Forum-shopping for favorable jurisdictions in which to try or defend a case is second nature to patent litigators. This post analyzes the dissonance between how that practice is sometimes disparaged legislatively and judicially and how such conduct is evaluated through the ethical lens of the Rules of Professional Conduct.
Patent legislative history and cases refer to forum-shopping pejoratively. In fact, one of the earliest cases of any kind to decry forum-shopping is a patent case. In Helene Curtis Industries v. Sales Affiliates, Inc., 105 F. Supp. 886 (S.D.N.Y.), aff’d, 199 F.2d 732 (2d Cir. 1952), Judge Irving Kaufman criticized a party’s forum-shopping tactics stating that the defendant “ . . . is forum shopping with a vengeance. I discern no other rational which can adequately explain the stratagems which it has employed throughout this controversy. Our courts are not meant for such use.” Id., at 902 (emphasis added).
The Federal Courts Improvement Act of 1982—the Act leading to the creation of the Federal Circuit—echoes Judge Kaufman’s judicial distaste for forum-shopping. Passage of the Act was driven in part by legislative intent to “reduce the forum-shopping that is common to patent litigation.”
The patent consultants to Huskra Commission (instrumental in promoting passage of the Act) concluded that “forum shopping on the scale that occurs in patent law increases the cost of litigation and ‘demeans the entire judicial process and the patent system as well.’”
Despite the “back-of-the-hand” treatment accorded to forum-shopping over the years in dicta and legislative commentary, the practice is obviously still alive and well in patent litigation. The creation of the Federal Circuit alleviated regional circuit forum-shopping; however, the practice of singling out favorable district court venues in which to file a patent infringement lawsuit continues with abandon.
The prevalence of patent infringement claims being filed in the Eastern District of Texas is a case in point. Despite the absence of any significant number of inventors or patentees residing in the judicial district, Marshall, Texas is now an epicenter of patent litigation.
Case statistics bear out its reputation as a favorable patent owner’s forum. From 1995-2007, the Eastern District of Texas ranked third in the nation with its plaintiff success rate at trial of 71.9%.
After combining summary judgment and trial decisions, Texas is still the second most successful district for plaintiffs among those districts with a minimum of 15 patent cases. The Eastern District of Texas awarded three of the top ten highest patent jury verdicts in 2005 and 2006, each of the three totaling over $70 million.
The very existence of the Eastern District of Texas as a favorable plaintiff’s forum in patent cases raises an interesting ethical issue: What are your ethical obligations in advising a prospective plaintiff client about where to file a patent infringement claim?
For example, do you have a responsibility to recommend use of the Eastern District of Texas as a preferred venue if you represent a patent owner seeking to enforce its patent rights?
The answer is a qualified YES, although the analysis of where actually to file suit is of course highly dependent on individual case facts.
The ethical obligation to seek out the most favorable venue for a case is derived from a duty to provide competent and zealous representation in pursuing meritorious claims.
Model Rule of Professional Conduct 1.3 concerns “Diligence” and its key applicable comment explains that:
- A lawyer should pursue a matter on behalf of a client despite opposition, obstruction or personal inconvenience to the lawyer, and take whatever lawful and ethical measures are required to vindicate a client’s cause or endeavor.
- A lawyer must also act with commitment and dedication to the interests of the client and with zeal in advocacy upon the client’s behalf.
- A lawyer is not bound, however, to press for every advantage that might be realized for a client…
- The lawyer’s duty to act with reasonable diligence does not require the use of offensive tactics or preclude the treating of all persons involved in the legal process with courtesy and respect.
ABA Model Rules of Professional Conduct Rule 1.3, cmt 1.
Essentially, RPC 1.3 creates a duty on the part of the litigator to analyze where a patent infringement case is most advantageously venued despite any personal inconvenience that venue may pose for the lawyer (given the practical reality that personal jurisdiction can be established over most sizable corporate defendants in any judicial district in the United States).
In light of this duty, legal scholars even opine that “the failure to forum shop would, in most instances, constitute malpractice.” See Bassett, The Forum Game, 84 N.C.L. Rev. 333, 344 (2006); and Juenger, Forum Shopping, Domestic and International, 63 Tul. L. Rev. 553, 572 (1989)(“When a relationship becomes litigious, failure to select an advantageous forum may amount to malpractice, for attorneys owe a duty to vindicate their clients’ rights wherever they can expect the best results.”).
The malpractice potential of providing insufficient forum-shopping advice, however, appears, overblown. An aggrieved malpractice plaintiff would have to demonstrate the malpractice claim elements of proximate causation and actual damages in order to present a prima facie claim. The Federal Circuit is unlikely to be receptive to an argument that a patent case would have fared better in on judicial district over another.
Putting aside malpractice issues, forum-shopping decisions are better analyzed as an application of economic game theory. As one legal scholar explains:
In the context of forum selection, the game theory issue is how the availability of more than one legal forum affects decisions regarding where to file suit. * * *
The moves in forum selection are sequential, so choices are made calculating future consequences.
The “normal form game,” also known as the “strategic form” of the game, posits three elements:
- the players
- the available strategies
- the payoff for each strategy or possible combinations of strategies. * * *
The aspect of forum shopping that generates most of the criticism is the filing of suit in the forum believed to offer the potential for the most favorable outcome, rather than the forum most convenient or having the most obvious connection to the litigation. * * * .
[T]he lawyer has two choices, both of which satisfy the subject matter jurisdiction, personal jurisdiction and venue prerequisites—either (1) to file suit in the forum that has more favorable substantive law, but seemingly fewer connections to the claim, or (2) to file suit in the forum appearing to have more connections to the claim, but has less favorable substantive law.
“Connections” to the litigation might include, among other factors, where the cause of action arose, the location of witnesses and other evidence, or the location of the defendant.
See Bassett, The Forum Game, 84 N.C.L. Rev. 333, 378-380 (2006).
When forum-shopping decisions are evaluated in this rational manner, the use of and need for pejorative labels falls away.
In game theory language, the Eastern District of Texas offers a better “payout” for patent owners than other potential jurisdictions.
To the extent that defendant “connections” to that forum are scant, the recent mandamus string of of Federal Circuit cases elevates the significance of those “connections” over the plaintiff’s choice of forum. See In re Nintendo, Co. Ltd. (pdf).
In light of these recent Federal Circuit mandamus cases, plaintiffs will have to calculate whether the increased costs, delays and potential success of a defense motion to transfer venue is worth the more favorable payout expected from filing a case in the Eastern District of Texas.
While pejorative labels hinder forum-shopping analysis and should be avoided, plaintiff lawyers who appear to be manipulating evidence in order to promote venue in a certain judicial district are not off the hook from being subject to judicial scorn and ridicule.
A salient example is the conduct of plaintiff’s counsel in In re Hoffman-LaRoche, Inc. (pdf). The plaintiff’s attorney sought to manufacture an argument for venue by converting into electronic format 75,000 pages of documents regarding conception and reduction to practice. He then sent them to the office of his client’s litigation counsel in Texas.
The Federal Circuit found that this file transfer tactic violated Van Dusen v. Barrack, 376 U.S. 612 (1964), which held that the change of venue statute (28 U.S.C. § 1404(a)) should be construed as preventing parties from defeating a venue transfer that would be proper but for their own deliberate acts or omissions. It is important to remember that the lawyer’s duty with respect to forum shopping decisions explicitly does not require or condone the use of offensive litigation tactics.