Court competition for patent cases.

Author:Anderson, J. Jonas
Position:Introduction through II. Court Competition B. Court Competition in Patent Litigation 1. Judicial Incentive to Compete, p. 631-665

Introduction I. Forum Shopping II. Court Competition A. The Rise of Court Competition in Patent Litigation 1. Shopping for a Circuit Court: 1970-1982 2. Shopping for a District Court: 1982-2013 a. Eastern District of Texas b. District of Delaware c. Eastern District of Virginia B. Court Competition in Patent Litigation 1. Judicial Incentive to Compete a. Individual Incentives b. Institutional Incentives 2. Judicial Ability to Compete a. Procedural Distinctions: Patent Local Rules b. Case Management Distinctions i. Case Assignment Procedure: The Ability to Judge Shop ii. Preference for Trials iii. Reluctance to Transfer iv. Speed III. The Implications of Court Competition A. The Cost of Court Competition B. Court Competition as a Feature of Specialized Adjudication C. Reducing Forum Shopping and Court Competition 1. Scholarly Proposals 2. Congressional Proposals 3. Other Potential Methods of Reducing Court Competition a. Randomizing Case Assignment Within Districts b. National Assignment of Patent Cases c. Judicial Assignment of Venue CONCLUSION INTRODUCTION

There are ninety-four federal district courts in the United States, but nearly half of the six thousand patent cases filed in 2013 were filed in just two of those courts: the District of Delaware and the Eastern District of Texas. (1) In the Eastern District of Texas and the District of Delaware-- neither of which is home to a major technology industry (2)--patent litigation comprises an astounding proportion of each court's docket: twenty-eight percent of 2013 filings in the Eastern District of Texas were patent cases while fifty-six percent of 2013 filings in the District of Delaware were patent cases. (3) In fact, the two judges with the busiest patent dockets--Judge Rodney Gilstrap in the Eastern District of Texas and Judge Leonard Stark in the District of Delaware--have larger patent dockets than does the entire Central District of California, the district that receives the third most patent cases in the country. (4)

While the popularity of the Eastern District of Texas and the District of Delaware with patent plaintiffs is a relatively recent phenomenon, (5) the litigation tactic of selecting the court that offers the greatest odds of success--otherwise known as forum shopping--is not. Forum shopping has been a significant concern in the patent system for over forty years. (6) Forum shopping is generally understood to be driven by the search for favorable substantive law, favorable procedural rules, or "home court advantage." (7) However, the persistence of forum shopping in patent law cannot be fully explained by substantive legal differences or home court advantage. (8) Patent litigants cannot obtain substantive legal differences by forum shopping because all federal district courts are bound by the same legal rules that come from the U.S. Court of Appeals for the Federal Circuit. Furthermore, the fact that the majority of patent cases are filed in district courts that do not have sizeable technology industries indicates that most forum shopping is not the result of major technology companies seeking the advantages of litigating at the nearest courthouse. (9)

That leaves procedural differences. This Article theorizes that forum shopping in patent law is driven, at least in part, by federal district courts competing for litigants. This competition occurs primarily through procedural and administrative differentiation among courts. All patent infringement cases are heard in federal court and are therefore governed by the Federal Rules of Civil Procedure. Despite the existence of the Federal Rules, district courts across the United States have adopted local rules specifically for patent cases. Intriguingly, some districts have adopted local patent rules despite almost never hearing patent cases in their courtrooms, (10)

J. Jonas Anderson ([dagger])

([dagger]) Associate Professor, American University Washington College of Law. I am grateful to the following people for helpful comments on previous versions of this Article: Michael Carroll, Jorge Contreras, Christine Farley, Susy Frankel, Jeanne Fromer, Amanda Frost, Paul Gugliuzza, Tim Holbrook, Daniel Klerman, Ben Leff, Amanda Leiter, Mark Lemley, Jake Linford, Lynn LoPucki, Irina Manta, Mark McKenna, Peter Menell, Christina Mulligan, Andy Pike, Greg Reilly, Elizabeth Rowe, Andres Sawicki, Sean Seymore, David Snyder, and Lindsay Wiley. suggesting that local patent rules serve a signaling function for courts looking to attract potential patent litigants.

Beyond procedural distinctions, courts can compete for litigants by adopting administrative norms and practices that align with plaintiff preferences, such as predictable judge assignment procedures, favorable case management norms, and preferential motions practices. Conversely, a court can dissuade litigants from filing in its courtrooms by adopting norms that are contrary to litigant preferences, such as randomization of judge assignments and adoption of case management norms which do not appeal to particular litigants. To encourage filings, court-created norms must be consistent and predictable; in contrast, to discourage filings, courts must seek to decrease predictability. In essence, maintaining trial management practices in a predictable manner that favors a particular type of litigant (almost always plaintiffs) allows district courts to compete for the business of litigation, while adopting case management practices that litigants disfavor or that are unpredictable reduces a court's ability to attract forum shoppers.

Appreciating the impact of court competition in patent litigation provides numerous explanatory benefits over the current litigant-centric theory of forum shopping. First, court competition offers an explanation for the prevalence of patent forum shopping in the Federal Circuit era. (11) Although the Federal Circuit was created in an effort to eliminate the forum shopping caused by regional variations in patent law, (12) forum shopping remains rampant today. Court competition theory suggests that by centralizing patent appeals in the Federal Circuit--and thus unifying the law nationally--the relative importance of distinctions between district court administrative practices increased significantly. The presence of a centralized appellate court allows district courts to better leverage case management distinctions in an effort to attract patent litigants.

Second, court competition for patent cases better explains the appeal of particular district courts to plaintiffs. The traditional account of outcome- and geographic-based distinctions as the basis for forum shopping cannot account for district courts with similar characteristics that experience vastly different numbers of case filings. For instance, the Eastern District of Texas receives over 1300 patent cases annually, (13) while the Eastern District of Oklahoma has received only two patent cases in the past decade. (14) Similarly, likelihood of success at trial cannot fully explain litigant choice. (15) Empirical studies find that patentees are most successful when bringing suit in the Northern District of Texas, yet litigants largely prefer the Eastern District of Texas and the District of Delaware. (16) Court competition theory, in contrast, better maps the forum shopping that occurs in patent cases: courts that adopt procedures that appeal to patent litigants tend to receive more patent filings than courts that offer less appealing procedures.

Lastly, court competition theory links patent forum shopping with other legal areas that have also experienced high rates of forum shopping, most particularly bankruptcy law. (17) Bankruptcy judges have engaged in many of the same practices that district courts have used to attract litigants. The primary difference is that for patent cases, some courts have actively discouraged litigants from filing in their courts; (18) similar examples of courts actively discouraging filings are not present in the literature on bankruptcy court competition.

The fact that bankruptcy and patent law are the two fields of federal law that have experienced large amounts of court competition suggests that legal fields with specialized judges may be more prone to court competition. This may be true for a number of reasons. First, specialized courts may receive greater benefits from successfully attracting litigants than do courts of general jurisdiction and therefore are more likely to attempt to increase case filings. Scholars have suggested that specialist bankruptcy judges seek to attract cases in order to increase the power of the court. (19) By increasing case filings, specialized judges justify their specialized position and expand the court's influence and prestige. Second, specialist judges may have unique non-bureaucratic reasons to compete for cases. Specialists more easily obtain the prestige associated with being an expert jurist than do generalist judges. (20) Indeed, much of what motivates generalist judges to pursue increased patent filings is the ability to specialize. In many respects, some judges on the Eastern District of Texas and the District of Delaware operate like specialist patent judges.

The history of court competition in patent and bankruptcy law has normative implications for policymakers. The prevalence of court competition in areas of specialized adjudication suggests that lawmakers contemplating new, specialized courts should carefully consider--and limit--future courts' abilities to attract litigation. In particular, lawmakers should consider restricting venue options in specialized legal areas to reduce court competition. Furthermore, attention should be paid to the oversight capabilities of appellate courts tasked with policing the case management practices of trial courts in specialized legal fields.

Forum shopping has fundamentally altered the landscape of patent litigation in ways detrimental to the...

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