Split the Cake to Eat it Whole: Ikorongo Argues for its Divide and Conquer Strategy - Patently-O

by Dennis Crouch

Ikorongo Texas LLC, et al. v. Samsung Electronics Co., Ltd., et al. (Supreme Court 2022)

Ikorongo Texas LLC holds exclusive rights to a set of patents, but only with respect to use of the inventions in counties within the Western District of Texas.  This includes McLennan County, home of Waco Texas and Judge Albright’s court.  Ikorongo Tech LLC holds the remaining interest in the patents.  This cutting-up of ownership rights is supported by old Supreme Court precedent as well as the Patent Act itself. See, Waterman v. Mackenzie, 138 U.S. 252 (1891) and 35 U.S.C. § 261 (patent rights may be conveyed “to the whole or any specified part of the United States”). Ikorongo Texas is also a Texas LLC (corporate registration in Texas), although its principles reside in North Carolina.

Ikorongo Texas then sued several companies, including Samsung & LG for patent infringement in WDTX.  The defendants asked that the case be transferred to the more-convenient forum of NDCal under 28 U.S.C. § 1404.  Although Judge Albright denied the motion, the Federal Circuit ordered transfer on mandamus.   Now, Ikorongo Texas has petitioned the Supreme Court for writ of certiorari.   To be clear Samsung and LG have previously litigated in Texas, they have lawyers in the state and lawyers willing to go to the state. The inconvenience of litigation is almost a total farce here.  The problem these companies have is with Judge Albright, and the likelihood that the case will go to trial rather than being dismissed on summary judgment.

Section 1404 Transfer: Absent consent from “all parties,” § 1404 only allows transfer to districts where the case “might have been brought.”  The key problem is that Ikorongo Texas could-not have brought the lawsuit in California court because venue would have been improper.

Might have been Brought:  Section 1400(b) defines proper venue for patent cases. The statute provides two different ways for finding proper venue.  First, state of incorporation.  A patentee can sue in federal court housed in the state where the defendant is incorporated.  In this case though, the defendants are incorporated in NY and Delaware. The Second approach asks whether “the defendant has committed acts of infringement and has a regular and established place of business” within the district.  Here, the defendants each have a place of business in N.D.Cal., and arguably infringe the patents in the district as well.  The catch, Ikorongo Texas argues that the infringing acts in California don’t impact Ikorongo Texas’s rights and therefore do not satisfy this second proper venue prong.  Bottom line, Ikorongo Texas argues that it could not have sued in California, and therefore it is improper to transfer the case to California.

In its decision, the Federal Circuit did not play the game but instead effectively pierced the corporate veil between the patent owners and their affiliated companies — holding that “Ikorongo Texas is plainly recent, ephemeral, and artificial—just the sort of maneuver in anticipation of litigation that has been routinely rejected.”

In its petition to the Supreme Court Ikorongo asks this question as follows: “Can a district court transfer a matter to a statutorily proscribed district based on expressly disregarding undisputed facts creating the proscription.”

The petition also asks a second question: “Should Gulf Oil Corporation v. Gilbert, 330 U.S. 501 (1946), be overruled, particularly in light of stronger technological abilities shifting the reasonable focus for determining what is convenient for parties and witnesses?”  Gulf Oil was decided in 1946 based upon the judicial doctrine of forum non conveniens. Two years later, Congress enacted Section 1404.  Still, Gulf Oil has remained a guidepost for these issues of convenient forum.

The petition takes issue with how convenient forum is litigated today — arguing that it is not simply a search for the “least inconvenient forum” nor is a search for the most convenient forum for the defendant.  Rather:

 [T]here must be some base significant inconvenience to a party to warrant transfer. . . [I]t is a remedy for when the plaintiff vexatiously chooses a forum that would cause undue hardship to the defendants. Simply weighing one forum against another defeats the purpose of Section 1404 by allowing defendants to abusively move a case to a forum that is inconvenient for the plaintiff. This case presents a robust example.

Petition. The petition also highlights the fact that electronic communications have  properly and dramatically changed how cases are litigated. And, “[a]lmost all of the private and public factors discussed by the Court in Gulf Oil are affected by the march of technology.”

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Split the Cake to Eat it Whole: Ikorongo Argues for its Divide and Conquer Strategy - Patently-O
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