Eastern District of Texas Federal Court Practice

False marking case ordered transferred

Promote Innovation v. Schering, 2:10cv248 (2/14/11)

Judge: T. John Ward

Holding: Motion to Transfer Venue GRANTED

Well, this makes ten rulings, with nine cases transferred and one denied.  Plaintiff is located in Houston, and defendant is in New Jersey.  The Court's analysis disclosed "almost zero" facts alleging connecting the case to the Eastern District of Texas, and "nearly all facts relevant to the venue transfer analysis" showing a closer connection with New Jersey.  I could go through the anslysis, but after Judge Ward's opinion in Texas Data v. Target, there's really no need to. 

The only significant new fact was this - Plaintiff noted that the defendant did not file this motion until after the 11/23/10 status conferences (at which as I have mentioned two motions to transfer were orally granted, resulting in a mad scramble to file motions in the cases where they had not previously been filed) and argued that this delay warranted denying the motion.  The Court disagreed, and noted, citing the againg rock star of the venue caselaw's - its equivalent of AC/DC (or Spinal Tap, depending on your perspective) - Mohamed v. Mazda, 90 F. Supp. 757, 760 (E.D. Tex. 2000) for the proposition that a venue motion can be made at any time. The Court also noted that the plaintiff asked for an extension to respond to the motion, which didn't help out the "delay" argument, apparently.

In the end, the Court found that three factors weighed in favor of transfer, and only one - the relative difference in time to trial - weighed against it, noted recent Federal Circuit caselaw holding that in this situation, transfer is indicated, and concluded that the proposed transferee forum was "clearly more convenient."

Shrinking verdict - new trial changes damages from $52 million to $8.5

I posted last week that Judge Ward picked three juries the Friday before.  One of those cases settled, another, Saffran v. Johnson & Johnson resulted in a $482 million verdict, and today the third, LaserDynamics v. Asus Computer International, 2:06cv348, which was a retrial limited to damages, wrapped up after a quick two day trial.  But it requires a little back story.

In June of 2009 the jury in LaserDynamics found for tha plaintiff in Judge Ward's court in Marshall.  Specifically, it found that the defendant contributed or induced infringement of one claim of the patent, that such infringement was willful, and that the defendant had failed to show by clear and convincing evidence that the patent was invalid as not enabled.  Damages were set at $52 million - final judgment was for $57.4 million.  Judge Ward later ruled on the inequitable conduct claims, which were presented to him in a bench trial on August 10, 2009, and concluded that inequitable conduct (here claimed to be failure to disclose by a nonlawyer inventor) was not shown in this case. 

On June 11 of last year Judge Ward granted the defendant's motion for new trial or for remittitur, holding that the jury's award of $52 million was against the great weight of the evidence because there was insufficient support for the application of the “entire market value” rule, and remitted the damage award to $6.2 million, which he held was the largest amount properly supported by the evidence. LaserDynamics had ten days from the entry of that order to notify the Court of its election in writing, and apparently it elected a new trial because that trial occurred yesterday and today.

On retrial, the jury determined that a lump-sum royalty would have been negotiated, and set the amount at $8.5 million.

The Be-All End-All Opinion On False Marking Cases and Motions to Transfer Venue

Texas Data v. Target, 2:10cv269 (E.D. Tex. Jan. 12, 2011)

Judge: T. John Ward

Holding: Motion to Transfer Venue DENIED

For any other opinion this heading might be hyperbole, but this opinion merits a few waves of the proverbial lighter (or cell phone).  As I've posted recently, every venue ruling to date that I'm aware of (two from Marshall and five from Tyler) summarily granted motions to transfer.  Two others were argued in Marshall in December, including this one, and Judge Ward just issued his ruling denying the motion, making it the first venue motion denied within the district. 

But the opinion is noteworthy for going through the background of the cause of action and venue law in patent cases in some detail before turning to the facts of the case.  I commend the analysis to you, since it's a very useful summary of the law to crib from.  (The Court even surfs over to Gray on Claims for one footnote - this is good stuff, Maynard, as we used to say in the music department at ETSU back when it was ETSU and I was in music.  But I digress).

One issue to be addressed at the outset was the defendant's argument that the plaintiff's choice of forum should be accorded less than the usual deference in a false marking case.  Perplexed, Judge Ward pointed out that there is no deference to the plaintiff's choice any longer - it isn't even a factor in the venue analysis.  The question was whether the burden of proof in false marking cases should be the same as that set forth in the Fifth Circuit's In re Volkswagen case, or whether it should be lessened.  After detailing the policy rationale underlying the false marking statute, as well as the history of the false marking statute, and the fact that given that the usual factors already favor defendants so that any contrary decision would likely ensure that all false marking cases would be heard in the defendant's home forum, Judge Ward declined to depart from the rule set forth in In re Volkswagen. In doing so, the Court was also not persuaded that the plaintiff's status as a recently-formed "marking troll" affected the analysis. 

The label of a “marking troll” obviously draws its name from the “patent troll” label often ascribed to entities created solely to buy patents and then license them or bring patent infringement suits.  But these entities own a legitimate property right—the patent—that they are seeking to enforce. The Court is not aware of any rules that apply differently to them. Likewise, a holding company formed to prosecute marking cases has a legitimate claim and the rules should not apply any different to them.  Indeed, in the Forest Group decision, one party argued that the Federal Circuit‟s interpretation could give rise to a “new cottage industry” of such entities, but the Federal Circuit responded that “[t]his, however, is what the clear language of the statute allows.”

(Internal citation looked at, thought about, then omitted). 

Judge Ward then went on to the transfer analysis, where he noted that most of the proof in false marking cases is not located with the plaintiff, but instead with the defendant or third parties.  Interestingly, in this case the products at issue were not made by the defendant Target, but rather by third parties, Kimberly-Clark and Bemis.  Now, guess where these third parties make the accused products?  In Paris, Texas and Longview, Texas, both within the Eastern District and within absolute subpoena power of Marshall court.  In fact the packaging itself is made only about twenty miles away from Marshall at Bemis' facility in Longview, and while KC makes the products in Paris, its headquarters are in Irving, Texas, which is far closer to Marshall than Wisconsin, to where transfer is sought.  (And let me tell you, it is a long and miserable collection of flights to get from Texas to Wisconsin, as I discovered when I spoke at a Door County, Wisconsin bar event three years ago'  Love the people - love the dairy products - hate the flights). Of course the evidence regarding the alleged intent to deceive is in Wisconsin, but this case presented substantial local connections with respect to the marking and manufacture of the accused products.

He also rejected the argument that the plaintiff's incorporation in Texas gave no "local interest" under In re Microsoft and In re Zimmer because plaintiff was allegedly a "front for counsel" created in anticipation of litigation, noting that the persons who formed the Texas company were in Texas before forming the company, with the counsel having been here for many years prior to that (I would note that I tried a horse-kicking case against one of their counsel at least ten years ago in state court - a Texas connection that we both likely regret), and noting that it was incorporating to manipulate venue that the Federal Circuit held was not permissible, not incorporating in anticipation of litigation, which Bon Tools expressly held was.  Therefore he gave it some weight - but after considering the other Texas interests noted above and the Wisconsin interest, called this factor even.

In the end, Judge Ward wrote that "[i]n balancing the Gilbert convenience factors in this case, the Court observes that two factors slightly weigh in favor of transfer and one factor slightly weighs against transfer. Therefore, Target has not met its burden in showing the Eastern District of Wisconsin is 'clearly more convenient' than the Eastern District of Texas." 

Once again, to echo what Judge Ward said about the way this analysis will apparently usually come out in false marking cases given the nature of the cause of action (and as if the prior seven rulings granting motions didn't already suggest this) in this case where the marking and the product were both made within absolute subpoena range of the courthouse in Marshall, the balance still very slightly (net one factor slightly favoring) weighed in favor of transfer.  But that was not sufficient to meet Volkswagen's "clearly more convenient" standard, which the Volkswagen court says (referencing the plaintiff's choice of forum, which it roughly equates to the burden of proof)  "places a significant burden on the movant to show good cause for the transfer."

Overall a very engaging read - I highly recommend it.  But then again, I think Box. v. Ameritrust, 810 F. Supp. 776 (E.D. Tex.1992) (Hall, J.) was a potboiler due to its nuanced analysis of the effect of President Jefferson's political issues in the Louisana Territory on contemporary venue law.

SynQor - updated information on verdict

A few more details on yesterday's verdict in Judge T. John Ward's court in Marshall in the SynQor v. Artesyn Technologies case. 

The plaintiff asserted five patent against eleven entities (Artesyn Technologies, Inc., Astec America, Inc., Bel Fuse Inc., Cherokee International Corp., Delta Electronics, Inc., Delta Products Corp., Lineage Power Corp., Murata Elec. North America, Inc., Murata Manufacturing Co., Ltd., Murata Power Solutions Inc., and Power-One, Inc.), and at least one claim of an asserted patent was found infringed against each of the defendants.  The jury found that the defendants had not shown by clear and convincing evidence that the patents were invalid, and set damages at $95 million collectively. 

As I mentioned yesterday, there are a bazillion JMOL motions, and Judge Ward has now set a hearing on the postverdict motions, including the plaintiff's request for an injunction, for January 19, 2011.

Plaintiff's verdict in SynQor

This afternoon a jury in Judge T. John Ward's court in Marshall rendered a verdict for the plaintiff in the SynQor v. Artesy Technologies case, which involved several defendants.  The verdict was a complicated one and precise numbers are not yet available, but the judgment against the defendants seems to be in the $90 million range.

The case is one of the rare ones locally in that it went into a second week (it started last Monday) and had multiple defendants at trial, which resulted in issues like how much time the parties would have for opening and evidence - for example the defendant received a third again as much opening time as the plaintiff to accommodate the additional defendants.  The case was a little more common in that it represented the norm lately of the Marshall judges doubling up on the case, with Judge Ward hearing issues and trying the case with Magistrate Judge Everingham cranking out numerous rulings and recommendations on assorting evidentiary and other issues at the same time.  I particularly enjoyed (well, that might be a little too strong a word) Judge Everingham's rulings on admissibility of expert testimony where he clarified what, in light of the experts' reports, the experts could and could not testify to at trial.

The past several days has seen concurrent blizzards of JMOLs from the defendants as the case wound down, and it will be interesting seeing how all of those play out as well.  When there are multiple defendants and multiple claims, it's always a game of three-dimensional chess trying to figure out how the verdict gets to the judgment.

Important safety tip: Filing under seal is not the same as filing in camera.

First American CoreLogic, Inc. v. Fiserv, Inc., et. al. , 2:10cv00132 (E.D. Tex. December 2, 2010)

Judge: T. John Ward

Holding: Motion for Protective Order / Motion to Reclaim Privileged Documents DENIED

Closely behind Shakespeare in providing useful one-liners for the English language is the 1983 movie Ghostbusters.   My favorite comes from this exchange during the movie's climax.

Dr. Egon Spengler: There's something very important I forgot to tell you.
Dr. Peter Venkman: What?
Dr. Egon Spengler: Don't cross the streams.
Dr. Peter Venkman: Why?
Dr. Egon Spengler: It would be bad.
Dr. Peter Venkman: I'm fuzzy on the whole good/bad thing. What do you mean, "bad"?
Dr. Egon Spengler: Try to imagine all life as you know it stopping instantaneously and every molecule in your body exploding at the speed of light.
Dr Ray Stantz: Total protonic reversal.
Dr. Peter Venkman: Right. That's bad. Okay. All right. Important safety tip. Thanks, Egon.

So for those of us fuzzy on the whole under seal / in camera thing, here's an important safety tip for practitioners. 

In this patent infringement case Plaintiff CoreLogic filed a motion for protective order asking the Court to prevent the defendants from communicating with two of its former employees.  In CoreLogic's motion for protective order, however, when attempting to bolster its argument that its former employees were privy to privileged communications at CoreLogic, CoreLogic attached as exhibits to its motion a declaration and six emails to illustrate a sample of the privileged communications of which Walker and/or Chen had participated.  (You can see where this is going, can't you?)  But CoreLogic did not submit the exhibits in camera; instead, CoreLogic attached the exhibits under seal, and served a copy of the privileged emails and declaration to every defendant in the present lawsuit.  (Yeah, I know - it hurts to type this too).  Further, nowhere in CoreLogic's motion for protective order did it state or indicate that it intended to file the exhibits for in camera review or for the “Court's eyes only.”

As you might expect, one of the defendants in its response pointed out that CoreLogic had waived its privilege to those documents by attaching them as exhibits and serving them on the parties.  CoreLogic then claimed that it meant to file the exhibits in camera, and filed the motion to reclaim.  Judge Ward held that CoreLogic had waived its attorney-client and/or work product protection with respect to the seven documents it disclosed to Defendants by attaching the documents under seal as exhibits to its motion for protective order and serving the documents on all parties. But he did not find a subject-matter waiver, thus CoreLogic had only waived its attorney-client privilege for the seven privileged documents it produced.  Judge Ward noted the important distinction between filing under seal and filing in camera:

Filing under seal is not the same as filing in camera. Filing under seal protects the documents from view of the public. On the other hand, filing documents in camera protects the documents from view of the public and also other parties in the case—only the Court can view the documents. Therefore, filing the documents under seal and serving them on the defendants has the same effect as disclosing documents to a third party and thus waiving the privilege.

The real analysis, however, was whether the disclosure was inadvertent, and here Judge Ward analyzed the new Federal Rule of Evidence 502 (which Judge Ward noted " is new and neither the parties nor the Court has identified any binding authority in this Circuit or District that specifically interprets Rule 502(b) as applicable to this case. Further, few appellate courts, if any, have had a chance to interpret the rule") and the prior Fifth Circuit caselaw on this point, and concluded that the disclosure could not be characterized as "inadvertent".

In this Court‟s view, the unique facts of the present case are not what Congress or the Advisory Committee had in mind when drafting Rule 502(b). Rule 502(b) and the previous five factor test outlined above were designed primarily to cope with the increasingly common problem in massive discovery where thousands or millions of documents are produced and a few privileged documents are “inadvertently” disclosed along with the millions of other documents. This case, however, does not involve the inadvertent disclosure of documents along with millions of other documents. Instead, Corelogic filed the privileged exhibits and declaration under seal and then served them on all the defendants. Hence, Defendant LPS, in essence, argues that CoreLogic advertently disclosed the documents to the defendants and thus waived its privilege.

Judge Ward went on to state that "Under the facts of this case, the Court is not willing to set a precedent allowing an exhibit to be considered as filed in camera when the party first filed the exhibit under seal (and served the other parties with the documents), and then later merely filed an affidavit claiming the exhibit was supposed to be in camera" but significantly noted that that the situation might have been different if the motion had claimed that the documents were being filed in camera, then accidentally filed them under seal and served them.

Judge Ward then ordered the parties to meet and confer for the purpose of determining an adequate solution to protect CoreLogic's privileged information while still allowing LPS to discover factual, non-privileged information from its employees Walker and Chen. Interestingly, he added that "the Court has observed from the briefing that there has been some dispute regarding what is required to satisfy the “Meet and Confer” requirement in good faith. Before meeting and conferring as the Court has ordered above, the attorneys for the parties are ordered to read Local Court Rule CV-7(h)" and "[t]he parties ... are ordered to meet and confer for the purpose of determining an adequate solution to protect CoreLogic‟s privileged information while still allowing LPS to discover factual, non-privileged information from its employees Walker and Chen. Further, the Court has observed from the briefing that there has been some dispute regarding what is required to satisfy the “Meet and Confer” requirement in good faith. Before meeting and conferring as the Court has ordered above, the attorneys for the parties are ordered to read Local Court Rule CV-7(h)" and "[p]articularly, the parties should pay attention to the portion that states “[i]n any discovery-related motion, the substantive component requires, at a minimum, a personal conference, by telephone or in person, between the lead trial counsel and any local counsel for the movant and the lead trial counsel and any local counsel for the non-movant.” Local Court Rule CV-7(h)" (emphasis added by Judge Ward).

Motion to Compel Due Diligence Report Denied In Light of Nondisclosure Agreement

WI-Lan, Inc. v. Acer, Inc. et al., 2:07cv473 (October 18, 2010)

Judge: T. John Ward

Holding: Motion to Compel DENIED

Defendants moved for the production of a report written by Dr. Peter Driessen and other documents disclosed to Broadcom’s attorneys during due diligence of a potential purchase of certain Wi-LAN intellectual property interests in late 2005 and early 2006.

Judge Ward found no waiver of the work product privilege where the plaintiff disclosed a report regarding potential litigation written by a non-attorney during due diligence, where the defendant had signed a nondisclosure agreement before reviewing any of the confidential information.  While not specifically holding that the disclosure was also protected by the "common interest" porivilege because such a finding was not necessary, the Court also observed that as the defendant had agreed that the disclosure did not waive that privilege, so it was estopped from claiming waiver, and principles of equity required the same estoppel apply to the similarly situated defendants.

from DocketNavigator.

Judge Ward grants new trial/remittitur in Laserdynamics - cuts judgment from $57.4 million to $6.2 million

The jury in LaserDynamics v. Asus Computer International, 2:06cv348 found for the plaintiff back on July 6 of last year in Judge Ward's court in Marshall.  Specifically, it found that the defendant contributed or induced infringement of one claim of the patent, that such infringement was willful, and that the defendant had failed to show by clear and convincing evidence that the patent was invalid as not enabled.  Damages were set at $52 million - final judgment was for $57.4 million.  Judge Ward has also ruled on the inequitable conduct claims, which were presented to him in a bench trial on August 10, and concluded that inequitable conduct (here claimed to be failure to disclose by a nonlawyer inventor) was not shown in this case. 

Yesterday, Judge Ward granted the defendant's motion for new trial or for remittitur, holding that the jury's award of $52 million was against the great weight of the evidence because there was insufficient support for the application of the “entire market value” rule, and remitted the damage award to $6.2 million, which he held was the largest amount properly supported by the evidence. LaserDynamics has ten days from the entry of this order to notify the Court of its election in writing.

Marshall Jury Finds for Plaintiff in Trucking Case

For the second time in as many months I am pleased to be able to congratulate my cocounsel on a favorable result in a trial in federal court here in Marshall.  Following our firm's assistance in a defense win last month (a JMOL at the conclusion of the plaintiff's case in a patent infringement case) we have a plaintiff's win to report this month.

Today my cocounsel Maria Wormington of the Wormington Law Group and Lin McCraw of McCraw & Gantt, both from McKinney, received a verdict in favor of our client Adriana Castillo Sanchez and her son Raul Argote in Sanchez v. Commercial Transportation, Inc., et al, 2:09cv47 from a Marshall jury in Judge T. John Ward's court.  The case arose out of the death of Ms. Sanchez' husband  and Raul Jr.'s, dad Raul Argote Robles in a collision with a truck operated by defendant CTI just south of Marshall on US-59 on January 5, 2009..

The jury found the decedent five percent at fault and the defendant trucking company, driver and sibling company (which performed maintenance on the truck) 95% at fault and assessed damages of $2,105,000 between Adriana, her son, and Raul's parents.  $1.475 of the damages were were economic losses - the remaining $630,000 was for noneconomic losses.

The case began trial before the Marshall jury on Wednesday, February 17, and continued through Monday February 22.  Lin and Maria put on an expert economist, accident reconstructionist, biomechanic, and expert on trucking safety - as well as calling the defendant's trucking safety expert as an adverse witness.  The defense did not offer any expert testimony of their own.  Of interest, the defendant's case in chief was presented Monday afternoon after the plaintiff rested, and consisted of two witnesses (a bus driver live and a fact witness by reading of deposition) whose combined testimony, including cross, was eight minutes. 

This was a particularly enjoyable trial for me because I got to work with Lin again for the first time since he and I were Practice Court partners at Baylor Law School nineteen years ago, culminating in the infamous "full discovery" trial in the summer of 1991 (anyone remember the case of the headless boater?).  Professor Powell will be glad to hear that we did a little better on our time management this time, using something like nine hours for our direct examination of our witnesses, and under five minutes for cross of the defense witnesses.  Fortunately we still look the same, right?  (Love the big hair - don't you miss the 80's?)

Again, congratulations to Maria and Lin on a great result for a deserving client. 

Infringement Finding in Smith & Nephew Patent Case

The Smith & Nephew v. Arthrex case concluded Tuesday with a jury finding of direct and induced infringement of the one remaining claim asserted.  The jury answered no to the public use and on sale defenses, and assessed damages at $4,713,000 ($4.7 million).

That's two wins for the plaintiff and two for the defendants in ED Texas patent cases thus far.