Post-'TC Heartland' Patent Cases Go Before MDL Panel
Uniloc USA Inc. brought the motion last month to coordinate 25 patent infringement lawsuits against companies such as Apple and Motorola over seven patents it acquired from Hewlett Packard Enterprise in 2017.
March 22, 2018 at 07:07 PM
6 minute read
A federal judicial panel could take up at least three motions to coordinate patent infringement cases involving nonpracticing entities into multidistrict litigation, all brought in the wake of a pivotal U.S. Supreme Court decision last year that shifted the venue rules for such cases.
The U.S. Judicial Panel on Multidistrict Litigation is set to hear the first of the motions next week at a hearing in Atlanta. Uniloc USA Inc. brought the motion last month to coordinate 25 patent infringement lawsuits against companies such as Apple and Motorola over seven patents it acquired from Hewlett Packard Enterprise in 2017. Defendants have filed a unified response, accusing Uniloc of forum shopping after a federal judge transferred several of its cases to California under the Supreme Court's TC Heartland v. Kraft Foods decision, which made it harder to bring patent infringement lawsuits in the Eastern District of Texas.
“They're trying to get a venue they think the jury will be more favorable to them, and they've made the decision that's the Northern District of Texas,” said Claude Stern, co-chairman of the intellectual property litigation practice at Quinn, Emanuel, Urquhart & Sullivan in Silicon Valley, who represents Peel Technologies, one of the Uniloc defendants. “They realize the Eastern District of Texas is no longer as hospitable as historically and want to come up with some sort of basis to have the cases in Texas.”
Another nonpracticing entity, PersonalWeb Technologies, has filed a motion to coordinate cases filed over cloud computing, and Microsoft Corp. has moved to coordinate a dozen cases brought by Iron Oak Technologies.
Although the MDL panel usually hears about mass torts and class actions, requests to coordinate patent cases aren't uncommon. And it's not the first time that the MDL panel has heard arguments in the wake of the TC Heartland ruling: On Oct. 4, the panel rejected a request from Blue Spike, a nonpracticing entity, to coordinate 14 infringement cases it had filed against companies such as Barnes & Noble and Toshiba.
But having three dockets of nonpracticing entities at the same time is rare. And lawyers have predicted that more patent infringement cases could make their way before the MDL panel after TC Heartland, which found that a corporation “resides” only in its place of incorporation, or where infringement occurs, and a defendant has “a regular and established place of business.” The ruling prompted a drop in filings in Texas and an uptick in Delaware and California.
Uniloc's cases, filed between May and December of last year, are pending in five states, including Texas, California and Delaware. On Dec. 22, Chief Judge James Rodney Gilstrap of the Eastern District of Texas transferred several of the cases to the Northern District of California.
Uniloc is asking for an MDL in the Northern District of Texas, where five cases are pending.
The Plano, Texas-based company, represented by Aaron Jacobs of Prince Lobel Tye in Boston, insisted in a Feb. 1 motion that the patents at issue are similar, many of which are used in smartphones. But the defendants, in a Feb. 23 response, opposed coordination of what they called a “motley collection” of cases over a “jigsaw puzzle of patents.”
“The products at issue vary widely between defendants and between cases for a single defendant, including baby monitors, headphones, computers, motion sensors, ovens, TVs, remote controls, and smartphone apps,” wrote Apple attorney Michael Pieja of Chicago's Goldman Ismail Tomaselli Brennan & Baum, joined by lawyers for the other tech defendants.
In rejecting Blue Spike's request, the MDL panel noted that the products at issue “vary considerably.”
But the move also smacked of forum shopping, Pieja wrote.
“Uniloc's motion appears designed to serve its counsel's desire to undo as much of Judge Gilstrap's order sending the Apple cases to California as it can,” he wrote.
All but one defendant suggested that the Northern District of California would be a better venue should the MDL panel coordinate the cases.
Uniloc, in its motion, said the TC Heartland decision is exactly why the MDL panel should not send the cases to California or Delaware since “there has been a diaspora of patent case filings out of the Eastern District of Texas and into Delaware and California.” Its motion included a chart and cited statistics stating that filings in Delaware rose from 11 percent to 24 percent of all patent cases in 2017, and the Northern District of California jumped from 3 percent to 7 percent. The Northern District of Texas, however, has remained below 2 percent.
Bob Carlson of Lee & Hayes in Seattle added that there would be a “substantial disadvantage in combining all these other cases together” for his client, Binatone North America, based in Indiana, where Uniloc brought suit over just one patent.
PersonalWeb filed a Feb. 26 motion to transfer 54 cases filed in January over five patents relating to cloud computing along with Level 3 Communications, which co-owns the patents at issue. Of those, 28 are pending before U.S. District Judge Beth Freeman of the Northern District of California, where PersonalWeb wants the cases to be. Amazon also has sued PersonalWeb in that district. Other PersonalWeb cases are in New York, Delaware and Texas. Amazon and the other defendants, which include FanDuel and Kickstarter, are due to respond next month.
And Microsoft, represented by Sidley Austin's Richard Cederoth, filed a Feb. 27 motion to centralize the Iron Oak cases before Chief Judge Barbara M.G. Lynn in the Northern District of Texas, who is overseeing seven of them. The patents at issue all involve Windows, and Microsoft has intervened in some of the cases and filed its own suit against Texas-based Iron Oak. The defendants, which include Dell and Samsung, have not opposed the motion, nor has Iron Oak.
Both Uniloc and Microsoft noted that the Northern District of Texas participated in a “Patent Pilot program,” which the MDL panel recognized in a 2015 order when it transferred several patent cases to that district.
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