Shopping for reversals: How accuracy differs across patent litigation forums

Journal of Intellectual Property

Volumn 12, Issue 1, 2013, Pages 1-21

  Lii, Teresa ^a  

^a The Earth Institute at Columbia University   (United States)

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EID: 84885457187     PISSN: 15599493     EISSN: None     Source Type: Journal    
DOI: None     Document Type: Article

References (68)

1. Zoe Fox, How Much is Apple Worth?, Mashable Business (May 02, 2012) http://mashable.com/2012/05/02/apple-worth/ (last visited June 16, 2012).
2. William McQuillen, Abbott Told to Pay Record $1.67 Billion Award to J & J, Bloomberg L.P. (June 29, 2009 9:32 PM), http://www.bloomberg.com/apps/news?pid=newsarchive&sid=aF0Qoxe0JCiw (last visited June 16, 2012).
3. Cyber Corp. v. FAS Techs., Inc., 138 F.3d 1448, 1476 (Fed. Cir. 1998) (Rader, J., dissenting).
4. Black's Law Dictionary (9th ed. 2009). Forum shopping is defined as the "practice of choosing the most favorable jurisdiction or court in which a claim might be heard."
5. Yan Leychkis, Note, Of Fire Ants and Claim Construction: An Empirical Study of the Meteoric Rise of the Eastern District of Texas as a Preeminent Forum for Patent Litigation, 9 Yale J.L. & Tech. 193, 204 (2007).
6. In this study, "accuracy" is construed to mean "in accordance with the Federal Circuit". This terminology can certainly be contested, but as the Federal Circuit has final say in most patent cases, it will be accepted for this study.
7. 35 U.S.C. § 101 et. seq.
8. 28 U.S.C. § 1338(a) ("The district courts shall have original jurisdiction of any civil action arising under any Act of Congress relating to patents, plant variety protection, copyrights and trademarks. No State court shall have jurisdiction over any claim for relief arising under any Act of Congress relating to patents, plant variety protection, or copyrights.")
9. Burger King Corp. v. Rudzewicz, 471 U.S. 462, 487 (1985) (finding federal jurisdiction under a broad set of standards.)
10. Kimberly A. Moore, Forum Shopping in Patent Cases: Does Geographic Choice Affect Innovation?, 79 N.C. L. Rev. 889, 9003 (2001) (finding that "most patent cases are brought in only a handful of jurisdictions.")
11. Craig Allen Nard & John F. Duffy, Rethinking Patent Law's Uniformity Principle, 101 Nw. U. L. Rev. 1619, 1620 (2007).
12. The Federal Circuit itself has commented on this mandate: The purpose of this Court's enabling act, the Federal Courts Improvement Act of 1982 . . . is to provide a forum that will increase doctrinal stability in the field of patent law . . . This Court was created, as contemplated by the Congress, to achieve uniformity and to reduce uncertainties in this area. Panduit Corp. v. All States Plastic Mfg. Co., 744 F.2d 1564, 1573-74 (Fed. Cir. 1984) (internal citation and punctuation omitted).
13. David R. Pekarek Krohn & Emerson H. Tiller, Federal Circuit Patent Precedent: An Empirical Study of Institutional Authority and IP Ideology, 3, Faculty Working Papers, Paper 42, 3 http://scholarlycommons.law.northwestern.edu/facultyworkingpapers/42 ("Using a variety of citation approaches and statistical tests, we find that federal district courts treat the Federal Circuit as more authoritative (compared to the Supreme Court) on patent law, than they treat the regional circuits (compared to the Supreme Court) on copyright law.")
14. Ted Sichelman, Myths of (Un)Certainty at the Federal Circuit, 43 LOY. L. REV. 1161, 1165-71 (2010).
15. 28 U.S.C. § 1400 (b) ("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.")
16. Fourco Glass Co. v. Transmirra Prods. Corp., 353 U.S. 222, 229 (1957) (Prior to 1988 amendments, § 1391(c) read only that "A corporation may be sued in any judicial district in which it is incorporated or licensed to do business or is doing business, and such judicial district shall be regarded as the residence of such corporation for venue purposes.")
17. Manchester Modes, Inc. v. Schuman, 426 F.2d 629, 632 (2d Cir. 1970) (holding that "we find it exceedingly hard to believe Congress had any idea that by enacting § 1391(c) it was allowing a corporation which did business in a multitude of districts to sue in any of them irrespective of the residence of the defendant.")
18. VE Holding Corp. v. Johnson Gas Appliance Co., 917 F.2d 1575, 1582-83 (Fed. Cir. 1990) (noting that "the 'freezing' of patent venue as a result of Fourco has made patent venue an anomaly" by "unduly shield[ing] a corporate infringer.") (internal citation omitted)
19. Jeanne C. Fromer, Patentography, 85 N.Y.U. L. Rev. 1444 (2010) (arguing that restricting venue in patent litigation to a defendant's principal place of business would decrease on forum shopping).
20. 28 U.S.C. § 1391(c).
21. VE Holding Corp., 917 F.2d at 1583-84 (holding that, for patent-related civil suits that did not involve infringement claims (e.g. a declaratory judgment suit), the general venue statute of § 1391 applies.)
22. International Shoe Co. v. Washington, 326 U.S. 310, 316 (1945) (setting out the present-day test for personal jurisdiction requiring a defendant to have minimum contacts with the forum such that the maintenance of the suit does not offend traditional notions of fair play and substantive justice).
23. Chester S. Chuang, Offensive Venue: The Curious Use of Declaratory Judgment to Forum Shop in Patent Litigation, 80 Geo. Wash. L. Rev. 1065,(2012)
24. Mark A. Lemley, Where to File Your Patent Case, 38:4 AIPLA Q.J. 1 (2010)
25. Roderick R. McKelvie, Forum Selection in Patent Litigation: A Traffic Report for 2006, Covington & Burling (2007)
26. Alisha K. Taylor, Note, What Does Forum Shopping in the Eastern District of Texas Mean for Patent Reform?, 6 J. Marshall Rev. Intell. Prop. L. 570 (2007)..
27. Black's Law Dictionary (9th ed. 2009). A rocket docket is defined as: "A court or judicial district known for its speedy disposition of cases."
28. Local Rules for the Eastern District of Texas: Appendix M Patent Rules, available at http://www.txed.uscourts.gov/cgi-bin/view_document.cgi?document=1179&download=true [hereafter E.D. of Tex. Rules]
29. Andrei Iancu & Jay Chung, Real Reasons the Eastern District of Texas Draws Patent Cases-Beyond Lore and Anecdote, 14 SMU Sci. & Tech. L. Rev. 299 (2011).
30. Shahnaz Mahmud, See Y'all Real Soon!, Managing Intell. Prop., Oct. 2006 (reporting that, on average, bench trials in the Eastern District of Texas resolve in 22.3 months compared to 37.8 months nationwide, while jury trials resolve in 21.1 months compared to 27.1 months nationwide). But see Tresa Baldas, Texas IP Rocket Docket Headed for Burnout?, Nat'l L.J., Dec. 28, 2004 (commenting that the average time to trial in the Eastern District of Texas has increased as the patent dockets are flooded by new cases)
31. Tresa Baldas, Texas IP Rocket Docket Headed for Burnout?, Nat'l L.J., Dec. 28, 2004 (commenting that the average time to trial in the Eastern District of Texas has increased as the patent dockets are flooded by new cases)
32. U.S. District Courts Civil Cases Commenced, By Nature of Suit and District, Judicial Business of the United States Courts, available at http://www.uscourts.gov/Statistics/JudicialBusiness.aspx (a comparison of Table C-10 (or T-3 in later years) from various years showing that the median time from filing to trial in the Eastern District of Texas has been steadily increasing since 2004).
33. Julie Creswell, So Small a Town, So Many Patent Suits, N.Y. Times, Sept. 24, 2006.
34. Susan Decker, Texas District is Heaven for Patent Holders Under Siege, Seattle Times, May 1, 2006 (quoting Judge Ward to say that "[p]roperty rights and respect for government resonate particularly strongly in East Texas").
35. Paul M. Janicke & LiLan Ren, Who Wins Patent Infringement Cases?, 34 AIPLA Q.J. 1 (2006).
36. Saurabh Vishnubhakat, Reconceiving the Patent Rocket Docket: An Empirical Study of Infringement Litigation 1985-2000, 11 J. Marshall Rev. Intell. Prop. L. 58, 61-70 (2011) (arguing that litigants are attracted to different rocket dockets for various reasons, including speed, efficiency and reputation for plaintiff-friendliness).
37. Goad v. Celotex Corp., 831 F.2d 508, 512 n.12 (4th Cir. 1987)
38. Richard Maloy, Forum Shopping? What's Wrong with That?, 24 Q.L.R. 25, 25 (2005)
39. Stowell R. R. Kelner, Note, "Adrift on an Uncharted Sea": A Survey of Section 1404(a) Transfer in the Federal System, 67 N.Y.U. L. Rev. 612, 638 (1992).
40. 28 U.S.C. § 1404(a) authorizes a district court to transfer a case to any other district or division where it might have been brought "[f]or the convenience of the parties and witnesses, in the interest of justice."
41. Ferens v. John Deere Co., 494 U.S. 516, 527 (1990)
42. Keeton v. Hustler Magazine, Inc., 465 U.S. 770, 779 (1984) (upholding plaintiff forum shopping for a favorable statute of limitations because it was akin to forum shopping for favorable substantive or procedural rules, or jury pool).
43. Carter G. Phillips, Lewis F. Powell, Jr. Lecture, 66 Wash. & Lee L. Rev. 1467, 1472 (2009) (remarking that forum shopping is "already a serious problem in patent litigation").
44. Blonder-Tongue Labs, Inc. v. Univ. of Ill. Found., 402 U.S. 313, 331 (1971) ("[P]atent litigation can present issues so complex that legal minds, without appropriate grounding science and technology, may have difficulty in reaching decision.")
45. James F. Holderman & Halley Guren, The Patent Litigation Predicament in the United States, 2007 U. Ill. J.L. Tech. & Pol'y 1, 105-106 (outlining several reasons, including a lack of scientific backgrounds or special training in patent law, why district judges struggle with patent cases as generalists of the law).
46. U.S. Court of Appeals for the Federal Circuit, Appeals Filed, Terminated, and Pending, available at http://www.cafc.uscourts.gov/the-court/statistics.html.
47. Cyber Corp., 138 F.3d at 1476 (Fed. Cir. 1998) (Rader, J., dissenting).
48. Cyber Corp., 138 F.3d at 1456.
49. Mark A. Lemley, The Changing Meaning, 104 Mich. L. Rev. 105, 106 (2005).
50. Cybor, 138 F.3d 1475-76 (Rader, J., concurring in part).
51. Randall R. Rader, The State of Patent Litigation, 21 Fed. Cir. B.J. 331, 337 (2012).
52. Jean O. Lanjouw & Mark Schankerman, Protecting Intellectual Property Rights: Are Small Firms Handicapped?, 47 J.L. & Econ. 45, 48 (2004).
53. Emergy G. Lee III & Thomas E. Willging, Fed. Judicial Ctr., Litigation Costs in Civil Cases: Multivariate Analysis 8 (2010), available at http://ssrn.com/abstract=1606846.
54. For a brief introduction to statistics, testing of two proportions and p-values, see Michael O. Finkelstein & Bruce Levin, Statistics for Lawyers, Second Edition, Statistics for Social Science and Public Policy, Springer-Verlag New York, Inc., 2001. Chapter 4.2 gives a brief explanation of hypothesis testing, while Chapter 5.1 explains the test that was used for this study. Note that only two-tailed tests were used for this study, as there was no hypothesis that the rate of reversal for any district was significantly different from the overall rate of reversal in one direction
55. Accessible at next.westlaw.com.
56. These dates were chosen because the research was completed in April 2012, and extended back through January 2009 in order to keep the data set limited to the most recent and relevant cases.
57. Thus, for example, cases dealing with venue transfer and false marking were excluded.
58. Cases where the Federal Circuit was reversed by the Supreme Court were excluded because of the extremely low probability that this would happen for any given patent litigation suit, and because it would make little sense for any litigator at the district court level to base his litigation strategy on having the case appealed all the way to the Supreme Court and relying on the Supreme Court reverse the Federal Circuit (regardless of whether the Federal Circuit affirms or reverses the district court). Cases affirmed by the Supreme Court, on the other hand, were included, because the litigation would conclude as if the case had only reached the Federal Circuit.
59. Of the courts having less than ten cases on appeal, the highest rates of reversal were from the District of Colorado (100%), the Eastern District of Pennsylvania (66.67%), the Southern District of California and the Middle District of Florida (each 50%). However, the rates of reversal are most likely highly skewed due to the small sample sizes of these districts, and therefore were excluded.
60. The weighted average was calculated by dividing the total number of cases reversed, regardless of district, over the total number of cases studied. The nonweighted average was calculated by averaging the rate of reversal by district over the total number of districts studied, and therefore gives disproportionate weight to districts with fewer cases.
61. All districts and not only those with ten or more cases on appeal are included in calculating the average and weighted average rate of reversal in order to obtain a more accurate result due to larger sample size. However, it was believed that studying in depth only those districts with more than ten cases on appeal would lead to more accurate results, for the same reason
62. Michael O. Finkelstein, Basic Concepts of Probability and Statistics in the Law 20 (Springer Science + Business Media LLC 2009) ("as the sample size [of the average] increases, the probability that the sample estimator will differ from the population parameter by any given amount approaches zero").
63. It is easier to think of "significantly not higher" as "significantly lower" and "significantly not lower" as "significantly higher," although this is not strictly speaking statistically correct. However, it may help the reader to understand why these results are important.
64. This was calculated by searching through each district court's docket on BloombergLaw's Docket Search for patent cases that had been filed between August 2005 and December 2008, where the nature of the suit was marked "Property Rights - Patent [830]."
65. For a discussion of R-squared values, see Michael O. Finkelstein & Bruce Levin, Statistics for Lawyers, Second Edition, Statistics for Social Science and Public Policy, Springer-Verlag New York, Inc., 2001. Chapter 13.3 explains that R-squared values are used to determine the correlation between two variables. Generally speaking, R-squared values range between -1 and 1. The farther away from 0 the R-squared value is, the higher the correlation between the variables.
66. This date range acts as a rough estimate for the dates in which cases filed at the district court level might have been decided on appeal by the Federal Circuit between January 2009 and March 2012. Patent cases were demarcated when the nature of the suit was marked "Property Rights - Patent [830]."
67. The highest R-squared value obtained for any of the graphs was 0.038, which shows essentially no correlation whatsoever.
68. "Total Cases" denotes all cases filed between July 2005 and August 2008, while "Total Appeals" denotes the number of those cases that reported at least one appeal to the Federal Circuit. The data was obtained from performing a Docket Search on Bloomberg Law, available at bloomberglaw.com, for all dockets that were commenced in that date range, where the nature of the suit was marked "Property Rights - Patent [830]."