Is Anyone Home?

(Image via Getty)

Back in the halcyon pre-COVID days of 2019, I predicted on these pages that "venue issues will continue as a source of conflict in patent cases." Slam dunk of a prediction, if I may say so myself. Before I take a victory lap, however, I do recognize that a litigator predicting future litigation action around a hot button legal issue is like a consultant telling Dunkin' that it should keep the coffee fresh since someone might come in looking for a cup. Still, when it comes to issues of importance -- and by importance I mean real economic value -- in modern patent litigation, it is hard to leave venue off the list.

There is no doubt that venue continues to command attention as a patent litigation issue, even as we round 2023's first bend into Q2 of this year. Plaintiffs and their counsel spend a lot of time thinking about the issue before filing, knowing that venue can play a role in a patentee's trial prospects or settlement value. Defendants pay their counsel hard dollars to fight to have cases dismissed or transferred based on venue, for the same reasons that plaintiffs fight hard to keep cases where they filed them. And litigation funders remain quick to suggest that their appetite for a given case will be impacted by the venue options vis a vis a given target defendant or group of alleged infringers. In short, venue matters, with the typical example in the patent context being plaintiffs continuing to direct their patent complaints whenever possible into EDTX or WDTX -- and defendants continuing to do their darnedest to get cases moved out of those jurisdictions. (As some venue aficionados may recall, I described one tactic to try to get a case transferred from EDTX to California utilized by an alleged infringer in a January column.)

Considering the importance of the venue issue, it is not a surprise that savvy defendants place great importance on trying to win a transfer motion or motion to dismiss for improper venue. But their zeal in seeking a win on the issue can sometimes get defendants in a spot of trouble, particularly with Texas's patent-savvy judges unafraid to call out behavior that crosses the line. In one prominent example, the WDTX's Judge Alan Albright slammed an Apple venue witness for "frequently and repeatedly submitted unreliable and misleading declarations to this Court." And in another, more recent example, the EDTX's Judge Gilstrap has sent a clear message to another large technology company, Broadcom, that its venue opposition tactics have increased the risk that it will be found liable for attorney's fees should it lose the case in which it employed those tactics. At a minimum, these examples make plain that Texas judges are not shy about calling out the utilizing of sharp practice to gain an edge on contested venue motions.

Judge Gilstrap's March 15, 2023, decision in the Broadcom case is illustrative. The case has a familiar setup: a nonpracticing entity, called Polaris Innovations Ltd., using acquired patents (from Infineon) tries to get licensing negotiations going prefiling. Tech defendant, in this case Broadcom, refuses to engage, even though the patents at issue have had some success surviving prior IPR challenges. Case gets filed in EDTX in September 2022, with Broadcom's first substantive move the filing of a motion to dismiss for improper venue in November. In particular, Broadcom argued that the Plano address identified in plaintiff's complaint as a Broadcom place of business was actually the offices of Broadcom subsidiaries and that no Broadcom employees for the entity accused of infringement worked there. In support, Broadcom submitted employee declarations supporting the idea that documents and relevant witnesses with respect to Polaris's claims would be found in various Broadcom offices in California or Colorado, not with its subsidiaries.

Polaris opposed the motion to dismiss. To aid in resolving the dispute, Gilstrap ordered broad venue discovery about six weeks ago. The court's authorization of venue discovery included allowing "Plaintiff to depose the 'Broadcom' employees that submitted declarations in support of the Motion to Dismiss." But Broadcom refused to "produce responsive information related to the Plano Office from its subsidiaries, Broadcom Corp. and CA, Inc." leading Polaris to file two motions to compel.

In his decision on those motions to compel, Gilstrap took serious issue with Broadcom's "hot-then-cold positions" on venue discovery, which were "not well received by the Court." In Gilstrap's view, Broadcom could not lean on employees of its subsidiaries in support of its motion to dismiss, but then argue that it had no control over those same employees when it came to complying with the court's expansive allowance of venue discovery. Nor could Broadcom move to seal the lease agreement on the Plano office, only to then argue that it had no control over the subsidiaries subject to that lease. As a corrective, the court gave Broadcom less than a week to provide fulsome venue discovery, in the form of documents and interrogatory responses, to Polaris. Critically, the court made clear such said discovery should be proffered by Broadcom in short order -- without drawing any distinction between Broadcom and its subsidiaries with respect to the obligation to furnish that discovery. And in a parting flourish of pique, the court also stated its hope that "no further disputes regarding the Court ordered venue discovery will arise," while also telegraphing its willingness to consider Broadcom's tactics in withholding discovery as potential litigation misconduct in the context of a future attorney's fee motion.

Ultimately, Gilstrap's decision zinging Broadcom is a potent reminder that Texas judges will brook no game playing by defendants looking to transfer or dismiss cases on venue grounds. Can defendants in Texas present evidence as to why venue is improper or why it would be more convenient if the case was transferred elsewhere? Of course. But the privilege of asking for a disturbance of the plaintiff's forum selection also comes with a responsibility to present evidence in a credible way. Here, Gilstrap expressed his concern that Broadcom's approach crossed the line and was inconsistent, at best, with his allowance of venue discovery as a predicate to his decision on Broadcom's motion. Now, that discovery will move forward as the court intended it to in the first place. That discovery is not a guarantee that Polaris will be able to defeat Broadcom's motion. But it does give Polaris the opportunity to knock on the door of the Plano office in question to see who is home.

Please feel free to send comments or questions to me at gkroub@kskiplaw.com or via Twitter: @gkroub. Any topic suggestions or thoughts are most welcome.

Gaston Kroub lives in Brooklyn and is a founding partner of Kroub, Silbersher & Kolmykov PLLC, an intellectual property litigation boutique, and Markman Advisors LLC, a leading consultancy on patent issues for the investment community. Gaston's practice focuses on intellectual property litigation and related counseling, with a strong focus on patent matters. You can reach him at gkroub@kskiplaw.com or follow him on Twitter: @gkroub.