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Frisco, Texas, some 30 miles due north of downtown Dallas, is perhaps best known for its sports venues.
A city of 180,000, Frisco hosts the headquarters of the NFL’s Dallas Cowboys; Major League Soccer’s FC Dallas; the Frisco Roughriders, the minor league affiliate of Major League Baseball’s Texas Rangers; the National Hockey League’s Dallas Stars; the Texas Legends, the G-League affiliate of the NBA’s Dallas Mavericks; Major League Lacrosse’s Dallas Rattlers; the Continental Indoor Football League’ Texas Revolution; and the headquarters of the NCAA’s Division I Southland Conference.
Founded in the 19th century as a village straddling the Shawnee Trail, and later the St. Louis-San Francisco railway, Frisco is known for its good schools, friendly residents, and comfortable exurban lifestyle.
But Frisco suffers from one minor drawback that will soon negatively affect its residents’ lives: It is situated in Collin and Denton Counties, within the Eastern District of Texas, and therefore will soon be losing its Apple Store — the latest ripple effect of the May 2017 TC Heartland Supreme Court decision regarding patent venue.
Recall that “venue” refers to the particular geographic location where a lawsuit may appropriately be filed. For years, the US District Court for the Eastern District of Texas thrived as a key destination for patent cases, having pioneered “patent local rules” that expedited case management and time to trial and having acquired a reputation among many practitioners as a friendly court for patent owners. In a now-famous 2006 story on the village of Marshall, Texas, entitled “So small a town, so many lawsuits,” the New York Times detailed how attorneys and vendors had begun crowding Marshall’s quaint streets, while local hotels, restaurants, and retail businesses were experiencing a boomlet.
However, 22 months ago the Supreme Court appeared to usher in a new era. In TC Heartland v. Kraft, the high court held that companies may be sued for patent infringement only in geographical districts in which they’ve been incorporated or have a “regular and established place of business.” The decision aimed to end “forum shopping,” or the tendency of some patent owners to hunt for a friendly place to file suit without regard to the defendant’s presence in that location.
The Federal Circuit Court of Appeals, which handles appeals of all patent cases, further explicated the ruling by defining a regular and established place of business to mean that the defendant (the party accused of infringing the patent) must have a physical place in the district, it must be a regular and established place of business, and it must be the place of the defendant. (The patent owner’s location is not relevant to this inquiry.)
Thus, retail stores for national chains located in the district would most likely qualify as having a regular and established place of business in the district while outlets with only an inchoate presence may not be subject to litigation there. These decisions have resulted in a significant drop in patent cases filed in Texas and a commensurate uptick in filings in Delaware, where many US companies are incorporated.
Which brings us to Apple, a frequent target of patent litigation around the country, but especially in East Texas. The world’s on-again, off-again most valuable company owns two locations in the district, one in Frisco’s Stonebriar Centre and another in nearby Plano.
However, in a move believed by many industry observers to enable Apple to escape venue in the district, the company recently announced it would be shuttering those locations and opening a new one in Dallas, safely ensconced in the Northern District of Texas.
“We’re making a major investment in our stores in Texas,” an Apple spokesperson told Business Insider, “including significant upgrades to NorthPark Center, Southlake and Knox Street. With a new Dallas store coming to the Dallas Galleria this April, we’ve made the decision to consolidate stores and close Apple Stonebriar and Apple Willow Bend. All employees from those stores will be offered positions at the new Dallas store or other Apple locations.”
So while Apple wouldn’t confirm that patent litigation motivated its store closures, it appears that the TC Heartland decision continues to ramify, in this case to the detriment of Frisco residents, who will now have to make the 15-mile trek to Galleria Dallas to buy the latest iPhone. Such is life in what was once the busiest patent district in America.
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