Uncertainty incentivizes litigation floods and forum shopping

IN SUPPORT OF PATENT ELIGIBILITY JURISPRUDENCE STUDY” 10/8, //DH

B. Eligibility Uncertainty Incentivizes Litigation

The uncertainty of Section 101 law has led to an explosion of companies accused of infringement “taking their shot” at having patents declared ineligible. Over 1,100 eligibility motions have been filed since Alice, compared with a mere handful in the years prior.7

The Federal Circuit has incentivized companies to litigate the issue by allowing district court judges to decide eligibility at the outset of a case under Fed. R. Civ. P. 12. At this early stage, no discovery has been taken (despite eligibility purportedly turning on underlying factual issues8), allowing judges to invalidate patents based on implicit, untested “findings of fact.”9 The cost of preparing a motion to dismiss at this stage is insignificant given the 40% chance to successfully render the patent ineligible.

The same uncertainty that fuels eligibility-related litigation also fuels inefficient ancillary tactics, like forum shopping. If the test for eligibility was well-defined, it would matter little where the dispute was heard. Because it is not, a particular court’s interpretation of the test is important. At the time of a 2019 study, the Southern District of New York and the Eastern District of Virginia granted more than 80% of eligibility challenges, while the Eastern and Western Districts of Texas granted less than half.10 Parties jockey over declaratory judgment jurisdiction, personal jurisdiction, and forum non conveniens transfers to secure an interpretation of Alice to their liking.