Texas Court Top Patent Venue, Delaware Close Behind in 2017

Jan. 5, 2018, 2:51 PM

By Mike Wilczek, Bloomberg Law

The Texas federal court that has been the most popular venue for patent infringement lawsuits narrowly held on to its title in 2017 despite a groundbreaking U.S. Supreme Court decision limiting where patent owners can sue.

The U.S. District Court for the Eastern District of Texas received 867 patent infringement complaints last year, 90 more than its closest rival, the U.S. District Court for the District of Delaware, Bloomberg Law data show. That court received 774 patent infringement complaints in 2017, the data show.

The Delaware federal court is likely to overtake the Texas one in 2018 if the trend that began with the Supreme Court’s May 2017 ruling in TC Heartland LLC v. Kraft Foods Group Brands LLC holds.[Image (src=https://db0ip7zd23b50.cloudfront.net/dims4/default/d208014/2147483647/legacy_thumbnail/600x400/quality/90/?url=https%3A%2F%2Fbspot-prod.bna.com%2Forca%2Fapi%2Frendition%2Fpng%2Forca93126.png%3Fdigest%3D07e8e164d2b40a3bdcb5939ae8f750eea2cc59e91cd52fe8d0cddb6b2f6f3e4e)][Image (src=https://db0ip7zd23b50.cloudfront.net/dims4/default/08eb6c3/2147483647/legacy_thumbnail/600x400/quality/90/?url=https%3A%2F%2Fbspot-prod.bna.com%2Forca%2Fapi%2Frendition%2Fpng%2Forca93127.png%3Fdigest%3D18abdd570418d42b261869447ad7d6c264038ef0d29ea4689a154bfeeda3df62)]The Eastern District of Texas, which has a reputation for being more favorable to patent owners, saw patent infringement complaints drop sharply after the TC Heartland ruling. It received 110 new complaints each month, on average, from January through May 2017. The average dropped to about 45 a month from June through December. The total for 2017 was down by nearly 50 percent over the previous year.

The opposite happened at the Delaware court, where patent infringement lawsuits surged. Patent attorneys and intellectual property academics expected that court to get a portion of the complaints that would have normally gone to Texas because so many companies are incorporated in Delaware. The court also had a large number of generic drug-related patent cases already on its docket.

Before the TC Heartland ruling, the Delaware court received, on average, about 46 new complaints per month. That average jumped to about than 78 per month after the decision, pushing the court’s 2017 total up more than 40 percent over 2016.

Patent owners must file lawsuits where an alleged infringer resides or has a regular and established place of business under the Supreme Court decision. Patent owners had been able to sue anywhere an allegedly infringing product was sold under the old venue rules, which had been in place for more than 20 years.

Overall, patent infringement lawsuits were down year over year, continuing a trend that started in 2016. Complaints filed in U.S. federal district courts fell by more than 600 filings in 2017, to 4,014.

Uniloc USA Inc., together with its Luxemburg-based parent company, was the top patent infringement filer, with 92 complaints. The patent holding company, which makes money from licensing patents and through litigation, filed 61 complaints in the Eastern District of Texas in 2017. Before the Supreme Court ruling, Uniloc only filed one complaint outside of the Texas court.

Uniloc’s lawsuits were against a who’s who of the technology sector, including Alphabet Inc.’s Google, Apple Inc., Amazon.com Inc., Samsung Electronics Co. Ltd., LG Electronics, Cisco Systems Inc., Motorola Mobility LLC, HTC America Inc., and Huawei Device Co. Ltd. Uniloc filed 11 complaints against Apple alone.

After Uniloc, the next four top complaint filers by volume in 2017 were: Sportbrain Holdings LLC with 64 complaints; Coding Technologies LLC, with 46; Venadium LLC, with 44; and Hybrid Audio LLC, with 43. Like Uniloc, all four of those companies are patent holding companies with technology patents.

Movie Studio Top Enforcer

Millennium Films was the top copyright plaintiff in 2017. The independent movie company, filed 351 complaints in various federal district courts alleging illegal downloading and distribution of its films using BitTorrent peer-to-peer networks. Millenium filed 183 of those complaints over “Mechanic: Resurrection,” an action movie starring Jason Statham, Jessica Alba, and Tommy Lee Jones.

Companies like Millennium typically bring such claims against unidentified defendants and then ask the courts to order internet service providers to identify their users based on internet protocol addresses. Such claims accounted for about a third of all copyright cases filed in federal district courts in 2017.

Copyright lawsuits filed in federal district courts dropped overall, by more than 200 cases in 2017, to 3,600. The decline was largely because of the drop in lawsuits filed by adult movie-maker Malibu Media LLC, once the most active plaintiff in copyright litigation. Malibu lawsuits dropped by more than 400, to 293 cases in 2017. The company filed the bulk of its 2017 lawsuits in February and, after a absence from court, resumed filing in November.[Image (src=https://db0ip7zd23b50.cloudfront.net/dims4/default/7006071/2147483647/legacy_thumbnail/600x400/quality/90/?url=https%3A%2F%2Fbspot-prod.bna.com%2Forca%2Fapi%2Frendition%2Fpng%2Forca93128.png%3Fdigest%3Db4e699fe6f8a88c5ae11df7cc05ec5f5fe7c7d46e1d957ae229637de86cbb87a)]Strike 3 Holdings LLC, another adult movie-maker, started its own litigation campaign in the last part of the year. Strike 3 filed 228 complaints from September through December.

The U.S. District Court for the Southern District of New York was the top venue for copyright infringement lawsuits. The New York court received 765 copyright complaints in 2017, 234 more than the previous year, Bloomberg Law data show. It knocked the U.S. District Court for the Central District of California, with 696 lawsuits, into second place.

The increase in complaints in New York was driven by lawsuits filed by the Liebowitz Law Firm on behalf of photographers alleging copyright infringement. The Liebowitz firm more than doubled the number of lawsuits it filed in 2017 from 2016. Liebowitz filed 388 copyright infringement lawsuits in 2017, with 368 at the New York court.

Trademark Lawsuits Also Down

Trademark infringement complaints were down by 274 to 2,912 in 2017 from the previous year. Fewer complaints were filed by big volume plaintiffs, such as eyewear giant Luxottica Group SpA, which filed half as many lawsuits in 2017 as it did in 2016.

More than half of the federal district courts that received trademark infringement complaints in 2016 saw a decline in filings in 2017.

Sream Inc, a distributor of glass water pipes from Germany, remained the most active plaintiff, with 70 lawsuits. Even so, the company filed 114 fewer complaints than in 2016. Perfume and cosmetics company Chanel Inc, the second largest plaintiff by volume, filed 33 trademark infringement complaints in 2017, down from 47 in the previous year. Yeti Coolers, a maker of high-end ice chests, came in at number three, with 26 lawsuits.

To contact the reporter on this story: Mike Wilczek in Washington at mwilczek@bloomberglaw.com

To contact the editor responsible for this story: Barbara Yuill at byuill@bloomberglaw.com

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