Just started ED Tex bench/bar in Plano. Will be tweeting about it - follow @mcj_smith.
As readers know, the 2013 Eastern District of Texas bench/bar conference starts tomorrow in Plano.
Tomorrow afternoon I will be moderating a panel Lies, Darn Lies & Statistics providing current and recent statistics regarding the docket in the Eastern District. We are honored to have with us the Federal Circuit's Circuit Executive and Clerk of Court, RADM (ret.) Daniel E. O'Toole, who joined the Court earlier this year after a distinguished 28 year career as a Navy JAG. Admiral O'Toole will be joined by Eastern District of Texas Clerk Dave Maland, and they will provide current information on both the Circuit and the district.
Given the length of even smaller trials, it's rare for a federal district court to get two verdicts in one week, but with a little multitasking, that's what happened last week in Marshall. Following a jury verdict in the Wi-LAN v. Apple case in favor of defendant Apple Tuesday, a second jury concluded its work Friday, finding for defendant TSTC-Marshall on a race discrimination case before Judge Gilstrap.
Although it found that the plaintiff was harassed on the basis of her national origin through the actions of her supervisors, it found that TSTC did exercise reasonable care to prevent and promptly correct the harassment, and that the plaintiff unreasonably failed to take advantage of corrective opportunities. The jury found that the plaintiff was not terminated based on her national origin, or in retaliation for reporting fer allegations to the authorities.
SimpleAir v. Microsoft, 2:11cv416 (8/27/13)
Judge: Rodney Gilstrap
Holding: Motion to Compel DENIED
This was a motion by defendant Google to compel production of four documents - correspondence involving the plaintiff's predecessor. After reviewing the applicable law on attorney-client privilege, Judge Gilstrap found that the privilege was appropriate in this as to the four document, which the Court reviewed in camera after an oral hearing. The Court noted that there was no serious dispute that the privilege attached - the question was whether it survived transfer to SimpleAir. The Court noted that this presented an issue of fact that was considered on a case by case basis.
Judge Gilstrap concluded that control of a business followed ownership, and not the other way around, and concluded that the transfer at issue was not a mere transfer of assets through which the privilege failed to survive. Accordingly, the motion to compel was denied.
Judge: Rodney Gilstrap
Holding: Motion for Extension of Time to Answer DENIED; Motion to Transfer GRANTED.
Plaintiff missed the deadline to respond to the motion to transfer by three weeks, belatedly asking for an extension and filing a response only when the defendant filed a notice of completed briefing. Judge Gilstrap found no good cause for failure to meet the deadline, struck the response, and granted the motion to transfer.
From Docket Navigator.
Well, aside from focusing on the next batch of cases, next week's patent status conferences, and getting ready for my panel discussion "Lies, Darn Lies & Statistics" with ED Tex clerk Dave Maland and Federal Circuit Executive Daniel O'Toole at next week's Eastern District of Texas bench/bar , I try to catch up on my backlog of potential posts (you may have noticed).
Updating Research Files
After making some headway on that, this morning I am doing some overdue work updating my research files by taking some older paper research files (actually a notebook) and scanning them into Evernote and indexing as appropriate.
This morning I'm focusing on my voir dire research - scanning past voir dire scripts, transcripts, articles & questionnaires into the database so all my materials are available no matter where I am. Aside from the obvious benefit - accessibility and freeing up file space - putting them in Evernote means that they're word-searchable, so when I can't remember which case it was where someone made a reference to the Alamo, or a bowtie, the program does. Which is a good thing, because that's kind of how my brain has gotten after doing this for 21 years. It remembers a single fact, but then sulks when I ask it for more information. This will help fix that problem.
The other benefit to actually going through the information is somewhat related, and it is that it brings back up useful tidbits of information you forgot you knew. For example, this morning I ran across a neat, handwritten one-page outline of what I needed to do to make a record on an anticipated Batson challenge in a 2001 trial before Judge Ward, complete with lists of juror numbers and other information I needed to get in the record to substantiate a challenge.
My recollection is that I was frantically scribbling this together during voir dire and after we cut our list - as I always do - in the event the other side struck the few minorities on the panel, because once you have the other side's strikes, depending on the judge you may have only seconds to decide whether to object. I remember in every trial before Judge Ward his courtroom deputy Sonya Dupree would look up at me after we exchanged lists and politely ask "do you have any challenges" and I really didn't want to say, "uh, I don't know - let me get back to you on that." As soon as I saw the strikes, I knew.
This was before I started editing the corresponding chapter of O'Connor's Federal Rules * Civil Trials. When I started updating that chapter one of the first things I did was eliminate the need for a separate outline like this by restructuring that section slightly so that the book's outline told you - assuming you were standing at the podium making your record before an impatient federal judge - in order, what you needed in the record to make a prima facie case that a strike was improper, assuming that you'd annotate the specific facts from the case in the margin. So now I just scribble down the relevant facts as voir dire is going along, and identify the jurors that I'd want to bring back if stricken for an improper reason, and with that and the book I'm ready. It's a sad fact of life in the Eastern District that minorities are often underrepresented on our panels, so the Batson issue often telescopes down to two or three panel members, depending on whose court you're in.
So while the one page outline is somewhat obsolete, it's still a useful reminder of how we used to have to do it back in the olden days.
If you think you've had the dullest three moments of your day - actually you haven't because you haven't seen me explaining what the Texas Bar Journal is to our viewers on Texas Bar TV. So you can celebrate avoiding that right now and hit 'delete'.
Seriously, I was asked to do a very brief summary of what the Bar Journal is and how the editorial board that I chair works. The video is actually somewhat misleading - no, I'm not claiming I'm thinner, but I actually have less of a personality than this makes it look like (believe it or not).
Saw several articles this morning on the latest version of House Judiciary chair Bob Goodlatte's patent reform bill introduced yesterday. This isn't the first draft - Rep. Goodlatte already circulated two public drafts for comment, and a companion bill is expected to be introduced shortly in the Senate by Senate Judiciary chair Sen. Leahy.
With respect to how the bill would affect current practice in the Eastern District, the thing that struck me in reviewing the bill is that several parts of it largely track requirements of the local patent rules (re: specific disclosures) and other local practices (mini-Markmans), so kudos to the drafters for finding language that is working in practice, although in other places I believe the legislation would inappropriately (and inefficiently) hamstring judges' ability to manage their dockets. But other parts confirm the impression that's been growing in my mind that some of the most serious abuses in the patent litigation system that the bill seeks to address appear to be practices that may be prevalent in other districts, but which I am not seeing happening in the Eastern District. The following post covers a few of these points:
More Detailed Complaints
The legislation would install detailed pleading requirements in patent cases for the plaintiff, and eliminate Form 18. Much of this duplicates detail already required by the local rules shortly after defendants answer or otherwise plead.
But here's one concern I had. Currently infringement and invalidity contentions have strict requirements for amendment under P.R. 3-6 - thus forcing parties to set their positions early and meet a raised bar for later amendments, while pleading amendments don't even require leave before a certain point. Thus either plaintiffs will have flexibility to amend their contentions that defendants won't for invalidity, or the court will have to limit the role of pleadings (early deadlines to amend, for example) to preserve the restrictions on amending contentions that have worked well in practice, thus eliminating the utility of the complaints, and putting us back where we started. But the net effect on local practice in light of the existing local rules would probably be minimal once the statutory requirements are coordinated with the patent rule disclosures. At least locally they would be - in courts without patent rules the effect would be far more pronounced, and perhaps that's where these provisions are really directed, a theme I'll come back to later.
Change in Award of Fees and Expenses Under 285
The fees statute would be amended from awards only in "exceptional cases" to awards required unless the loser's position was "substantially justified" or that "special circumstances" would make it unjust. This preserves the discretion that the judge who has seen the entire case has to determine when fees are and aren't appropriate. It would likely mean closer scrutiny of both sides' positions after trial or the granting of a dispositive motion, and means we would be starting over with new tests for the granting and denial of such motions. But we may be facing that anyway with the Supreme Court considering cases on the existing test for "exceptional case" under Section 285.
With some room for judicial discretion, no discovery until claims construction ruling.
Transparency of Patent Ownership
Plaintiffs are required to provide information regarding patent ownership. However, the accompanying provision that the plaintiff can't recover damages or fees under section 285 for any period of noncompliance with this provision would arguably encourage postverdict satellite litigation unrelated to the merits of the case. I would assume that any deficiencies in the disclosures could be addressed and appropriate penalties or sanctions imposed via motion practice during or after the litigation, rather than by providing parties with a monetary incentive to carpet bomb the court with motions to try to reduce a damages award, even without a tie to any harm resulting from the nondisclosure.
For patent damages buffs, this makes using the entire market value of an accused product to calculate damages look reasonable by comparison. I mean, I'm not characterizing this as a windfall or anything, but this would be a definite growth area for contingency-fee lawyers. Think of it as Son of False Marking.
Judicial Conference Rules on Discovery and Early Dispositive Motions
One of the improvements in the legislation compared to some alternative proposals is the section referring to the Judicial Conference the task of developing rules and procedures, albeit "using existing resources", on discovery issues and potential early resolution of cases, thus recognizing at least in the abstract the concept of judicial discretion to administer their dockets, and avoiding case management by statute.
Unfortunately, with respect to discovery, it is largely only in the abstract as currently drafted. The discovery rules come pre-written in the legislation, including, surprisingly, a verbatim recitation of portions of the Federal Circuit Advisory Committee's 2011 model e-discovery order relating to emails, complete with mandatory limits and cost-shifting, despite the existence in many courts of highly successful modifications to that order, such as the Eastern District's own e-discovery order, as well as rules mandating cost-shifting and requiring parties to post bond before seeking discovery in all non-core discovery. While the limits on core and e-mail discovery can be modified with a showing of good cause, the cost shifting and bond requirement cannot, and all district courts would be required to conform their local rules to these rules, once written.
I recently spoke at a seminar in Minneapolis on how successful the Eastern District's revised version of the model e-discovery order has been within the district. I cannot recall seeing any motion practice on e-mail discovery in any of my cases since its enactment, and we fought over it all the time before the ED model rule provided a framework vetted by experienced practitioners on both sides of the docket, and then proposed to a court experienced in considering these issues. So this is a provision I hope is revised during the debate to permit courts discretion to manage their cases using the practices they have found to be most efficient. Congress' reference of the issue to the courts for rulemaking is appropriate - but I believe the crafting of the rules itself is ill-advised. It does not have the expertise that the Judicial Conference - not to say individual districts and courts - can bring to bear on the issue.
Early Dispositive Motions
The requirement to study and implement procedures to identify any potential dispositive issues of the case and focus on early summary judgment motions does not come with pre-drafted rules, but treads no new ground locally. As noted in the Uniloc opinion by Judge Davis discussed below, he implemented mini-Markman proceedings and other similar innovations in appropriate cases in early 2011. And in fact, statistics I have prepared for next week's bench/bar panel reflect that dispositive motions have already
increased almost seven-fold in Marshall patent cases in 2012 over 2010. As far as resolution, remember that the Federal Circuit recently indicated that motions to transfer venue should take priority, so which motions are more focus-worthy appears to be a function of which end of Pennsylvania Avenue one's office or chambers are located. And remember that discovery would also be stayed until a Markman ruling as well, so there's a third requirement for a trial court's focus. Did I mention the Speedy Trial Act? Yeah, that too. You get the idea.
And no, not all cases have mini-Markmans, but as Judge Gilstrap recently observed at the FCBA/Eastern District seminar in Plano in April, he already sets full Markmans so soon in cases (6-10 months from the status conference) that a mini-Markman could hardly be set sooner. In my experience our judges are working extremely hard to battle trial litigators' tendency to paper every possible issue (not me, of course, but other lawyers) via page limits, motion limits and letter briefing requirements to cull the motions down to the ones that have the best chance of surviving an analysis under the rigorous standards of Rule 56, and therefore merit scarce judicial attention.
While I appreciate any guidance or procedural advice the Judicial Conference can provide, the trial judges handling these cases are already innovating ways to do this as best they can (when they're open and/or funded. Having judges would be nice, too). And the Patent Pilot Program is acting as a hothouse for judicial innovation in this area - innovation that should be allowed to continue. Now is particularly not the time - so soon after the AIA - to freeze judicial rules and procedures on how to handle infringement cases in such a way that it would take an Act of Congress - literally - to change the national rule on the number of custodians whose emails can be searched.
Personally, I think the best way for Congress to enhance the chances of early dispositive motions is to fill the two judicial vacancies in the district and fully fund the courts. But I do have to note in that regard that Congress did recently respond to the courts' plea for help following sequestration. In early May, the administrative office for the courts and the chair of the U.S. Judicial Conference submitted a request to Congress for $73 million in emergency funding to help it respond to the $350 million in sequestration cuts. $41 million of the requested increase was for the Defendant Services account, and $31.5 million for the court’s salaries and expenses account. The budget deal that was approved by Congress in mid-October to reopen the government and raise the debt ceiling included partial relief in response to the request. Congress approved $51 million in additional funding, which represents $26 million more for defendant services and $25 for judicial salaries and expenses. So I do want to acknowledge that Congress has acted to help here. Well, perhaps "help" is a misnomer. Mitigate the damage, let's say.
Stays of Customer Suits
The bill provides a flexible stay procedure for suits against customers where manufacturers are parties. But here is where I am really seing a discrepancy between what the legislation is seeking to address as far as national problems and what I have seen in recent local practice.
Candidly, I haven't ever seen suits against individual customers (individuals or users of accused products) in my practice. I know the cases are out there - you can't miss the actions by state attorneys general in Vermont and Nebraska, for example, but I haven't seen them locally, and I think I know why. And I think it's related to the fact that I haven't seen many suits against really small entities (equivalent to the proverbial "Mom and Pop" customers in size if not character of usage) since Chief Judge Davis' opinions in Raylon and Parallel Networks - particularly the latter. I used to - in fact I have represented a number of them in the past two decades - but I don't see this business model of patent infringement suits locally any longer. Let me explain:
As I was telling someone the other day, almost three years ago now, at the end of 2010, Judge Davis issued an opinion in Raylon, LLC v. Complus Data Innovations, Co. et al in which he expressed concern about cases where a plaintiff asserts questionable patent claims against a large number of defendants to extract cost of defense settlements. See Raylon, LLC v. Complus Data Innovations, Co. et al., 6:09cv355 Docket No. 147 at 5 (“[T]his Court has some concerns about plaintiffs who file cases with extremely weak infringement positions in order to settle for less than the cost of defense and have no intention of taking the case to trial. Such a practice is an abuse of the judicial system and threatens the integrity of and respect for the courts.”) (emphasis mine). In that opinion, Judge Davis observed that while not appropriate in that case (admittedly a decision the Federal Circuit later disagreed with, remanding for a determination of sanctions, if any, under their opinion), Rule 11 sanctions would be appropriate where, for example, "a case lacks any credible infringement theory and has been brought only to coerce a nuisance value settlement" or where "the cost of the litigation is more of a driving force than the merits of the patent-in suit". As he wrote in an opinion in April of 2011,
Defendants are faced with a Hobson’s choice of spending more than the settlement range on discovery, or settling for less than their cost of defending the case, regardless of the merits of the case. See Parallel Networks, LLC v. Abercrombie & Fitch Co. et al., 6:10cv111 Docket No. 338. In those situations the Patent Rules, with their quick discovery deadlines, may not provide the most efficient case management schedule, and the Court has modified its Docket Control and Discovery Orders to level the playing field. See id.; see also Adjustacam LLC v. Amazon.com, Inc. et al., 6:10cv329 Docket No. 426 (implementing agreed modifications to the Docket Control Order to streamline discovery and potentially lead to early resolution of dispute).
See Uniloc USA, Inc. v. Sony, et al, 6:10cv373 (E.D. Tex. 5/20/11). As a result, Judge Davis took the then unprecedented step of considering staying discovery (and issuing stays in some cases) and holding special scheduling conference in cases involving large numbers of defendants to ascertain whether they are ones that merit judicial concern as one "where a plaintiff asserts questionable patent claims against a large number of Defendants to extract cost of defense settlements with the costs of defense being driven by the quick discovery deadlines of the local patent rules, and thus the Court's Docket Control and Discovery Orders need to level the playing field." Judge Davis also began ordering in camera submissions of settlement licenses and information regarding offers in selected cases. Clearly, Raylon wasn't an aberration - the issue had the soon-to-be chief judge's attention.
A characteristic about the Eastern District of Texas going back at least to Judge Parker's CJRA Plan in 1991 is strong judicial leadership when it comes to management of the court's docket. Our judges often come from the practicing bar locally so they know the court and its docket going back in some cases generations, they work hard to administer their dockets fairly, and they have correspondingly high expectations for the lawyers that practice before them. They like lawyers (a high compliment locally for a judge - you know some actually don't) and are notable for their willingness to listen to the bar - something I can vouch for that as chair of the local rules committee for nine years through four chief judges. But after having considered an issue, when they decide how they are going to handle something we listen and redirect our litigation strategies and practices accordingly.
But in my experience, not many directives from the Court have been as influential in affecting local conduct as the Parallel Networks opinion in which Judge Davis cited his concerns over cases brought for sub-defense costs. With days I saw plaintiffs dropping significant numbers of smaller defendants (including some clients of mine) in numerous cases. I recall seeing 27 dropped in a single case within a two or three day span, and it wasn't an isolated occurrence - quite a few defendants were dropped rather than have Judge Davis confronted with evidence of large numbers of small settlements in multidefendant cases. (I'm not sure what he would have done, but I concur with not wanting to be the party that found out firsthand). Thus the character of cases filed in the district changed somewhat after Parallel Networks - a change that was accelerated by the enactment of the AIA later in 2011, which provided an additional disincentive for plaintiffs to include small defendants.
I don't mean to imply that there aren't any smaller defendants in the Eastern District, of course, or that there are not plaintiffs who are pursuing cost of defense settlements or pursuing weak infringement cases. Cases that in my opinion fit exactly that model are alive and headed for their rendezvous with the same jurors in Marshall and Tyler that have more often than not this year found all asserted claims not infringed and invalid to boot, as a Marshall jury did yesterday. If they even get that far. It will take a while for some of the cases to work their way through the system.
I mean only that practitioners who do a lot of work in the district got a strong negative signal from Judge Davis back in 2010-2011 about these cases, which he has recently reaffirmed in Adjustacam, saying in denying a 285 request for fees that he "seriously considers when a defendant alleges a case was merely brought as a nuisance lawsuit, and will not hesitate to award attorney fees if the facts support doing so." And in my experience, that changed the local patent docket. I just didn't realize how much it had changed until I studied the proposed legislation and realized not just how much it reflects things the courts are already doing locally, but also how much it seems to be addressed at conduct that, while obviously occurring in some locations, doesn't seem to be prevalent locally. Used to be that I could map proposed legislation directly on the local docket - that's no longer the case. Perhaps the worst of the bad actors on the national patent scene just decided the cotton was higher someplace else.
Around here we're just trying to get cases moved as efficiently as possible in an extremely negative staffing situation for our judges. The Eastern District currently has 248% of the weighted average filing per authorized judgeship - and that doesn't take into account the fact that two of the eight authorized judgeships are vacant (which makes it 310% per filled judgeship). Filling the vacancies would go a long way to providing resources for the courts to handle patent cases more efficiently and effectively.
Reports are that Congress will be considering the Goodlatte bill on a relatively fast track. I look forward to seeing how the proposals do in committee, and what amendments are considered.
I do want to say this - I know there was a lot of concern with a lot of the proposals floated recently that they would do major damage to patent holders' ability to enforce meritorious claims of infringement of valid patents. I don't think this proposed legislation does that. I think it has problems and would put in place some inefficient and costly litigation procedures that would delay courts' resolution of claims, while providing little benefit, at least in courts that are experienced with these types of cases. I do think the procedures could be a godsend in some cases - it largely depends on the individual court, as best I can tell, because it would provide some needed structure and limits in courts where that's presently not the case. But it doesn't appear to me to substantively erode the value of patents by making it impossible or in many cases financially impossible to enforce them.
Hey, I'm from Texas - I know what real tort reform looks like. This is basically just fiddling at the margins, trying to make some needed changes without making anything else worse. Like most proposed legislation, some of it's good, some of it could be better, and a few provisions should die a quiet death in committee. But that's what the legislative process is for. Please do follow former Federal Circuit Chief Judge Michel's recent admonition, and if you have an opinion on this bill, pro or con, let it be known. As I've said before, most of the people reading this have forgotten more about patent litigation than Congress actually knows. So as Ann Richards once told a group of Baylor students who showed up at the Capitol to lobby:
"Speak up, shut up, thank them, and get out."
Can't say it any better than that. So get out there and get to work.
The taxpayers are certainly getting their money's worth out of the Marshall courthouse this week. Juggling juries between different rooms in the building, Judge Gilstrap finished up the Wi-LAN case yesterday morning and started evidence in a discrimination case involving Texas State Technical College - Marshall after lunch.
Meanwhile, Judge Payne has been conducting pretrial conferences in multiple cases on the November patent docket, and there might be possibly be some things happening in criminal and nonpatent civil cases as well...
I have also updated the Wi-LAN v. Apple post from yesterday to reflect that Wi-LAN was seeking $248 million. Legal media has Wi-LAN saying that this doesn't affect the validity of the numerous licenses it signed prior to its loss on different patents in Tyler against four defendants before Judge Davis in July, which I posted on here. Interestingly, that trial was consolidated as to all four defendants and all issues, as I posted on here, and also resulted in the jury's finding none of the claims infringed, and all of the claims invalid.
Possibly celebrating the new iPad Air introduced yesterday, a Marshall jury in Judge Rodney Gilstrap's court gave Defendant Apple a win this afternoon, finding the asserted claims (1) not infringed; and (2) invalid.
Obviously no on willful infringement and zero on damages.
Update: Wi-LAN was seeking $248 million. Following the verdict a Wi-LAN spokesman was reported as saying that this doesn't affect the validity of the numerous licenses it signed prior to its loss on different patents in Tyler against four defendants before Judge Davis in July, which I posted on here. Interestingly, that trial was consolidated as to all four defendants and all issues, as I posted on here, and also resulted in the jury's finding none of the claims infringed, and all of the claims invalid. Just saying...