The holder of a patent avoided bankruptcy court by disavowing claims that arose before the infringer’s chapter 11 plan became effective.
Global Geophysical Services Inc., a provider of seismic data for the oil and gas drilling industry, confirmed and consummated a chapter 11 reorganization plan in early 2015 in the Southern District of Texas. Nine months later, a patent holder sued for infringement in the Eastern District of Texas. The patent holder’s complaint sought damages for “past infringement” and made allegations about Global’s activities before bankruptcy.
Global latched onto the claim for pre-bankruptcy damages and filed a motion seeking a transfer of venue to the bankruptcy court. At that point, the patent holder evidently said to itself, “Oops.”
Answering the venue motion, the patent holder disavowed the complaint and told District Judge Rodney Gilstrap of Marshall, Texas, that it would not make any claims arising before consummation of the chapter 11 plan.
That was good enough for Judge Gilstrap. He said that interpretation of the reorganization plan was “both unnecessary and irrelevant.” Transferring the suit to bankruptcy court would be “nonsensical and a waste of judicial resources,” according to his April 15 opinion. Lacking bankruptcy jurisdiction, there was no basis for invoking the bankruptcy change-of-venue statute, 28 U.S.C. Section 1412.
There being no basis for bankruptcy court jurisdiction, Judge Gilstrap denied the venue motion under 28 U.S.C. Section 1404(a), the statute applicable in general civil litigation.