For most of patent law’s 200-plus year history, patent holders could sue only in the district inhabited by the defendant. In 1990, the United States Court of Appeals for the Federal Circuit decided that the scope of permissible venue extended to all districts with personal jurisdiction over the defendant. In recent years, patentees have flocked to certain districts, fueling the widespread perception that patentees, particularly those that do not practice their patents, called non-practicing entities (“NPEs”), are abusing forum. Responsive to these concerns, Congress and the courts have moved to reinstate a more restrictive rule, culminating in the Supreme Court’s 2017 TC Heartland LLC v. Kraft Foods Group Brands LLC decision to limit venue to locations of the defendant. Yet, incredibly, to date there has been no measure of the overall pervasiveness of forum shopping and whether TC Heartland or any other venue reform will change this phenomenon.
We address this gap by estimating the differential impacts of reform on filing patterns. We find, based on an analysis of approximately 1500 patent and non-patent cases filed in 2015 that about 86% of patent cases—a striking share—were brought outside of the defendant’s home district. This practice is not limited to non-practicing entities, however; corporations, universities, and individuals all filed outside of defendant districts. Things would have been different if venue were reformed, but much depends on how reform is implemented. If the Supreme Court’s decision to restrict venue to where the defendant resides or has an established place of business were already in effect, an estimated 58% of 2015 cases would have had to have been filed in a different venue. If the Congressional proposal to change venue to include home districts with research or manufacturing connections to the case had been in effect, about half the NPE cases in our sample would have needed to be refiled in another district, but only 14% of the operating company cases would. Cases would have become less concentrated in a single district, with the top district, Delaware, capturing 20–24% of cases, but the top three districts, the District of Delaware, the Eastern District of Texas, and the Northern District of California, would still have the majority of cases. Regardless of the reform, we expect smaller defendants to get more from venue relief than larger defendants because of their relatively smaller footprints. Among NPEs, universities, individuals, and small companies should be impacted to a lesser extent than patent assertion entities (“PAEs”), considerably so if the VENUE Act were enacted.
77 Md. L. Rev. 46 (2017)