Several months ago, I wrote about the phenomenon of patent suits being brought in the federal courts of eastern Texas. The judges and juries there seem unduly plaintiff-friendly in patent suits. That has caused the towns of Marshall, Tyler, and Texarkana to host patent suits having nothing to do with those places, but in which hundreds of millions of dollars are often at stake.
The latest such instance was in I4I v. Microsoft, a case in which a jury in May awarded the plaintiff $200 million in damages; last week, the judge enhanced the award to $290 million. He also enjoined Microsoft from selling copies of Word that infringe the patent in suit, which has been construed to cover certain use of custom XML in Microsoft Word DOCX-format files. (The judge did not require Microsoft to send a software update to existing Word customers to kill the functionality.) I've never used custom XML, so I don't expect to miss the feature in Office 2010; others may.
Some commentators have immediately lashed out, suggesting that the patent is old stuff and invalid. I think it's a little risky to base an analysis of the lawsuit on a quick review of the patent, no matter how many means-plus-function elements are in the apparatus claims, and no matter how similar the method claims are to those means-plus-function apparatuses.
The fact that the judgment occurred in the Eastern District of Texas necessarily casts some shadow over the judgment because of perceived favoritism there toward patent suits, as I wrote about in my paper. The trouble with trying -- as the Eastern District of Texas has done -- to be a magnet for patent suits is that by and large plaintiffs, not defendants, choose to sue. To get patent cases, you need to draw plaintiffs, and to draw plaintiffs you need big judgments in favor of plaintiffs. This is not to say that there is anything wrong with the result in this particular case (on which I take no opinion), but rather there is something wrong that people can say "there goes the Eastern District of Texas again."
This, of course, begs the question why Toronto-based I4I sued Redmond, Washington based Microsoft (which is incorporated in Delaware), in remote Texas, nowhere near any parties, witnesses or facts having to do with the case. Barring a real or perceived benefit to plaintiffs of the Texas courts, there is no reason to sue in Texas. The federal district court in Buffalo, NY, is less than a two-hour drive from Toronto. Chicago, Detroit, and Minneapolis are airline hubs convenient both to Seattle and Toronto. Indeed, it is hard to imagine any location in the continental United States less convenient to these particular parties and to the administration of justice than eastern Texas. (Perhaps Florida.)
In my paper (at pages 6-10), I explained the problem with current venue provisions, 28 U.S.C. sections 1391 and 1400. These provisions govern in which federal courts suit may brought, and which, as applied to corporate defendants in patent cases, are often tantamount to having no limitations on suit at all.
I argued in my paper that even if the rough Texas justice turns out, after detailed analysis, to be fair, the perception of unfairness is enough to require a legislative solution. Federal judges are held to make sure that there are no "appearances" of partiality in their own Code of Conduct, and the federal judicial districts as a whole ought to be held to similar high standards: One federal judicial district ought not repeatedly mete out justice potentially out of line with what the other 90-plus federal districts would do.
Congress had proposed fixing patent venue as part of a broader patent reform agenda. That reform, which had looked like it would pass this session, became derailed by, among other things, health-care reform. I criticized the pending legislative proposals, and advanced my own (at page 16).
Under my proposal, the case would have been brought in either Delaware or Washington State, assuming Microsoft's pertinent engineers are all on the Redmond campus. What about Buffalo? Not under my proposal. That is a reflection of my attempt to accommodate Congress's concern about plaintiffs' manufacture of venue by moving to jurisdictionally-desirable locations, such as eastern Texas. Rather than getting into threshold disputes about whether a plaintiff's location is genuine or manufactured -- a conflict that could add months to a lawsuit, and that could require discovery and testimony -- it's better just to focus on the defendant's location. One could rationalize the anti-Buffalo result here under my proposal by noting that the plaintiff is Canadian, and that U.S. venue provisions are ordinarily protective of U.S. citizens, not foreigners (who are subject to venue throughout the U.S. and not merely near where they are located). So my proposal might not always find the most convenient location, but at least it has the benefit of preventing, as Justice Scalia might call it, a new "renegade jurisdiction" like the Eastern District of Texas from arising.
