There's no place like home, most litigants feel. At the very least, being able to try a case on its own turf can save a company a lot of money and bother: Lawyers and witnesses won't have to run up travel expenses and the law firms that usually do the company's work can handle the case. At best, a company with a good local reputation can look for a sympathetic and believing judge and jury.
So it's no wonder that both plaintiffs and defendants maneuver to have cases brought in their home jurisdictions.
It used to be that in patent infringement cases there was little room for jockeying: The cases had to be brought in the place where the defendant -- the company accused of using an invention illegally -- was incorporated. That gave a break to the accused infringer.
Now it is an open question whether that rule still holds. Congress may have almost inadvertently changed it two years ago.
What the lawmakers thought they were doing was clearing up a technical problem of jurisdiction that had nothing to do with patent litigation. They rewrote the general rule on where a corporation may be sued to make clear that it refers not to a state but to the specific judicial district where a company operates -- an important distinction in states like New York and Texas, which have four districts.
But in fact the amendment was written so that it can be read as applying to the entire chapter of the U.S. code about where a person can be sued. That would wipe out the special provisions on patent litigation.
If that is what Congress did, it means that an alleged infringer can be sued anyplace where it does business. If the defendant is a big national concern, that means the patent-owner can pick a court near home, which may turn out to be disadvantageous to the defendant.
The U.S. District Court in San Francisco on April 12 read the law just that way, opening the way for the regents of the University of California to sue Eli Lilly & Co. in California. The judge acknowledged that that was probably not what Congress had meant to do, but said the statute's language is so clear that there's no need to look behind it for a hidden meaning.
The U.S. District Court in Knoxville last year came to the same conclusion.
Judges in Baltimore and Chicago, however, have come to just the opposite conclusion, ruling that patent infringement suits still have to be filed in the defendant's place of incorporation.
In the rest of the country, plaintiffs and defendants are free to continue to fight over the issue.
In other cases, courts ruled that:
A securities offer can be both "literally true" and fraudulent. The U.S. Court of Appeals in New York breathed new life into a suit by debenture holders who felt they had gotten a raw deal when the company issuing the notes merged. They had been promised full face value for the debentures in case of a merger, but there were so many strings attached to the promise that the company would have virtually never had to honor it.
The trial court judge found no deception, since all of the conditions were spelled out in the offering. But the appellate judges reinstated the suit, saying that the issue "is not whether the particular statements, take separately, were literally true, but whether defendants' representations, taken together and in context, would have misled a reasonable investor."
(McMahan v. Wherehouse Entertainment, April 10) The owner of an incorporated business may be held personally liable for the company's debts. The question is whether or not a supplier to the business knew that the firm is incorporated. The D.C. Court of Appeals ruled that unless the owner makes it clear in giving an order that he is merely acting as agent for a corporation, the supplier can look to the owner's personal wealth to collect debts. But once the owner says that the company is incorporated, bills for any other shipments are the responsibility only of the corporation.
(Rosenthal v. National Produce, April 18) A railroad can take the best offer for trackage it wants to abandon. Federal law says that when service over certain routes is being dropped, it must be sold to a responsible bidder, with the Interstate Commerce Commission deciding who meets that criterion. To a cement company that was the first bidder on the Ivalee-Greens line in Alabama being abandoned by CSX Corp., that means that as soon as a responsible buyer makes an offer, the deal must be closed. But the U.S. Court of Appeals in Washington found nothing wrong in the ICC policy of waiting until all the bids have accumulated and then letting the railroad pick among the qualified buyers.
(Cheney Railroad v. ICC, April 27) You don't have to be a lawyer to get paid like one. The U.S. District Court in Florida told the government to pay a Social Security claimant for his successful court fight to collect disability benefits. The law tells the government to reimburse the other side's "attorneys" when individuals prove that the government never should have disputed their claims -- a mandate that Judge Jose A. Gonzalez Jr. read as applying to anyone who prepares and argues a case, whether or not he has a law degree.
Gonzales figured, however, that a man who presented his own case should collect only $75 an hour -- below usual lawyer rates -- because he did not have the overhead expenses of a lawyer. Still, that came to almost $19,000.
(Celeste v. Sullivan, April 3)
Appraisers may not be allowed to keep a client's confidences. The U.S. Tax Court gave the green light to testimony in an estate tax case for Willamette Management Associates to give evidence for the government on the value of stock in the Chicago Bears, even though Willamette had earlier worked for the football team in pricing stock the company bought back from another estate.
Questions of conflict of interest do not apply, the opinion says, because the position of appraisers "is in no way analogous to that of attorneys." The judge found, "There is no recognized testimonial privilege between appraisers and their clients."
(Halas Estate v. Commissioner, April 11)
Daniel B. Moskowitz is a Washington editor for Business Week newsletters.