Eastern District of Texas Federal Court Practice

Motion to Dismiss Indemnity Claim Against Third Party Defendant in Patent Case for Improper Venue Granted

Iovate v. BSN, 9:07-CV-46 (E.D. Tex. 1/31/08)
Judge: Ron Clark
Holding: Motion to Dismiss for Improper Venue GRANTED
This one's not reported yet, but was worth posting on.  This is a Lufkin patent case in which plaintiff Iovate accuses defendant BSN of infringing its patent dealing with dietary supplements.  Defendant third-partied in Creative Compound, LLC. (which I represent in this case, by the way - full disclosure) alleging that Creative was obligated to indemnify BSN for any liability to Iovate in connection with shipping, distributing, offering for sale and/or selling any product containing the accused product.
Creative moved to dismiss the third party claim against it, asserting: a) improper venue and b) failure to state a cause of action upon which relief can be granted. 
This afternoon, Judge Clark granted the motion to dismiss, finding that "Creative does not have a place of business or any employees in this district. It has never made any sales of the product accused in the Third Party Complaint to anyone in the Eastern District of Texas and currently has no pending orders from customers located in the Eastern District of Texas."  Absent the above, the Court determined that the plaintiff had not met its burden to prove a prima facie case that venue was proper.
Interestingly, one of the key issues in Judge Clark's holding was that the nature of the third party claims at issue, which were not patent claims, but breach of warranty claims.  "To the extent that Creative does have contacts with Texas," he wrote "those contacts do not give rise or relate to the alleged breach of warranty claim that BSN has asserted against Creative. BSN’s cause of action involves
indemnification of BSN’s liability and has nothing to do with the alleged infringing activities at the core of this suit."  The different claims at issue also affected the "fair play" prong of the jurisdictional analysis, where Judge Clark wrote that "[a]lthough this district has an interest in adjudicating the underlying patent infringement dispute, the citizens of this district have little interest in the interactions between two companies that conducted their transactions outside of Texas." 
So while the patent case stays where it is in Lufkin, the defendant's indemnity claim against its supplier will have to be heard elsewhere.

"A Battle Over Where the War is to be Fought - Venue in Patent Cases" - The Advocate

The second article, which I'm afraid doesn't seem to be available online yet, and in paper only to members of the Litigation Section of the State Bar of Texas is an article in the Winter 2007 edition of the Section's quarterly publication The Advocate.  That issue is a symposium issue entitled "Jurisdiction & Venue" and my contribution is the lead-off article "A Battle Over Where the War is to be Fought - Venue in Patent Cases", found at pages 10-13.  It's a short article outlining the text and history of the current patent venue statute, with an analysis of the activity to date of the pending patent legislation.  Luckily for me, nothing substantive has happened in Congress since I submitted the article, so for at least the next month or so, the article is fairly current.
The Litigation Section's new website is where to look for the article online when it is uploaded.  I would also mention that the issue contains a good article on litigating before magistrate judges.  I may post on that after studying it a little more.

Update:  Here's a copy of the article - Download venue_in_patent_cases.pdf

Texas Bar Journal "Year in Review" 2007 - "Patent Litigation: A Changing Landscape"

In the middle of my firm change this month (more on that later) I haven't posted on a couple of articles I wrote on patent litigation that came out in Texas legal publications this month.  The first is an article on the changing landscape of patent litigation as part of the Texas Bar Journal's "Year in Review - 2007" in the January 2008 edition.  The entire article is available here Download Year.pdf - my contribution is at page 25.

Managing Discovery of Electronic Information: A Pocket Guide for Judges - Barbara J. Rothstein, Ronald J. Hedges, and Elizabeth C. Wiggins

One of the weblogs that I monitor is Electronic Discovery Law at K & L Gates.  This week I ran across a post on it about a new Federal Judicial Center publication Managing Discovery of Electronic Information: A Pocket Guide for Judges - Barbara J. Rothstein, Ronald J. Hedges, and Elizabeth C. Wiggins.  The "pocket guide" is a 26-page short guide for federal judges which identifies frequent issues that come up in electronic discovery, and lists and discusses tools and techniques that judges can use to handle them.   It can be downloaded from the Federal Judicial Center’s website here, free of charge.

The central theme of the paper is that attorneys and parties should address ESI in the earliest stages of litigation, and judges should encourage them to do so.  It notes that "[a]ll too often, attorneys view their obligation to “meet and confer” under Federal Rule of Civil Procedure 26(f) as a perfunctory exercise.
When ESI is involved, judges should insist that a meaningful Rule 26(f) conference take place and that a meaningful discovery plan be submitted."  It's hard to dispute that, but the thing I have noticed in practice recently is that in the rush to get scheduling and discovery orders agreed to by a court-ordered deadline, e-discovery issues are often deliberately pushed to the back burner in order to get the agreements the court needs to enter these initial orders and get the case started without active judicial attention.  Forcing the parties to confront these issues early makes sense from the perspective of treating e-discovery issues right, but what the paper misses is that that confrontation would mean that the court would have to address these issues  as well as a lot of others that would otherwise be agreed early on in order get basic scheduling and discovery orders out, which would have an - apocalyptic is probably a good word - effect on docket management in busy courts.  And often these issues are worked out as time goes by, and the court only has to address by motion the few issues the parties cannot resolve.  It's not the tidiest way to handle it, but it may be the most efficient. 

One solution to this issue might be to segregate the e-discovery issues from the rest of the issues the parties have to resolve initially, and provide a later date and - more importantly - a separate order for the e-discovery issues.  Another would be for the court to send out a default e-discovery protocol and require the parties to take potshots at it.  I actually dislike either - the parties are likely in the best position to determine if there is even a dispute, and can always raise the issue by motion if the need arises.  Forcing them to agree to broad contours early on carries the unavoidable risk that parties will be fighting over ground they don't yet know they will even need.  In many, many cases I wouldn't be willing to agree that I was not entitled to request such and such, but I might later determine that I didn't need it anyway, so the dispute over scope becomes moot.

I'm not even going to get into the issue of proportionality or allocation, because the issue of whether something is sufficiently relevant to be worth the effort of getting it, and who ought to pay the cost is so fact-specific that it's almost impossible to say anything useful without knowing the specific facts.  "At stake is the art of judging" as a commentator said about trying to assign weights to the factors on a different type of motion (motions to transfer venue) many years ago.  But I can't help pointing out, as I always do when I speak on this subject, that in this analysis it is critical for the requesting party not to concede that ESI is not reasonably accessible because of the cost provisions that such a finding will carry.  An 8-track may not be reasonably accessible to me, but a few minutes on eBay is likely to locate one.

There is one howler at page 10 where the writers say that "the cost of copying and transporting the [ESI] is practically eliminated and the cost to the requesting party of searching the information may be reduced because it can be done electronically."  I don't think the authors have seen many fights over the mechanics of production of source code, nor have they seen how ESI in many cases can be impossible to search electronically (and sometimes by design).  Just because some ESI can be searched doesn't mean it all can.  I have seen many fights where the requesting party was pleading for paper because good old-fashioned wood pulp was easier to analyze, and it was less trouble to start over entering the documents in a database than deal with the other side's format.  The 2006 rules prohibit this kind of gamesmanship, but even when parties aren't actively trying to spike the database, it can still be hard for the other side to use.  I have fights like this between programs on the same computer all the time - I can imagine the problems translating databases.

On the issue of inadvertent disclosure, I thought it was odd that report simply stated (at n. 22) that proposed FRE 502 was published for comment in 2006 when it's actually been proposed to Congress now, and legislation enacting it introduced.

All in all, a good short paper on these issues.  Not a lot of law or detail, but there's not a  lot here.  But it gives the general contours, and that's what readers need.

New Local RuleCV-62 regarding supersedeas bonds.

Chief Judge Heartfield recently signed into effect via General Order 08-4 , Download 08-4.pdf new Local RuleCV-62 regarding supersedeas bonds.  The new rule requires that, unless otherwise ordered by the presiding judge (or the requirement of such a bond is waived) the amount of such a bond be the amount of the judgment plus 20% plus $250. 

Local Rules amendments

Chief Judge Heartfield just signed G.O. 08-02, Download go_082.pdf which amends a couple of our local rules.  Among other things, the order (1) allows attorneys to e-file sealed documents without first having to seek permission to do so; and (2) authorizes attorneys to file applications for extension of time to answer that are grantable by the clerk, subject to certain parameters. In short, instead of filing a motion to extend a time to answer where the extension sought is (1) unopposed; (2) not more than 30 days; and (3) doesn't result in an overall extension of 45 days for the defendant, now you file an application, which the clerk's office handles, rather than the judge having to review a motion and sign an order.  There is also a  minor revision to the comment to the amendments to Patent Rules 2-1 and 3-1 in General Order 07-09.

The new rule changes, including those contained in General Order 07-9 ,Download 07-9.pdf go into effect this Monday, January 14th (that order had previously said January 1, 2008). 

I have not previously posted much substantively on 07-09, but here is generally what it covers:

        - Mandatory e-filing of complaints & online payment of filing fees by attorneys in civil cases
        - Filing of ex parte documents in CD-ROM format rather than e-filing
        - Streamlined procedure for permission to file overlength documents
        - Better way of identifying emergency motions
        - Mandatory double spacing of e-filed documents
        - New procedure for contested bills of costs
        - Non-mandatory, but recommended, practice of providing trial exhibits in CD-ROM format
        - Revised criminal motions rule
        - New procedure governing the e-filing of plea agreements in criminal cases
        - Completely revised Court-Annexed Mediation Plan
        - Bar members obliged to notify court of disbarment or suspension received from another court     or state bar
        - Clarification of procedure governing disciplinary actions initiated in this court
        - Clarification that the initial case management conference under the local patent rules = Rule 16 conference
        - Deadline for serving infringement contentions under local patent rules changed from 10 days post-scheduling conference to 10 days after scheduling conference.

Marshall Status conferences - questions on P.R. 3-1 deadlines

I have already gotten calls from attendees at yesterday's conferences who said that they heard that the deadlines for PR 3-1 is 34 days after the conference, not 24 as I wrote yesterday - and for the 8:30 and 9 am conferences, they're right.  At those conferences, the court stated that (and I'm paraphrasing)  ten days after the orders are due (14 days from yesterday) was the date that was "deemed" to be the status conference.  Of course 3-1 PICs are due ten days after that (let's not get into the fact that the patent rule deadline was changed via rule amendment 1/1/2008 to make that date ten days BEFORE the status conference, or that that change has been postponed to 1/14 - regardless of what the local rule says, might say or will say, the individual judge can set that date whenever they want, and Judge Ward appears to be sticking with the ten days post right now).  14 + 10 + 10 = 34 days till PR 3-1 disclosures.  We all scribbled this down and compared notes and all came up with 34 days to PR 3-1.
But at the later conferences in the day which I attended (meaning 9:30, 10:30, 11 and 1:30, plus the ensuing quarter-hour ones) the court phrased it differently, stating that the turn-in of the reports at 14 days after the status conference was deemed the date of the scheduling conference for purpose of calculating PR 3-1 disclosures, so PRs under that would be due at 14 + 10 = 24 - and that's what I posted (there was a little checking done that I won't get into that confirmed at least in my mind that that's what the court probably intended, and it is more logical that turning in the orders = scheduling conference).

Further supporting this is language I saw this morning in an order in one of my early cases, which stated "The Court further instructed the parties that the time for complying with P.R. 3-1 would be 10 days after the date of the parties filing their proposed orders."  So that ought to settle things, even for the early cases. 

Marshall Status Conference II: To Consent or Not to Consent

The second round of Judges Ward and Everingham's status conferences in patent cases took place in Marshall today, and a good time was had by all.  33 cases received Markman hearing and trial dates, and one case announced settled (to a round of applause from the judges and a teary display of emotion by the law clerks).  Ten of the 33 consented to trial before Judge Everingham, (to a teary display of emotion by Judge Ward) and all stood in awe of the purple and gold necktie worn by Fish & Richardson's Ruffin Cordell, who was celebrating his alma mater LSU's win in the national championship game last night (ed. note - my dad played defensive end for the Tigers in the early 1950's, so we know how to spell LSU here as well.  Geaux Tigers!).
Markman dates assigned began April 23, 2009 and finished November 4, 2009.  Trial settings spanned August 2009 to April 2010 for Judge Ward and March 2009 toJanuary 2010 for Judge Everingham.  Discovery and scheduling orders in the cases heard today are due in 14 days, and plaintiffs' P.R. 3-1/3.2 disclosures ten days after that.  Prize for most conferences attended today goes to (newlywed) Betty DeRieux of Brown McCarroll, who reportedly logged thirteen today.