In a previous post, I outlined the ways in which the Supreme Court's TC Heartland case has shifted the former filing preference for the Eastern District of Texas to other jurisdictions. The TC Heartland decision focused on the interpretation of 28 USC section 1400(b), which states:
Any 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.
After TC Heartland held that "resides" means the defendant's "state of incorporation," patentees have begun to file primarily in the District of Delaware. Given Delaware's popularity for incorporation, this shift is not particularly surprising.
Nonetheless, the Eastern District of Texas maintains second place for patent litigation filings over the past three months, according to Lex Machina searches.
Why is this the case? I have some thoughts and speculations. Perhaps you do as well, which I ask that you describe in the comments.
First up, this data measures initial filings before any motions to transfer are filed. Recall that patent plaintiffs really, really like the Eastern District of Texas (as described in this research by Brian Love and James Yoon). So long as there is a Rule 11 foundation for filing, patentee choice for this district sticky.
Which brings us to the second point. An "established place of business" has a fuzzy meaning where business is conducted virtually Specifically, Judge Gilstrap of the Eastern District of Texas has issued this order in Rayethon v. Cray detailing venue standards there. With a nod to this "Cyber Age" this order clarifies that a physical presence in the district is not required. In Rayethon, the court held that venue was properly in the Eastern District of Texas because, among other things, one of Cray's salesperson solicited business from his office there. Further, the accused system was used within that district (although the physical computer that implemented the sysetm was housed in Austin, which is within the Western District of Texas).
Some complaints filed post-TC Heartland ground venue on allegations that the defendant is "regularly doing or soliciting business, engaging in other persistent courses of conduct and/or deriving substantial revenue from goods and services provided to individuals in this district." (Clean Energy v. Cisco). Fall Line's patent complaint against Uber asserts that venue is proper there because Uber provides its ride-sharing services there and maintains a Greenlight Hub (a physical location staffed by an Uber employee) within the District. Presumably, companies with local stores to sell their products will fit within this same reasoning. Although these allegations have not been tested, presumably patentees are comfortable asserting these as sufficient under Rule 11.
It is not clear how quickly construct of proper venue under the "established place of business" standard will be crystallized. Certainly, some defendants who plan to settle early may never contest venue. To fight venue may only drive up one's own transaction costs, and therefore cases filed in the Eastern District of Texas may stay disappear quickly off of the court's active docket without a fight.