Choosing wisely: Practical considerations for choosing venues for IP disputes

Should you opt to pursue your claims in district court, you are likely to find yourself in certain districts

Corporations interested in enforcing their intellectual property, monetizing their patent portfolios, or defending themselves against charges of infringement have multiple forums to press their case, the most popular of which are: an infringement suit or declaratory judgment action in the United States district courts; an investigation at the U.S. International Trade Commission (ITC), and filing either an inter partes review or post-grant review at the U.S. Patent and Trademark Office. Each forum has unique opportunities and challenges, and it can be hard to determine the benefits and drawbacks of each.  This series introduces each venue and the strategic considerations in pursuing actions at each, starting with the district courts.

The first venue that comes to most counsels’ minds is the United States district courts. The district courts are the most traditional option for offensive use—enforcing your intellectual property rights. They may also be used defensively, as companies who have been threatened with (or had their customers threatened with) charges of infringement may file actions for a declaratory judgment of patent invalidity or non-infringement. 

The district courts offer the broadest scope of remedies for infringement because they can address infringement of patents, trademarks, copyrights and trade secrets, can provide both injunctive relief and monetary damages, and may also declare patents invalid or not infringed.  They are also the only forum where the option of a jury trial is available, and juries may be a substantial advantage to companies with a sympathetic story and technologically uncomplicated cases.

Because of their strong subpoena power and lengthy discovery period, district court actions generally allow discovery from the widest range of parties, including those overseas. Accordingly, if your case requires discovery from parties located overseas, or who notoriously resist discovery, filing in district court is advantageous.

However, there are also downsides to the district courts. It is the slowest option and, outside of certain districts, you may have a judge with limited experience in patents or interest in delving into the details of technology. In addition, juries may be unsympathetic to foreign clients, have difficulty with technology, and always add uncertainty.

While district courts do issue injunctions as a remedy for intellectual property infringement, after the Supreme Court’s 2006 decision in EBay v. MercExchange it has become increasingly difficult to obtain injunctions in the district courts. Post-EBay, the rate of injunctions in district court has fallen to only 75 percent of reported cases overall, with the percentage being much lower in certain types of patent cases. Further, even when district courts issue injunctions, they may be ineffective to stop sales by small parties, which either avoid detection or ignore the order. As discussed in a later installment, if your primary goal is injunctive relief, the ITC may be your best option. The ITC, and its general exclusion order, is particularly effective when many small parties infringe your intellectual property or the products enter the country many hard-to-police ways, such as with knockoffs. Another disadvantage to the district courts for parties with multiple infringers is the fact that, due to changes made in the 2011 America Invents Act, district court plaintiffs are often unable to name all potential infringers in one suit and must instead bring multiple suits in multiple districts.

While they are the forum with the strongest ability to compel discovery, the district courts have substantial limits on discovery which may hinder parties needing broader discovery to develop their cases.  In addition, while parties may use the district courts defensively to file actions seeking declaratory judgments of invalidity or non-infringement, such actions often trigger countersuits. Also, district courts have traditionally been less likely to invalidate patents than the ITC or USPTO. 

Should you opt to pursue your claims in district court, you are likely to find yourself in the following districts, ranked in order of number of patent cases: Eastern District of Texas, District of Delaware, Northern District of California, or Eastern District of Virginia. Below are some pros and cons of each: 

Eastern District of Texas: much has been written about this district and its rise to popularity, much of it relating to the small size of the local patent bar (making the retention of knowledgeable local counsel essential), reputation for patent-friendliness ( patentees win in 57 percent of cases, with median awards of $10 million), and some large jury verdicts. In PriceWaterhouseCoopers’ 2013 Patent Litigation Study, median time to trial was roughly two years. However, it may unfairly have the reputation for being less welcoming to foreign companies, or those without the best local counsel.

Delaware: Knowledgeable judges, strong bench trial practice (which are often preferred by accused infringers), and a reputation for being friendly to patentees (patentees win 42 percent of cases with median damages of $20 million). Median time to trial is slightly less than two years, according to the PWC study.

Northern District of California: Perhaps the first district in the United States to have special procedures for patent cases, and its patent rules are the models for those used in trials and districts across the country. However, these rules include substantial early disclosures, locking parties into their arguments earlier, and front-loading much discovery and its costs. It is also relatively slow, with median time to trial in patent cases of almost three years. Patentees win 24 percent of cases, with median awards of $8 million.

Eastern District of Virginia: Gained prominence with its “rocket docket,” which allows patent trials to conclude in a year. However, the district increasingly grants transfer motions, so unless there is a strong tie to Virginia, cases filed there are highly susceptible to transfer. In addition, the expedited proceedings allow for less time to gather evidence and to explore legal theories. Patentees succeed 35 percent of the time, with median damages of $36 million. 

District courts offer the widest range of relief for the widest range of infringements and may be used defensively. However, they are the slowest, least predictable, and most expensive option, and are unsuited to certain cases.  

 

District Court

USITC

PTAB

Injunctive relief available?

Yes, but less common

Yes

No

Monetary damages available?

Yes

No

No

May invalidate patents?

Yes

Yes

Yes

General exclusion order available?

No

Yes

No

Will determine whether rights are infringed?

Yes

Yes

No

Judges experienced with patent cases?

Varies

Yes

Yes

Speed

At least 2-3 years (except for EDVa)

16 months, 12 months until initial decision

12-18 months

Cost

Along with the USITC, the most expensive option

Along with district court, the most expensive option

Least expensive option

Offensive use

Yes

Yes

No

Defensive use

Yes

No (except for counter-suits)

Yes

Patents

Yes

Yes

Yes

Trademark

Yes

Yes

No

Copyright

Yes

Yes

No

Trade Secret

Yes

Yes

No

Overseas discovery

Yes

Yes (but limited)

Only allowed with authorization

Third party discovery

Yes

Yes (but limited)

Only allowed with authorization

Contributing Author

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Aarti Shah

Aarti Shah is a member in Mintz Levin’s Washington, D.C. office and former senior investigative attorney at the U.S. International Trade Commission. She specializes in...

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