Venue One Year After TC Heartland : An Early Empirical Assessment of the Major Changes in Patent Filing

In its May 2017 decision in TC Heartland LLC v. Kraft Foods Group Brands LLC, the Supreme Court reined in the Federal Circuit’s permissive venue standard, which had fueled the rise of the Eastern District of Texas as the busiest patent trial court in the nation and the preferred filing location of patent assertion entities (PAEs), derisively known as patent trolls. While the new limits of permissible venue in patent cases continue to be demarcated in the lower courts, sufficient time has passed since TC Heartland to begin to investigate the impact of the decision across a number of dimensions. Accordingly, in this study I examine changes in the volume of cases filed nationally and in leading districts by comparing the numbers one year before versus one year after the decision. Further, I separately study changes in the location, volume, and distribution of PAE and practicing entity litigation. Finally, I examine how plaintiff adherence to the new venue standard in TC Heartland has changed defendant connections to the districts where they are sued. As others have predicted, I find evidence that the largest shift in patent litigation has been from the Eastern District of Texas to the District of Delaware. Specifically, 72 percent more patent cases were filed in the District of Delaware and 68 percent fewer cases were filed in the Eastern District of Texas the year after TC Heartland compared with the year before the decision and the decline in filings in the Eastern District of Texas is entirely attributable to PAEs. Further, changes in filing trends before and after TC Heartland indicate that between three and seven hundred fewer PAE lawsuits were filed the year after than would have been the case had the Supreme Court not restricted venue. Had these cases been filed, they would have comprised between fifteen and thirty percent of PAE filings for the year. Closer defendant connections to the courts where cases were filed post-TC Heartland suggest not only that PAEs perceived significant benefits from filing in the Eastern District of Texas and other pro-plaintiff venues, but also that many PAEs believe they are less likely to succeed on defendants’ home turf. Comparing the year before with the year after TC Heartland, the share of PAE suits filed in the court containing a defendant’s principal place of business jumped from nine to thirty-two percent and the share filed where a defendant is incorporated spiked from ten to forty-eight percent