March 28, 2016

“Bill Curbing EDTX Patent Docket May Have Legs In Congress,” Law360, March 24, 2016

Law360, New York (March 24, 2016, 3:01 PM ET) — A Senate bill that would place new restrictions on where patent lawsuits can be filed would effectively shut down the busy patent docket in the Eastern District of Texas and could get enough support to become law, even though broader patent legislation has stalled, attorneys say.

The bill, introduced March 17, would restrict patent suits to courts where the defendant has a place of business or is incorporated, or where the patented invention was developed, among other factors.

The bill appears aimed at preventing patent suits from being filed in the Eastern District of Texas, which saw 45.5 percent of all patent complaints last year. Few accused infringers are based in East Texas and few technologies are developed there, so the rules would be an effective way of shifting patent legislation elsewhere, attorneys say.

“This bill screams, ‘We want patent cases out of the Eastern District of Texas.’ It all but says that,” Baldassare Vinti of Proskauer Rose LLPsaid. “If it passes, it will have a real effect and real teeth, and the patent community will quickly see an impact.”

A very similar provision was included in a wide-ranging patent bill that advanced out of committee in the House last year, but it has stalled in the months since. A narrowly targeted bill to overhaul venue rules for patent cases could stand a better chance of being enacted, however, since the disproportionate number of cases in Texas has gotten widespread attention, attorneys say.
“It seems like this is the kind of thing Congress can do,” Arthur Gollwitzer of Michael Best & Friedrich LLP said. “It’s a very simple, four-page bill, and it looks like it would work.”

The more comprehensive patent bill in the House, and a similar one in the Senate, include such provisions as raising pleading standards in patent cases and requiring fee-shifting more often. Proponents say the bills are aimed at reducing abusive litigation by nonpracticing entities, but the changes would apply to all patent owners, sparking concerns that they could stifle even legitimate patent suits.

The venue bill, in contrast, is aimed narrowly at the subset of nonpracticing entities seeking to use the Eastern District of Texas to their advantage, according to Rudolph Telscher of Harness Dickey & Pierce PLC.

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