Virginia IP Law : Virginia Intellectual Property Lawyer & Attorney : Troutman Sanders Law Firm : Technology & Patent Litigation

Some of our colleagues have produced a concise summary of the most significant aspects of the Leahy-Smith America Invents Act (AIA), which can be found here. In advance of the legislation’s expected enactment by the President, we’d like to highlight a few provisions that will directly impact patent litigation in Virginia:

Venue

As we blogged here way back in 2009, Section 9 of the AIA moves venue for civil actions appealing various decisions of the PTO, BPAI and TTAB from the District Court in Washington, D.C. to the Eastern District of Virginia. Such actions include civil actions appealing decisions by the BPAI relating to patent rejections (35 USC 145) and interferences (35 USC 146), civil actions appealing decisions by the PTO relating to patent term adjustments (35 USC 154(b)(4)(A)), civil actions appealing decisions of the TTAB relating to registration of a trademark (15 USC 1071(b)(4)), and civil actions appealing suspensions or exclusions from practice before the PTO (35 USC 32). The change applies to any civil action commenced on or after the enactment of the AIA.

Multi-Defendant Litigation

We’ve noted  the increased frequency of patent litigation involving large groups of defendants on several occasions. Section 19 of the AIA addresses these cases by severely limiting joinder of defendants in patent litigation. Plaintiffs filing suit after enactment of the AIA can join multiple accused infringers only if the defendants are jointly or severally liable or liable in the alternative for infringement arising out of the same transaction, occurrence or series of transactions or occurrences. The claims must also involve questions of fact common to all defendants, and so common issues of claim construction will presumably be insufficient. In addition, the AIA specifically provides that an allegation that each defendant has infringed the same patent is insufficient for joinder. 

False Marking

Virginia has not been a hotbed of false marking cases, but many such cases have been brought here. Section 16 of the AIA effectively ends the practice of bringing qui tam false marking cases by restricting the award of statutory damages to the United States. A plaintiff can still recover compensatory damages for actual competitive injury, but the AIA provides that the marking of a product with an expired patent that covered the product does not constitute false marking. The false marking provisions of the AIA apply to all suits pending at the time of enactment.

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PatentlyO reports here that the House version of patent reform legislation, H.R. 1249, will be the first item that the Senate will take up after its August recess.  Rather than attempt to reconcile the differences between the House and Senate passed bills, the Democratic majority intends to attempt to invoke cloture and pass the House bill as is, potentially speeding the legislation to President Obama's desk.

Perhaps, at long last, patent reform is at hand.

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On March 8, the Senate passed comprehensive patent reform legislation by a vote of 95-5. While almost all the litigation-related provisions were removed, one provision, placing venue for suits against the PTO in the Eastern District of Virginia, was included in the final bill.

Congress has struggled with patent reform over the past several Congresses, and a few of our posts from previous efforts can be found here and here. The latest bill, S. 23, with changes made in the Judiciary Committee, can be found here.  A good summary of the provisions of the bill as passed by the Senate written by the Congressional Research Service can be found here.

There are few provisions left which will alter patent litigation lawsuits. The proposal to alter willfulness claims in the original bill was eliminated in Committee, and other litigation provisions affecting venue and damages were removed on the Senate floor through a manager’s amendment, which can be found here.  The bill also left out a proposal for a pilot program in district courts to provide training and additional resources for judges willing to take patent cases, which appeared in earlier versions of patent reform legislation.

The one venue provision that survived the manager’s amendment has a direct effect on Virginia. That provision changes the venue for litigation against the Patent and Trademark Office from the federal court in Washington to the Eastern District of Virginia, since the PTO is located in Alexandria.  The bill also effectively eliminates false patent marking claims under 35 U.S.C. 292(a) and eliminates the best mode defense to claims of patent infringement.

The legislation now moves to the House of Representatives, which held subcommittee hearings on patent reform on March 9 and 10.  There are indications that the Senate attempted to address some of the House's concerns in the manager's amendment, and so hopes for ultimate enactment of the legislation are higher than in past years.  Even if passed by the House and enacted into law, though, patent reform will be delayed a bit longer. The effective date of the Act is one year after enactment and applies to any patent issued after that effective date.

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Sen. Patrick Leahy announced last Thursday that agreement had been reached by a bipartisan group of Senators on a compromise bill providing for patent reform. The full text of the bill can be found here.

Undoubtedly, the blogosphere and legal publications will shortly become saturated with analysis of the compromise bill and speculation about its chances for passage.  Last April, we blogged about a relatively minor provision of the bill -- the provisions addressing venue.  As patent litigators in Virignia, we have a particular interest in venue, because the venue provisions of the bill will direcly affect the volume of patent cases filed here.

The compromise version of the bill includes the same provisions discussed in our earlier post, which can be found here. Here are the highlights (all of which are discussed in detail in the earlier post):

• the legislation provides that a district court shall transfer a case upon finding that a transferee forum is clearly more convenient. (Sec. 8 of the bill, page 72).
   
• the legislation establishes a pilot program in six U.S. District Courts that provides $5 million a year for education of judges and hiring of patent law clerks. (Sec. 16 of the bill, pages 92-93). 
   
• the legislation changes venue for civil actions appealing decisions by the BPAI relating to patent rejections and interferences, civil actions appealing decisions of the PTO relating to patent term adjustments, civil actions appealing decisions of the TTAB relating to registrations of a trademark, and civil actions appealing suspensions or exclusions from practice before the PTO from the District Court in Washington to the Eastern District of Virginia. (Sec. 8 of the bill, pages 72-73).

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On April 2, the Senate Judiciary Committee passed a compromise version of S. 515, the Patent Reform Act (the “Act”). The original bill can be found here, and the amended bill is here.  A few observations on the Act’s impact on litigation in Virginia:

Venue

• The original bill limited venue in most patent cases to districts where the defendant is incorporated, has its principal place of business or has a “regular and established physical facility . . . that constitutes a substantial portion of [its] operations.” This provision would have shifted cases from popular plaintiff’s forums like the Eastern District of Texas to the homes of high-tech companies such as California, Delaware and New Jersey/New York and perhaps Virginia, based on the high-tech presence in Northern Virginia.

• The amended bill replaced those venue provisions with a very short new subsection, 28 U.S.C. §1400(c), which provides that “for the convenience of the parties and witnesses, in the interest of justice,” a district court shall transfer a patent case “upon a showing that the transferee venue is "clearly more convenient” than the current venue. (emphasis added).

• The “clearly more convenient” language comes from In re Volkswagen, 545 F.3d 304, 315 (5th Cir. 2008) (en banc) and In re TS Tech, 551 F.3d 1315 (Fed. Cir. 2008). Some commentators have characterized the amendments as “codifying” TS Tech, but the true impact is likely to be more muddled. Since the Act does not alter 28 U.S.C. § 1404(a), courts may well continue to apply their existing venue transfer standards and ignore the “clearly more convenient” standard. More likely, courts will simply add the “clearly more convenient” standard to their existing analysis.

• In Virginia, a “clearly more convenient” standard may produce fewer venue transfers. In several post-TS Tech decisions, transfer has been denied as not “clearly more convenient” where parties, evidence or witnesses are located in several forums. See Novartis Vaccines & Diagnostics, Inc. v. Hoffman LaRoche, Inc., 2009 U.S. Dist. LEXIS 14656 (E.D. Tex. Feb. 3, 2009) (transfer denied where drug developed in North Carolina, manufactured in Colorado, processed in Michigan or Switzerland, packaged in New Jersey and sold nationwide). Under Virginia federal court precedent, by contrast, transfer is often granted if the parties are not located in Virginia and Virginia is not the “center of accused activity.” See GTE Wireless v. Qualcomm, 71 F.Supp. 2d 517, 519 (E.D.Va. 1999). Thus, a “clearly more convenient” standard may shift the focus from whether the case has ties to Virginia to whether the case has ties to a particular transferee district. That accused activity is occurring nationwide, for instance, would count against transfer rather than, as it presently does, in favor of transfer.

District Court Pilot Program

• The amended bill establishes a 10-year pilot program for patent cases in at least six U.S. District Courts. Courts included in the program must be among the 15 districts with the largest number of patent cases or that have adopted local patent rules. At least three of the courts must have more than 10 active judges (including three judges who have requested and been designated to hear patent cases), and at least three must have fewer than 10 active judges (including two designated patent judges). The pilot program includes $5 million a year for education of judges and hiring patent law clerks. Cases would still be randomly assigned to all judges, but non-patent judges could decline to accept patent cases.

Venue for Patent and Trademark Appeals

• A technical amendment in the Act moves venue for civil actions appealing various decisions of the PTO, BPAI and TTAB from the District Court in Washington, D.C. to the Eastern District of Virginia. Such actions include civil actions appealing decisions by the BPAI relating to patent rejections (35 USC 145) and interferences (35 USC 146), civil actions appealing decisions by the PTO relating to patent term adjustments (35 USC 154(b)(4)(A)), civil actions appealing decisions of the TTAB relating to registration of a trademark (15 USC 1071(b)(4)), and civil actions appealing suspensions or exclusions from practice before the PTO (35 USC 32). Though such actions are relatively rare, this change could increase the volume of patent practice in Virginia.

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