all patent cases) to grant rehearing in a case in which a three-judge panel substantially undermined restrictions on where plaintiffs are permitted to file patent-infringement lawsuits. The panel affirmed a district court ruling (from the plaintiff-friendly Eastern District of Texas) that the defendant “waived” objections to having the suit heard in Texas—even though the defendant voiced its objections throughout the district court proceedings. In a brief supporting the rehearing petition in Erfindergemeinschaft UroPep GbR v. Eli Lilly and Co., WLF charges that the Federal Circuit is inappropriately invoking waiver arguments as a means of evading the Supreme Court’s recently announced limitations on patent venue.
In a controversial 1990 decision, the Federal Circuit held that companies that sell products nationwide could be sued for infringement in any federal district court in the Nation. As a result of that ruling, patent holders (particularly patent “trolls”—a pejorative name for entities that buy up patent but do not produce any products) flocked to the Eastern District of Texas because of its reputation for issuing huge verdicts for plaintiffs. In 2015, more than 40% of infringement lawsuits were filed in rural East Texas, even though most nationwide companies conduct little business there. The Supreme Court ostensibly put an end to that practice in 2017 when it overruled the Federal Circuit’s expansive interpretation of venue rules. It held that infringement suits may only be filed in a district in which the defendant maintains “a regular and established place of business.”
But some Federal Circuit judges have resisted application of the new limitations to the many suits pending when the Supreme Court announced its 2017 decision. In this and other cases, Federal Circuit panels have upheld judgments from the Eastern District of Texas by declaring that the defendant waived all objections to venue—even though it was uncontested that the defendant did not maintain a regular place of business there. In its brief urging rehearing, WLF argues that such waiver findings are particularly inappropriate when (as here) the defendant objected to venue throughout the district court proceedings.
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