Patent litigationIntroduction:

In December of 2016, the United States Supreme Court agreed to hear a case that is “a challenge…to venue rules for patent cases [that] has the potential to upend patent litigation as we know it.” Ryan Davis, “Patent Litigation Trends to Watch In 2017,” Law 360, Jan. 2, 2017 at https://www.law360.com/articles/876203/patent-litigation-trends-to-watch-in-2017 (last visited Apr. 3, 2017). The decision it will render (which is expected in June of this year) may alter the nature and types of patent claims that will be made in 2017 and beyond, and there are several potential implications to the case’s eventual outcome.

Discussion:

Venue Issues: With respect to questions of venue, the Supreme Court is considering “the Federal Circuit’s longstanding rule that effectively allows patent suits to be filed in any district where the defendant makes sales, which has attracted a vast number of suits to the reputedly plaintiff-friendly Eastern District of Texas. If the justices discard the rule, patent suits would likely shift to other districts.” Id. When the Supreme Court agreed to contemplate that venue rule, many legal analysts were left with questions. One of those questions was whether the Supreme Court would “significantly curtail patent litigation in the Eastern District of Texas.” Id. Whenever ambiguity in a decision exists, there is room for argument by attorneys on each side and, accordingly, a need for expert testimony. Experts on venue and patents, and intellectual property in general are likely to play a role in interpreting whether the default rule stays in place or not.

The Supreme Court will make a final decision on this matter in the summer of 2017. See id. Until then, however, a bit of ambivalence is in the air. On the one hand, “[t]he possibility of losing out on the perceived advantages of litigating in the Eastern District of Texas could spur non-practicing entities interested in quick settlements to file even more suits there in the months leading up to the Supreme Court’s decision, expected by June. ‘It’s possible we might see a spike in the short term as people try to get a foot in the door now before the law changes,’” said Boris Zelkind of Knobbe Martens Olson & Bear LLP.” Id.
On the other hand, “litigants who expect to see a case through to trial may be more cautious and seek to file in a place where venue challenges won’t be an issue even if the law changes in a few months.” Id. This suggests that it will indeed be a battle of opposing arguments, at least until the Court rules, and it also means that both sides will require consulting experts to guide them in terms of where to file and defend their patent lawsuits.

One legal analyst tried to articulate the uncertain position of litigants until the Supreme Court makes its decision: ‘“You might use your lawyering skills to stall a little bit and try to get discovery stayed pending the outcome…, depending on where it goes, the case might be a major shift in where plaintiffs can file their lawsuits.’” Id.

Alice and Enfish Cases: Another set of cases that are expected to be affected by the Supreme Court are so-called “Alice” decisions. Specifically, “[a]fter the Supreme Court’s Alice decision that abstract ideas implemented using a computer are not patent-eligible under Section 101 of the Patent Act, courts invalidated many computer-related patents. However, a series of 2016 Federal Circuit rulings in which patents were found to pass muster under Alice will likely help more patents survive in the coming months, attorneys say.” Id.

After the Alice case was initially decided, the Court’s holding limited computer-related patent cases: the Federal Circuit only found one patent eligible after it was determined in 2014. See id. However, “[t]hat all changed in 2016, when the appeals court handed down several decisions reversing lower court rulings finding computer-related patents ineligible, beginning with a May decision known as Enfish.” Id.

The combination of Alice and Enfish have created a situation where litigants are somewhat unsure which rule will apply, so both sides are making arguments based upon the theories of expert witnesses. Prospective plaintiffs, who own certain patents will rely upon computer, engineering, patent, and general intellectual property experts, and these plaintiffs will also “cite those decisions extensively [Enfish and its progeny] when defending against eligibility challenges to their patents, and the precedent will likely persuade more judges to uphold patents under Alice.” Id.

Defendants are likely to invoke the Alice holding to dispute the claims made by plaintiffs about patent ownership. However, “Enfish and the other decisions give courts more precedent to support arguments by patent owners that the claims are valid,…so [there will be] a lot more losses on Section 101 motions than…previously.” Id.

In other words, until the High Court irons out these issues, attorneys on both sides will cite what precedents they wish to rely upon and will use their patent experts to help tell their stories, using credible theories from expert witnesses to sway adjudicators.

Conclusion:

There is no way of knowing how the Supreme Court will rule, but there are issues with venue and Alice-type cases that remain unresolved. It would behoove litigators to retain experts early and seek out their advice and opinions, both before filing or defending against a lawsuit and during the actual litigation process. Absent other guidance from a legal authority, the industry is rife with uncertainties that make expert witnesses more important than ever.