On May 22, 2017, the Supreme Court voted 8-0 to reverse the Federal Circuit’s decision in TC Heartland LLC v. Kraft Food Group Brands LLC, definitively establishing that, for purposes of the Patent Venue Statute (28 U.S.C. § 1400(b)), a corporation resides where it is incorporated. The decision reverses decades of precedent by the Federal Circuit and district courts holding that the definition of corporate residency in the broader general venue statute (28 U.S.C. § 1391(c)) also applied to the Patent Venue Statute.
The District of Delaware, the host forum to over 60 percent of Fortune 500 companies, expects a significant uptick in new filings in view of the TC Heartland decision. The greatest influx of cases is expected from transfers out of the Eastern District of Texas, which in recent years has outpaced Delaware in new patent filings, many of which are by nonpracticing entities (NPEs). The Eastern District of Texas saw 311 new patent cases (33.2 percent of the national total) filed in the first quarter of 2017 alone. Not taking into account new filings, a transfer of only half of these cases would result in doubling Delaware’s current intellectual property caseload.
The District of Delaware will have to contend with this expected surge in business in an environment of new challenges. Judge Sue L. Robinson, the longest-serving member of the U.S. District Court for the District of Delaware (the district with the second-highest number of patent cases assigned on a per judge basis in the country), became Senior Judge Robinson on February 3, 2017, and is currently set to cease active casework this July, prior to leaving the bench in August 2017. On May 1, 2017, the second-longest serving jurist of the Delaware court, Judge Gregory M. Sleet, took senior status. While Judge Sleet’s announcement indicates that he “intends to render substantial judicial service as Senior Judge,” the move will eventually lead to only two full-time district judges: Chief Judge Leonard P. Stark and Judge Richard G. Andrews. Honorable Gregory M. Sleet to Take Senior Status, U.S. District Court: District of Delaware (2017), http://www.ded.uscourts.gov/news/honorable-gregory-m-sleet-take-senior-status.
District of Delaware: No Dearth of Patent Cases
The District of Delaware has long been a hotbed for intellectual property litigation. As reported by Lex Machina, 13.8 percent of all new patent cases in the first quarter of 2017 were filed in Delaware, second only to the Eastern District of Texas. Howard, supra. Put in perspective, Delaware’s 455 new patent cases filed in 2016 equaled an average of 113 patent cases per judge with a full four-judge bench. Brian Howard, 2016 Fourth Quarter Litigation Update, Lex Machina (Jan. 12, 2017). However, if the cases are assigned to only three judges, there would be an average of 151 new patent cases per judge. In fact, Judges Robinson, Sleet, and Stark are ranked the most active district judges in the country (by number of decisions and trial decisions) for the period spanning 1996–2015 (an even more remarkable statistic considering that Chief Judge Stark became an Article III judge only in 2010). PWC, 2016 Litigation Study: Are We at an Inflection Point? 17 (May 2016), https://www.pwc.com/us/en/forensic-services/publications/assets/2016-pwc-patent-litigation-study.pdf.
Managing Caseloads in the Face of Judicial Vacancies
Delaware has faced judicial vacancies before. A judicial vacancy was created in December 2006 by the elevation of Delaware District Court Judge Kent A. Jordan to the U.S. Court of Appeals for the Third Circuit. Judge Jordan’s vacancy was filled by now–Chief Judge Stark on Aug. 10, 2010, but another vacancy on the Delaware bench was created around the same time with the retirement of Judge Joseph J. Farnan Jr. on July 31, 2010. The District of Delaware continued to be down one judge until Judge Andrews took the bench on Nov. 7, 2011. All the while, the district judges successfully managed a caseload that was nearing the all-time District of Delaware peak, providing litigants a competitive time to trial and adopting procedures for streamlining discovery and other disputes to both the court’s and parties’ benefits.
Picking Up the Slack: Magistrate Judges
In preparation for the increased workload that will be created by Judge Robinson’s vacancy, many of Judge Robinson’s cases have been referred to the magistrate judges (Chief Magistrate Judge Mary Pat Thynge, Magistrate Judge Christopher J. Burke, and Magistrate Judge Sherry R. Fallon) for case management. These capable judges have the full authority permitted by law to manage the vacant judgeship docket, including entering schedules through trial, deciding nondispositive matters, and making recommendations about the resolution of dispositive matters. Cases assigned to the vacant judgeship that require the attention of a district judge will be reassigned from the vacant judgeship to one of the district’s sitting judges.
To accommodate the anticipated influx of new cases following TC Heartland, the court will likely follow a similar strategy of utilizing magistrate judges to handle a case in full (including trial) with the consent of the litigants. Counsel should be prepared to advise their clients about these possibilities and the benefits of consenting to a magistrate judge conducting all proceedings in a case, including trial, entry of final judgment, and posttrial proceedings. Counsel should advise litigants to consider the possibility of short delays while the court transitions from Judge Robinson’s departure and adjusts to the new caseload, and they should incorporate this possibility into their case strategies and budgets. These delays have traditionally been counterbalanced, though, by the Delaware judges’ dispute procedures in patent cases, which circumvent traditional routine motions and result in a faster resolution than the typical motion practice favored in other districts.
The Delaware District Court and its practitioners will certainly miss Judge Robinson, “one of the most respected and experienced district judges in the country,” whose intellectual property prowess would be a great asset in tackling the challenges of a post–TC Heartland landscape. However, the court has established a reputation for maintaining a high level of attention to its cases, attention that has persisted during prior vacancies and will no doubt continue. With that in mind, it should be business as usual in the District of Delaware in 2017 and beyond.