Law Times

PAGE 10 FOCUS February 22, 2010 • Law Times Forum shopping in U.S. courts: do your homework first I BY JULIUS MELNITZER For Law Times n December 2009, a U.S. federal appeals court up- held a US$290-million verdict by a Texas jury against Microsoft Corp. for wilfully infringing a patent held by Toronto-based i4i Inc., a docu- ment collaboration fi rm. Microsoft had used computer code embraced by the patent in its 2003 and 2007 versions of Word, its popular word-processing soft- ware. Following the jury's verdict, the presiding district court judge awarded i4i the $290 million and restrained Microsoft from selling versions of Word that contained the off ending code. Microsoft has since eliminated the feature. "Th ere are some places in the U.S, including eastern Texas where this case was tried, in which any plaintiff with a reasonable case almost always wins," says Stephen Maddex of Lang Michener LLP who at- tended law school in the United States and practised as a com- mercial litigator in Houston for eight years before returning to Canada in 2008. "It demon- strates that the key to winning in the U.S. is to determine the nature of your jury by picking your venue before you fi le suit." A single federal court district, for example, might straddle sev- eral counties, but the results could be diff erent depending on where a trial takes place. "Th e fi rst Vioxx trial was in Brazoria County, just south of Houston, which is known as very plaintiff -friendly," Maddex recalls. "Th e jury made a large award, and the plaintiff wasn't even from Texas." Similarly, venues east of Houston are in the plaintiff s category, while Houston proper is considered very conservative. So is Dallas, but again venues south and east of the city tend to favour plaintiff s. It is not, however, as if forum shopping is a total free-for-all south of the border. 'Conducting an analysis of the available jurisdictions can be complicated and time-con- suming. But in many cases it's worth the effort,' says Stephen Maddex. "Firstly, plaintiff s must fi nd a state or states with jurisdiction over the defendant," says Ann Schofi eld Baker, a Canadian practising in New York City who heads McKool Smith's copy- right and trademark litigation department. "Th en they have to establish that there is some kind of nexus between the venue they want and the litigants or the dispute." Under U.S. law, plaintiff s can sue in any state where a de- fendant is resident or otherwise maintains suffi cient contacts. Defendants, however, have the protection of the constitu- tional right to due process, which protects people's liberty interest in not being subject to the bind- ing judgments of a forum with which they have established no meaningful contacts. "It is in plaintiff s' best interest to determine what jurisdictions may be available and then select the state that provides the great- est advantage," Maddex says. "But states with which defen- dants have only random, fortu- itous or attenuated contacts will not be enough. Th ey must be substantial and purposeful and directed towards the forum." By contrast, Canadian law demands that a suit be fi led in Announcing a special Interim Edition Ontario Annual Practice 2010 Interim Edition Includes the new amendments to the Rules of Civil Procedure! Major amendments to the Rules of Civil Procedure came into effect January 1, 2010. 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Ontario Annual Practice, Interim Edition includes all of the great features of the traditional OAP, as well as: • a general description of the newly amended Rules of Civil Procedure • pertinent case annotations - the cases which are no longer relevant in light of the amendments have been removed • a thorough overview of the amendments • a synopsis of each newly amended rule as well as expert commentary • the new Practice Directions for civil applications, motions and other matters in the Toronto region effective January 1, 2010 And with the monetary limit of the Small Claims Court increased from $10,000 to $25,000, this edition of OAP includes: • the amended rules of the Small Claims Court • case annotations • the amended Small Claims Court forms Hardbound (Main Volume) • 1872 pp. • Perfectbound (Forms) • 832 pp. • CD-ROM January 2010 • $89 • On subscription (includes both volumes, CD-R0M, paper supplements & e-notes) P/C 0645140000 • One time purchase $94 • P/C 0645010999 • ISSN 0318 3556 Get the June edition FREE when you buy this special Interim Edition. T BONUS: wo Editions for the price of one! Carthy_OAP Interim (LT 1-2x4).indd 1 www.lawtimesnews.com 2/17/10 1:46:01 PM the jurisdiction with the closest "real or substantial connection" to the dispute. "In that sense, there is gen- erally only one appropriate ju- risdiction in which to fi le the dispute," Maddex says. And quite apart from the de- mographics of juries, the U.S. legal system is extremely diverse, so there can be wide disparities in substantive laws and proce- dural rules. "Each potential jurisdiction could have its own advantages and disadvantages, including the costs of litigating there, the right to proceed in federal court or state court, the relative speed of litigation, and a whole variety of other factors that could have an important impact on the out- come of the case," Maddex says. If a state has jurisdiction, and the plaintiff s have chosen their venue, the defendant can fi le a motion to transfer on the ba- sis that there is a venue that is "clearly more convenient." Th e realities of today's world, how- ever, mean that several venues can be equally or close to equal- ly convenient, making success on a transfer motion diffi cult. Th e Canadian company like- ly best known for falling prey to the vagaries of forum shopping by U.S. plaintiff s is Research In Motion Ltd., the Waterloo, Ont.-based makers of the ubiq- uitous BlackBerry. NTP Inc., a U.S. patent troll, claimed RIM had infringed its patents. Th e company fi led its claim in the U.S. District Court for the Eastern District of Virginia in November 2001. Th e jurisdiction is known as a "rocket docket" for the speed with which it brings cases to tri- al regardless of their complexity. Th at makes eastern Virginia a favourite for plaintiff s, particu- larly in patent disputes. Eastern Virginia didn't disap- point NTP. Th e trial began barely a year after the company sued RIM. NTP put 16 claims from fi ve patents before the jury. Seven- teen days later, the jury found in favour of NTP, ruling RIM's pat- ent infringement was wilful. On Nov. 21, 2002, the jury assessed damages at US$23 million plus a royalty on BlackBerry sales in the United States. Th e case eventually settled when RIM agreed to pay $612.5 million to NTP. RIM's vulnerability has a les- son: while Canadian defendants may be relatively helpless to deal with forum shopping by U.S. plaintiff s, Canadian plaintiff s su- ing in the U.S. can use the same tactics against U.S. defendants. "But it's very important that no foreign attorney do a venue analysis without involving an experienced U.S. trial counsel," Baker says. "You need to know the rules of the game before you play." Maddex is of similar mind. "Conducting an analysis of the available jurisdictions can be complicated and time-con- suming," Maddex notes. "But in many cases, it's worth the eff ort." LT The Lat e Honourable Der r y Jus Millar tice G. and Jef f James J. Co Car t w an h y

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