Texas Forum Shopping – Europe has its share as well

Part of any smart patent litigation strategy is to seek the right venue. This is true for Europe as well as for the US. Among practitioners it is known that Texas is a preferred venue for patent litigation in the US, as the judges are assumed to be patentee friendly and, important, not inclined to immediately bow to defendant’s strategies to unduly complicate and manipulate litigation by throwing in  litigation tactics with the (sole) intention to complicate the litigation, so as to gain time and to force the plaintiff to be “outlawyered”.  A preferred venue for NPE’s. Defendants in patent assertion cases are often operating companies from which royalty payments are sought for the use of their selected patents. Injunctions are their best bet to get to those royalty payments. Time is off the essence as contingency lawyers tend to charge more the longer the patent litigation protracts.

Part of countering trolls’ actions  is to test how much “stamina” the NPE plaintiff in fact has. The perception is that (some) courts in Texas are not tolerating these delaying and frustration tactics by any party, earning Texas courts the epithet “rocket dockets”. A recent decision by the District Court for the Eastern District of Texas, Marshall Division (MedIdea vs. Zimmer Holdings) seems to reinforce this notion of the Texas courts. The defendant, Zimmer Holdings, drawn into this venue by the patent owner, a company asserting medical devices patents, did not agree with MedIdea’s change of office to Texas so as to make the Texas Marshall the proper jurisdiction> Zimmer tried to convince the court that the move by MedIdea to establish its offices in Texas was only done to create jurisdiction, so unfair  “forum shopping”. The court did not see any problem with that:

“Defendant argues that the Eastern District of Texas has little or no interest in the outcome of this litigation. The Court disagrees. MedIdea maintains its principal place of business in Longview, which gives the Eastern District of Texas [has] a substantial connection to this lawsuit. The Northern District of Indiana also has a connection to this lawsuit because Zimmer’s principal place of business is there. Neither venue has a greater interest in this dispute, which makes this factor neutral as to transfer.”

Forum shopping is a frequently debated issue in Europe as well. In the eraly 1990’s when Dutch courts provided for “cross border patent injunctions” (an injunction under a patent, obtained in The Netherlands which would then be valid and enforceable in the entire EU under the Brussels Convention of 27 September 1968  and by the Brussels-1 Regulation replacing it. This gave rise to fierce debates among European practitioners about the appropriateness of forum shopping. Italian lawyers came with the idea of “torpedoes” in response to widely published Dutch cross border injunctions.

Most legal observers in Europe have questioned the appropriateness of prescribing a blind application of European rules on jurisdiction by domestic courts, relying on the legal traditions of EC Member States usually providing for corrective mechanisms – such as the common law doctrine of forum non convenience and ‘exception de fraude’ in French Law – in cases when a party tries to seek a venue that is “incovenient” or would otherwise result in accessive costs  or other advantages, that many find unjust. This criticism came especially after three ECJ (European Court of Justice) decisions, which yielded (some find:) excessively, restrictive answers to the issue of forum shopping, ruling out any discretion by domestic courts to remedy any inconvenience arising from the strict application of the European provisions, if such discretion were provided for by the lex fori: the Gasser case, the Turner case, and the Owusu case. This series of rulings from the ECJ raised several questions. Most observers questioned the appropriateness of prescribing a blind application of European rules on jurisdiction by domestic courts, relying on the legal traditions of EC Member States usually providing for corrective mechanisms – such as ‘forum non conveniens’ in English Law and ‘exception de fraude’ in French Law – in cases when a party abusively triggers the jurisdiction of a court in order to obtain an unjust advantage, thus practicing unacceptable forum shopping.

The Preamble to the Brussels-I Regulation states that: “The autonomy of the parties to a contract…must be respected subject to the exclusive grounds of jurisdiction laid down in this Regulation”. This is clearly coming a long way from what under common law, where jurisdiction is not simply left to the redistributive will of the parties.

In the first case, Gasser vs. Misad, the principal issue was simple enough. Articles 17 and 21 of  Brussels I Regulation say that in proceedings involving the same cause of action and between the same parties , any court other than the court first seized shall stay its proceedings until such time as the jurisdiction of the court first seized is established and, if established, it shall then decline jurisdiction. The ECJ held that even if a contract contains a jurisdiction clause granting jurisdiction to the courts in member state A if proceedings are brought first in the courts of member state B, the courts of member state A must, by virtue of Articles 27 and 28, stay proceedings until the courts of member state B have declared they have no jurisdiction.

In a second case, the question came up, would under European law, “anti-suit injunctions“, available under UK law, be allowed? In Turner vs. Grovit, the ECJ had a chance to scrutinize UK anti-suit injunctions. Question asked by the UK court:

“Is it inconsistent with (the Brussels Convention) to grant restraining orders against defendants who are threatening to commence or continue legal proceedings in another Convention country when those defendants are acting in bad faith with the intent and purpose of frustrating or obstructing proceedings properly before the English courts?”

and the ECJ reply was:

“The [Brussels Convention] (…) is to be interpreted as precluding the grant of an injunction whereby a court of a Contracting State prohibits a party to proceedings pending before it from commencing or continuing legal proceedings before a court of another Contracting State, even where that party is acting in bad faith with a view to frustrating the existing proceedings” .

In the third case, Owusu vs. Jackson, also referred to the ECJ by a UK court, gave no room for any “forum non convenience” defense under European jurisdictional rules.[1]

Forum shopping is just a part of shrewd patent enforcement. No matter how many cry foul about these practices. Forum shopping is there to stay, and for courts to be dealt with.

[1] source (an for further reading) Edwin Peel, Forum Shopping in the European Judicial Area – Introductory Report, Oxford Faculty of Law

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