Forum Shopping in Patent Cases

Despite the pending high-profile withdrawal of the United Kingdom from the EU and growing Euroscepticism around the continent, the EU is determined with its plans to unify patent lawsuits into a consolidated system of courts, ahead. The Unified Patent Court, the current structure, aims to foster “uniformity of the legal order of the Union and the primacy of European Union law.” To achieve this goal, UPC contains a range of regulations aimed at curbing a growing concern affecting jurisdictions around the world: in patent litigation, forum shopping. Over the last two decades, the new European and U.S. system have seen a spike in forum shopping, leading to increased appeals, increased legal expenses, decreased litigation clarity, and the over-concentration of patent proceedings in only a few forums.
The “forum shopping” method encourages patent owners to file infringement suits in courts considered to be complainant-friendly, which easily brings lawsuits to trial and helps to create more favourable jury verdicts. In the other hand, patent owners have opposed venue change because they claim it is yet another way for infringers to avoid punishment by barring them from federal courts where they can get a reasonable trial against richer and more dominant infringers of the company.
Under the patent venue statute, 28 U.S.C. § 1400 (b), “[a]ny civil action for patent infringement may be brought in the judicial district where the defendant resides, or where the defendant has committed acts of infringement and has a regular and established place of business.”[1] The US Code also contains a broader venue statute, 28 U.S.C. § 1391, which states “[e]xcept as otherwise provided by law” and “[f]or all venue purposes,” a corporation “shall be deemed to reside, if a defendant, in any judicial district in which such defendant is subject to the court’s personal jurisdiction with respect to the civil action in question.”[2]
A federal appeals court found in VE Holding Corp. v. Johnson Gas Appliance Co.[3] , that the residence rule in the statute of the general venue must take precedence over the regulation of the statute of the patent venue. This harmless decision allowed claimants in every court where the defendant had any involvement, however tenuous, to institute violation suits. This has resulted in a growing tide of ‘patent trolls’ or non-practicing companies, who now had a relatively simple model for embroiling claimants in lawsuits and obtaining from them settlements or even penalties. This was way back in the early 2000s.
On December 14, 2016, in TC Heartland LLC v. Kraft Foods[4], the High Court decided to reconsider a Federal Circuit ruling in which the Federal Circuit upheld the long-standing tradition of allowing patent suits to be brought in every judicial district in which an allegedly infringing device was marketed by the defendant. In May 2017, the Supreme Court ruled in favour of Heartland, holding unanimously that only in the state where they are incorporated can corporations be sued for patent infringement. It is too early to say what TC Heartland would mean in the long term, but at least it was the Supreme Court’s attempt to minimise forum shopping and improve uniformity and predictability at the district-court level in patent proceedings.
In a case merely because of the choice of forum, Congress and judges have acted with court orders, laws, or public policy to discourage litigants from shopping sites, and to make the justice system predictable, clear, and fair if there is a way for the claimant or defendant to get a particular result in a case. It is unreasonable for the USPTO to encourage a patent drafter to merely modify a few terms without altering the subject matter of the application and to categorise the application more favourably. Big data and text processing make it very easy for patent drafters to enter a drafted application into a text editor with recent technological developments and get a forecast on where the USPTO will categorise the application. More concepts and approaches that would make the classification of an application even more dependent on its subject matter and less dependent on how creatively it is drawn up should be implemented. Such initiatives will improve uniformity and predictability thus, discouraging the drafting of artful patents.