Wednesday, March 7, 2018

BlackBerry afraid of transfer of its trollish patent lawsuit against Facebook to Northern California

The company that used to be called Research In Motion is now named BlackBerry. It has always had the wrong kind of name at the given time: Research In Motion would be a typical name for a patent troll (second-best to "Innovations in Motion", more often than not with a demonym such as "American" placed in front) as those organizations try to position themselves as innovative, research-centric businesses with a view to jury trials when in reality they usually aren't. But it had that name when it was making those BlackBerry devices. Now that it has the name of the product, it's no longer making phones and becoming ever more of a patent troll. Admittedly, if I could go back in time, this blog here would have a different name, too: I didn't initially envision it to become so focused on smartphone patent and competition issues, whether or not they involve open-source software ("FOSS" stands for "Free and Open Source Software"). This blog may undergo a name change later this year or next.

BlackBerry has filed a patent infringement complaint against Facebook and its Instagram and WhatsApp subsidiaries (this post continues below the document):

BlackBerry v Facebook by Russell Brandom on Scribd

For the patents-in-suit, let me refer you to Ars Technica's article. I agree with Timothy B. Lee that the patents are extremely broad. In fact, they're so abstract and generic that many or even all of them might die an Alice death before the case even goes to trial.

I have an observation to share that other commentators don't seem to have focused on so far. The "jurisdiction and venue" section (paragraphs 25 to 36) is unusually long. In many other patent complaints it spans only a very few--and especially short--paragraphs. Here, it's almost epic.

Without a scintilla of doubt, the reason for BlackBerry's preemptive defense of its venue choice--the Central District of California (that's Greater L.A.), while Facebook is headquartered in the Northern District--is last year's Supreme Court recent decision in TC Heartland vs. Kraft Foods, which reinstated an earlier ruling (thereby overruling many years of Federal Circuit precedent) according to which "[a]s applied to domestic corporations, 'reside[nce]' in §1400(b) refers only to the State of incorporation" despite potentially broader definitions of "residency" in §1391. TC Heartland was viewed as a blow to the Eastern District of Texas, where patent trolls usually prefer to sue: it's easier now for defendants to get cases transferred out of that district.

BlackBerry's lawyers from Quinn Emanuel--a great firm though it has very much positionied itself as an anti-Apple firm (representing not only legitimate Android device makers but also antitrust violators and trolls against Apple) and apparently now also as an anti-Facebook firm (it already represented Yahoo against Facebook)--go to unusual lengths to justify the venue choice. Paragraph 34 of the complaint points to a 35,000 sq. ft. L.A. office as a "regular and established place of business" (though Facebook's new Northern California headquarters will have 1.75 million sq. ft.), and footnote 4 says there are at least 17 LinkedIn profiles of "people in this District that are dually employed by both Facebook and one of WhatsApp or Instagram." The complaint also points to "network effects" between Facebook's various services in order to establish as close a connection as possible between that L.A. Facebook office and the two Facebook subsidaries accused of infringement alongside their patent company.

BlackBerry also lists an Orange Country address for an in-house counsel, but it's actually a Canadian company and traditionally had most of its U.S. employees in Texas, though this may have changed.

It's all too obvious that BlackBerry doesn't want the case to be transferred to the Northern District of California. It appears to be realistic that it won't be a cakewalk to keep it in Southern California, but at least it wants to try. So it tries to satisfy the second part of §1400b:

"(b) Any civil action for patent infringement may be brought in the judicial district where the defendant resides, or where the defendant has committed acts of infringement and has a regular and established place of business."

It doesn't appear that Facebook filed a declaratory judgment action in the Northern District of California before BlackBerry brought its offensive assertions. But Facebook will still try to get the case transferred to San Jose, and that's where the question of whether Instagram and WhatsApp have a "regular and established place of business" in L.A. or whether it's just Facebook (the parent company)--and whether the parent company's presence is sufficient and whether there are dually-employeed people etc.-- will come up. I'm sure that any relevant witnesses on the Facebook/Instagram/WhatsApp side will be based in Northern California.

Why is BlackBerry afraid of Northern California? Obviously, for the troll that the company increasingly is, the Eastern District of Texas would have been an obvious choice. But presumably BlackBerry didn't want to try such a long shot in light of TC Heartland. I can think of three reasons for which BlackBerry would like to stay out of the Northern District:

  1. Juries in that district tend to be rather tech-savvy. They might be underwhelmed by BlackBerry's abstract patents (unless those are held invalid under Alice as a matter of law) and be more inclined to identify overlaps between those "inventions" and the prior art.

  2. Relative to its economic and societal stature, Facebook has relatively few employees, but still enough that Northern California jurors may know Facebook employees.

  3. Paul Grewal. The former U.S. Magistrate Judge from the Northern District of California (whose opinions were always extremely well-written, not just in my opinion but that of other litigation watchers, too) became Facebook's deputy general counsel in charge of litigation. He's also quoted in Facebook's response, according to which the social network company intends to fight back (I very much hope so: please, Facebook, don't feed the troll even if you can cheaply get rid of the case!). BlackBerry may be afraid of Mr. Grewal still having a unique relationship with some of the judges in that district.

Just one other observation. BlackBerry is seeking an injunction. RIM (as it was called at the time) faced the prospect of an injunction in 2005 when it was being sued by a patent troll named NTP, and had to cough up hundreds of millions of dollars. The following year, the Supreme Court's famous eBay v. MercExchange ruling on patent injunctions came down. Under eBay, irreparable harm is key, and whatever little of an operating business (security software) BlackBerry has left is not really in a competitive relationship with Facebook, Instagram, and WhatsApp. Also, remedies will only have to be discussed if and when BlackBerry prevails on the merits, and that's a big "if."

BlackBerry's approach to patent injunctions has changed. I remember a meeting with them between their almost-shutdown and eBay. One of their in-house counsel told me that they would only pursue an injunction in extreme situations such as an employee leaving the company and stealing some of their code. None of that is at issue now. They've simply become more of a troll themselves.

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