A Patent Case is Not Final and Appealable Until It’s All Over but the Counting

In Halo Electronics, Inc. v. Pulse Elecctronics, Inc., [2016-2006](May 26, 2017), the Federal Circuit dismissed Pulse’s appeal from the district court’s decision awarding prejudgment interest because it lacked jurisdiction.

The Federal Circuit said that the Order that Pulse appealed from could not be a final order because the district court never resolved the parties’ dispute regarding the date from which to begin calculating prejudgment
interest or set the amount of prejudgment interest to be awarded to Halo.  As a result, there is no final decision because the district court has not “determine[d], or specif[ied] the means for determining the amount” of prejudgment interest.

Supreme Courts Reaffirms Fourco, and Limits Where Corporations Can Be Sued for Patent Infringement

In TC Heartland LLC v. Kraft Foods Group Brands LLC, [16–341] (May 22, 2017), the Supreme Court reversed the Federal Circuit and held that for purposes of the patent venue statute (28 U.S.C. 1400(b)), a corporation only resides where it is incorporated.

The Supreme Court looked back to its to its 1957 decision in Fourco Glass Co. v. Transmirra Products Corp., 353 U.S. 222, 226 (1957), where it concluded that for purposes of §1400(b) a domestic corporation “resides” only in its State of incorporation.  At the time, the Supreme Court rejected the argument that the broader definition of corporate “residence” in the general venue statute (28 U. S. C. §1391(c)) applied.

The Court noted that §1400(b) has not been amended since Fourco, although §1391(c) has been amended.  While one amendment stated that §1391(c) applies “for all venue purposes,” another amendment qualified “[e]xcept as otherwise provided by law.”  The Supreme Court concluded that the amendments to §1391 did not modify the meaning of §1400(b) as interpreted by Fourco, and held that a domestic corporation “resides” only inits State of incorporation for purposes of the patent venue statute.

This will certainly impact patent litigation in the Eastern District of Texas, because most patent defendants are not incorporated in Texas, and many do not have a “regular and established place of business” there.

This is probably a good thing.  It has been estimated that at much as 40% of patent cases are filed in the Eastern District of Texas, and that is not healthy for the patent system.  It is probably not a good thing for Marshall, Texas, which has enjoyed a patent litigation bonanza for many years.


“Unfamiliarity” with Federal Court Practice Not Enough to Avoid Default

In United Construction Products, Inc., v. Tile Tech, Inc., [2016-1392] (December 15, 2016), the Federal Circuit affirmed default judgment against Tile Tech on claims of patent infringement and unfair competition because of its counsel near complete failure to provide discovery.

After cataloging Tile Tech numerous discovery failures, and considering the Malone factors:

  1. The Public’s Interest in Expeditious Resolution of
  2. The Court’s Need to Manage Its Docket
  3. The Risk of Prejudice to the Other Party
  4. The Public Policy Favoring the Disposition of Cases on
    Their Merits
  5. The Availability of Less Drastic Sanctions (i.e., Alternatives
    to Dismissal)

the Federal Circuit found that entry of default was not an abuse of discretion.  Tile Tech tried to undo the default by arguing that its conduct was not willful or in bad faith, noting that the district court found that “while
defense counsel perhaps handled the case unreasonably, this [c]ourt does not attribute that to bad faith, but instead a complete lack of preparation.”  However, the Federal Circuit said that willfulness and bad faith were not the only justifications for entering default, which also include “fault.” While Tile Tech has argued that its trial attorney had “unfamiliarity” with federal court practice, it has not offered any evidence to suggest that its dilatory actions were outside of its attorney’s control.