The Race to the Courthouse Just Got a Little Easier for Accused Infringers

• Publication year: 2021
• Author: Ted Chandler, Bradley Shigezawa

THE RACE TO THE COURTHOUSE JUST GOT A LITTLE EASIER FOR ACCUSED INFRINGERS

AUTHORS

Ted Chandler

Baker Botts LLP

Bradley Shigezawa

Baker Botts LLP

INTRODUCTION

A recent Federal Circuit decision may make it easier for accused infringers to win the race to the courthouse, and as a result there may be an uptick in declaratory judgment actions.

In patent cases, a declaratory judgment action under 28 U.S.C. § 2201 allows an accused infringer to race to the courthouse, instead of waiting for the patentee to file suit. But until recently, when there was a race to the courthouse, the parties did not start on equal footing. The patentee often had an easier time than the accused infringer finding courts with personal jurisdiction and venue. And a patentee could surprise an accused infringer by filing suit in any of those courts without warning, while an accused infringer typically had to be threatened by the patentee before filing a declaratory judgment action, effectively keeping the keys to the courthouse in the back pocket of the patentee. No wonder, then, that declaratory judgment actions in patent cases have been increasingly rare—less than five percent of all patent cases in recent years.¹

The Federal Circuit's recent decision in Trimble may reverse that trend.²

In Trimble, the Federal Circuit distinguished its prior holding in Red Wing,³ which had restricted personal jurisdiction in declaratory judgment actions for the past twenty-three years. Now, under Trimble, accused infringers have a better chance of establishing personal jurisdiction in their home court against the patentee.

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The following hypothetical illustrates what the race to the courthouse may look like now, as well as common pitfalls to avoid if you find yourself in such a race:

Our hypothetical patentee is a Texas company headquartered in Dallas (within the Northern District of Texas).

Our hypothetical accused infringer is a Delaware corporation headquartered in Los Angeles (within the Central District of California). The accused products are sold at retail stores in Los Angeles, Chicago, and New York, and online throughout the United States.

Assume the patentee in Dallas sends a threatening letter to the accused infringer in Los Angeles, which results in letters back and forth between Dallas and Los Angeles disputing whether or not the accused products infringe the asserted patents.

Now what? At this point either party could race to the courthouse, but the race is not equal. Unlocking the courthouse doors requires subject matter jurisdiction, personal jurisdiction, and venue, but the tests differ depending on whether the plaintiff is the patentee or the accused infringer:

Subject Matter Jurisdiction

The patentee always has a "remedy by civil action for infringement of his patent," 35 U.S.C. § 281, and any federal district court will have subject matter jurisdiction in such an action, see 28 U.S.C. § 1338(a). The accused infringer, in contrast, needs to be threatened in some way before bringing a declaratory judgment action. The Supreme Court lowered the bar for declaratory judgment actions in 2007,⁴ but there is still a hurdle that exists for accused infringers and not patentees.⁵ In our hypothetical, let's assume the threatening letters accused specific products of infringing specific patents, thus providing a basis for the accused infringer to file a declaratory judgment action.⁶ But where?

Personal Jurisdiction

There is always general personal jurisdiction over a defendant in its home state,⁷ but typically plaintiffs prefer not to file suit in the defendant's back yard. So where can a plaintiff establish specific personal jurisdiction outside of the defendant's home state? According to the Federal Circuit, the test for specific personal jurisdiction differs depending on whether the defendant is the accused infringer or the patentee: an accused infringer may be subject to personal jurisdiction almost everywhere the accused...