This morning Chief Judge Leonard Davis signed General Order 14 – 03 General Order Regarding Track B Initial Patent Case Management Order. The new order creates a second "track" for patent infringement cases in Eastern District of Texas. This appears to be the first such order by any U.S. district court nationally, but it follows in the local tradition of case management "tracks" that were a hallmark of the 1991 CJRA Plan, which brought expedited mandatory disclosure to the District. (For more on the Plan, see my article Man With the Plan -- Successful Eastern District Practice Requires Understanding History in the April 11, 2011 Texas Lawyer).
According to the order, the familiar patent case management scheme that Judge Davis refers to as "Track A" will continue as the default. However, due to the experience gained in administering cases using the traditional structure, the judges of the district believed that additional efficiencies and cost savings could be achieved through the use of alternative procedures in appropriate cases. This alternative, which the Court dubs "Track B" complements the default procedures of Track A by providing litigants and the Court with a choice for a faster, less expensive way of resolving patent cases.
Chief Judge Davis explained the purpose behind the new track earlier today. "It is designed to get more case specific information to the parties earlier and less expensively so that each side, and the Court, will be more knowledgeable about the case at the time of the Initial Case Management Conference," he says. "Hopefully this will lead to the entry of a more focused and cost effective Case Management Order, thus avoiding treating all patent cases the same and lead to earlier resolution at less cost to the parties and court." Does he see it as favoring one side or the other, and will there be modifications? "We tried to seek an equal balance between both sides of the docket," he explained. "We will see how it works and make modifications as needed."
So let's explore this new order.
You Can Volunteer But You Might Get Drafted Anyway
The procedures in the new Track B case management order go into effect in one of two ways. First, the parties can file a joint notice electing to proceed under Track B, or the court can order that the case will proceed under Track B. Notices of election are to be filed on or before the date by which all defendants have filed either an answer or a 12(b) motion. If additional parties are added or consolidated into the case after the filing of a Track B election, the new parties can object to the election prior to appearing in the case, and the court will then consider the objection.
Dramatically Different Structure and Timing
The order itself establishes a standard alternative structure for patent cases that, both in terms of timing and substance, represents a radical departure from the customary Track A procedures. Notably, it incorporates into local practice several provisions that are still only under consideration in the form of pending legislation in Washington, mostly taking the form of early mandatory disclosures of relevant licensing, sales and damages information, in addition to the information already required under the Patent Local Rules.
The Track B structure counting in days from the answer/12(b) motion, and with notable additions to existing practice in red, is:
Answer +14 – infringement contentions and licensing disclosures
Plaintiff serves its infringement contentions and accompanying production in compliance with patent rules 3-1 and 3-2. Importantly, the plaintiff "shall also produce all licenses or settlement agreements concerning the patents in suit and any related patent."
Answer +44 – initial disclosures and summary sales information for accused & "reasonably similar" products
All parties serve initial disclosures pursuant to FRCP 26(a)(1). Defendants also produce "summary sales information" reflecting the quantity of accused products sold in the United States and the revenue from those sales. Importantly, for purposes of this disclosure, the term "accused products" includes all products identified in the infringement contentions as well as all "reasonably similar" products. Of interest, the order defines this as "other products that a party should reasonably expect to be accused of infringement of the asserted claims after a full opportunity for discovery."
Answer +58 – good faith damages estimate, including method of calculation
Each party claiming infringement must file a good-faith estimate of its expected damages, "including a summary description of the method used to arrived at that estimate." The court notes that this estimate is nonbinding in that it will not serve to limit the damages that a party may recover.
Answer +72. Invalidity contentions
Answer +77. File notice of readiness for management conference
Answer +87. Patent rule 4-1 disclosures due (4-2 and 4-3 follow using default PR spacing)
So the Track B cases proceed up through claims construction disclosures without any further guidance by the court - and, during this initial phase of the case, discovery is limited to five (each) interrogatories, requests for production and requests for admission per side absent leave or stipulation. However, once the court sets a management conference, the following dates fall into place:
Conference minus 14 – meet and confer pursuant to Rule 26(f)
Conference minus 7 – parties jointly file discovery plan.
This plan is required to address a number of issues, including consolidation, discovery limitations, whether the court should enter its model orders focusing patent claims and prior art or on e- discovery, entry of the protective order, claim construction (scheduling and limits on claim terms), and trial scheduling.
The order must also address any "clearly dispositive issues that warrant special scheduling", as well as whether expedited trial, trial on limited issues, or any other issues are appropriate to be discussed.
In language that is also a nod to pending proposals before the Advisory Committee on the appropriate scope of discovery, the order states that "in particular, the court is interested in scheduling and discovery limits that are fair and adequate, but that also bear an appropriate relationship to the likely value of the case." (Emphasis added).
Finally, the order notes that while the court is aware that the order requires certain disclosures "that depend on the exercise of judgment at an early stage of the case," it cautions that appropriate sanctions will be imposed if case development reveals that a party's disclosures under the order (1) lacked a good-faith basis, (2) were unreasonably sparse, or (3) were intentionally misleading.
As noted above, several of the provisions in the Track B order reflect proposals currently under consideration in Congress, including early disclosure of certain information, such as licensing information, as well as very early disclosure of both the damages sought and the method of calculating those damages.