“Representative Issa is trying to create confusion to galvanize the anti-patent crowd into more harmful anti-patent legislation” – David Pridham, CEO, Dominion Harbor

by: Jan Wolfe | Reuters Legal | July 14, 2017

(Reuters) – A Republican congressman harshly criticized U.S. District Judge Rodney Gilstrap in Marshall, Texas at a hearing on Thursday, saying the judge was flouting a recent U.S. Supreme Court ruling that cracked down on forum-shopping in patent cases.

U.S. Representative Darrell Issa of California, chairman of the House Subcommittee on Courts, Intellectual Property and the Internet, said at a committee hearing that a recent decision by Gilstrap was a “reprehensible” end-run around the high court’s May 22 opinion in TC Heartland v. Kraft Foods Group Brands.

That unanimous decision limited where patent cases can be filed and has already lessened the steady flow of patent litigation in the Eastern District of Texas, where Gilstrap sits.

TC Heartland said a company can only be sued for patent infringement in the district where it is incorporated or in a district where it has a “regular and established” place of business.

The decision upended three decades of jurisprudence that allowed patent owners to sue a company anywhere its products are sold, leading to about a third of all patent cases being heard in plaintiff-friendly Eastern Texas.

A few days after the TC Heartland decision, supercomputer maker Cray Inc asked Gilstrap to transfer a patent infringement case filed against it by the Raytheon Company out of the district, arguing he lacked jurisdiction under the high court’s new rule.

Gilstrap rejected the motion to transfer on June 29, saying that Cray had a regular and established place of business in East Texas because it employed a sales executive there who worked out of his home.

Issa said Gilstrap’s decision was intended to ensure that the East Texas economy would continue to benefit from a cottage industry of patent litigation.

“It is not common for a member of Congress to call out an individual judge or district,” Issa said, “but after a long period of enrichment of a community by judges who consider that community’s wellbeing part of their goal, I can reach no other conclusion.”

The Thursday hearing, titled “The Impact of Bad Patents on American Business,” addressed whether Congress should pass additional legislation intended to curb lawsuits filed by patent owners that generate revenue by suing over patents instead of making products.

Gilstrap’s judicial assistant said he declined to comment.

Under Gilstrap’s interpretation of regular and established place of business many companies still face the threat of patent suits in East Texas, said Matthew Rizzolo of Ropes & Gray (who is not involved in any of the litigation mentioned). “It shows the Eastern District of Texas isn’t going to go quietly into the good night,” he said.

Issa’s criticisms of Gilstrap were unfair, said David Pridham, chief executive of Dominion Harbor Group, a Texas-based company that buys patents and seeks to license them to other companies.

“Representative Issa is trying to create confusion to galvanize the anti-patent crowd into more harmful anti-patent legislation,” Pridham said. “Judge Gilstrap simply picked up where TC Heartland left off in an attempt to develop a framework so that decisions can be made in a timely and consistent manner.”

copyright Reuters