09.22.17

Courts Are Losing Patience for Gilstrap’s Unbridled Support of Patent Trolls

Posted in Courtroom, Patents at 4:08 pm by Dr. Roy Schestowitz

He’s no better than Randall Rader, a facilitator of trolls (discharged with dishonor, so to speak)

Randall R. Rader
Photo from Reuters

Summary: The man whose court has become a trolling ‘factory’ is being refuted (but not reprimanded) by the CAFC, which certainly can see that something is amiss and serves to discredit the system as a whole

THE media does not usually name judges (personifying cases). But Gilstrap is a special case; he himself has become the story due to outrageous rulings on patents (and more recently copyrights, too). The judge whom prominent politicians have dubbed “reprehensible” keeps ignoring the Supreme Court [1, 2]. He has single-handedly decided that the litigation ‘industry’ in his town is more important than the law itself.

What will people think of the legal system, having read about the tales of Gilstrap? It’s almost as though he is proudly biased; he boasts about it and openly invites patent trolls to his court (for favourable treatment). If he continues to make complete and utter mockery of the law, how long will it take before higher courts intervene at a more personal level/capacity?

Well, towards the end of this week the patent microcosm’s media took note of one such development; “Federal Circuit rejects Gilstrap’s test for patent venue,” said the headline. Here is the opening paragraph (much of the rest is behind a paywall):

The Federal Circuit has reversed an Eastern District of Texas refusal to transfer the Cray case, and rejected Judge Gilstrap’s test for determining patent venue. This includes the appeals court stating there must be a physical, geographical location in the district from which the business of the defendant is carried out

Almost simultaneously the other site of the patent microcosm reaffirmed the view that Gilstrap is obviously rigging the system:

As a general matter, Judge Gilstrap’s interpretation appears fairly broad, and on writ of mandamus, the Federal Circuit has rejected Gisltrap’s analysis and directed that he transfer the case to a more appropriate venue.

Why is he tolerated after all he has done? The era of patent trolls in the US may be ending, but Trump’s nomination (USPTO Director) gives reasons for concern and judges like Gilstrap somehow maintain their job, in the face of growing controversy and outrage. Here is another new article to that effect (about patent venue):

Judge Leonard Stark of the District of Delaware has issues two rulings on motions to transfer that provide guidance for Hatch-Waxman and other patent litigation. This included ruling “regular and established place of business” requires a physical place of business in the district

The EFF has already commented on this. Yesterday Vera Ranieri wrote about Gilstrap , noting that this latest appeal/reversal is good news for those of us who work hard to stop software patents and patent trolls (overlapping issues). To quote some of the relevant parts:

In a closely watched case, the Court of Appeals for the Federal Circuit has issued an order that should see many more patent cases leaving the Eastern District of Texas. The order in In re Cray, together with the Supreme Court’s recent decision in TC Heartland v. Kraft Foods, should make it much more difficult for patent owners to pick and choose among various courts in the country. In particular, it should drastically limit the ability of patent trolls to file in their preferred venue: the Eastern District of Texas.

“Venue” is a legal doctrine that relates to where cases can be heard. Prior to 1990, the Supreme Court had long held that in patent cases, the statute found at 28 U.S.C. § 1400 controlled where a patent case could be filed. This statute says that venue in patent cases is proper either (1) where the defendant “resides” or (2) where the defendant has “committed acts of infringement and has a regular and established place of business.” However, in 1990 in a case called VE Holding, the Federal Circuit held that a small technical amendment to another statute—28 U.S.C. § 1391—abrogated this long line of cases. VE Holding, together with another case called Beverly Hills Fan, essentially meant that companies that sold products nationwide could be hailed into any court in the country on charges of patent infringement, regardless of how tenuous the connection to that forum.

[...]

One decision, Raytheon Co. v. Cray, Inc., written by Judge Gilstrap (a judge who at one point had ~25% of all patent cases in the entire country before him) appeared to take a broad view of what it meant to have a “regular and established place of business.” Judge Gilstrap held that “a fixed physical location in the district is not a prerequisite to proper venue.” More concerningly, Judge Gilstrap announced his own four-factor “test” that created greater possibilities that venue would be proper in the Eastern District.

The Federal Circuit has now rejected both that test and Judge Gilstrap’s finding that a physical location in the district is not necessary. The Federal Circuit specifically noted that the venue statute “cannot be read to refer merely to a virtual space or to electronic communications from one person to another.” Importantly, the Federal Circuit also held that it is not enough that an employee may live in the district. What is important is whether the alleged infringer has itself (as opposed to the employee) established a place of business in the district. The Federal Circuit did stress, however, that every case should be judged on its own facts. Based on the facts of Cray’s relationship to the district, the Federal Circuit ordered Judge Gilstrap to transfer the case out of the Eastern District.

What will it take for Gilstrap to accept that he is wrong to put the financial interests of litigators ahead of the law itself? What will compel those in charge to consider his dismissal (for making his mission as a judge akin to that of the disgraced CAFC judge, Randall Rader)? How are people expected to respect the patent system when rules are not being honoured even by these judges?

Update: Just an hour before publishing this article the CCIA’s Josh Landau wrote about this too. He mentioned the judge:

Yesterday afternoon, the Federal Circuit overturned the Eastern District of Texas’s test for venue. Even after TC Heartland, patent trolls were trying to keep defendants in the Eastern District of Texas. And in the first order issued by Judge Gilstrap, in a case called Raytheon v. Cray, it seemed like he was going to cooperate.

In Cray’s request to overturn Judge Gilstrap’s decision, the Federal Circuit ruled that Judge Gilstrap had abused his discretion in refusing to transfer the lawsuit out of the Eastern District. The Federal Circuit then established three key factors in analyzing the “regular and established place of business.” Their factors are based on the text of the patent venue statute, 28 U.S.C. § 1400, and the history of its development, a history that establishes that it was intended to restrict the availability of venue in patent cases.

The upshot? Having a website generally accessible in a district or a telecommuting employee isn’t enough to create venue. And that stems directly from the text of the statute – a district where “the defendant has … a regular and established place of business”.

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