The Supreme Court will hear a case that may signal a death-knell for the Eastern District of Texas as the tech industry's so-called "rocket docket."
On Monday, March 27, the Supreme Court will hear oral arguments in TC Heartland v. Kraft Foods. The issues in the case are obscure, concerning old cases and fundamental issues such as fairness and the interpretation of statutes. But the practical impact of TC Heartland is important to engineers because it may signal a death-knell for the Eastern District of Texas (EDTX).
Since the late 1990s, a strong plurality of patent cases have been assigned to a handful of obscure towns in northeast Texas, including towns such as Tyler, Marshall, and Beaumont. This region of Texas is not known as a hotbed of technological development. Nevertheless, many patent owners have chosen to bring patent lawsuits in one of the last places that a neutral observer would ordinarily look for them.
The reasons for the phenomenon of the EDTX are varied. From a legal perspective, most judges tend to favor allowing a plaintiff in any case (not just patent cases) to sue in the location where they were harmed, or in any location where the defendant is otherwise subject to the courts. This principle makes sense for garden-variety product defect or auto accident cases.
When this principle is applied to patent cases, however, it produces anomalous results. The harm for patent infringement occurs whenever someone makes, uses, or sells a patented article, and most patent defendants--large, multinational corporations--are subject to courts throughout the United States. The combination of these factors gives patent owners the effective ability to sue anyone (i.e., any deep-pocketed corporation), anywhere, for patent infringement.
So why the Eastern District of Texas? Because patent owners and their attorneys usually forum shop—i.e., to find the most favorable jurisdiction for their case.
One of the problems that patent owners encounter is that some judges do not like to hear patent cases. In the early 1990s, one of the judges in the EDTX signaled that he was willing and able to hear patent cases on an expedited basis. This was great for patent owners, since time-to-trial is one of the key risk factors for any patent lawsuit.
Other EDTX judges soon followed. It soon became clear that Eastern District juries were skeptical of large corporate defendants and were willing to award large amounts of damages. Given the possibility of speedy trials and generous juries, it is not hard to see why patent owners flocked to the EDTX.
TC Heartland comes to the Supreme Court as part of a long campaign to shut down these practices. For many years, corporate defendants have complained--not entirely without cause--about the way their cases were being handled.
Both Congress and the higher courts have partially addressed these complaints. Thus far they have declined to stop EDTX, although they have clamped down on some of the more abusive problems. In hearing TC Heartland, the Supreme Court signaled that it is seriously considering redirecting cases to other jurisdictions.
If the Supreme Court rules in TC Heartland’s favor, several things are likely to happen. First, a number of existing cases are likely to be reassigned to other courts, creating some amount of disruption in the system.
Second, patent litigation in Delaware, where many companies are incorporated, is likely to increase significantly, creating a bottleneck there. Third, patent litigation in Los Angeles, San Francisco, and other urban centers is likely to increase.
After all of that, however, a substantial amount of litigation is likely to remain in EDTX even after TC Heartland. So it may not be time to say a firm goodbye to EDTX, but it may soon become a place that, like a now-distant uncle, you just don’t see as much as you used to.
--Thomas King is a partner in the Orange County office of Haynes and Boone.