Eastern District of Texas Federal Court Practice

The End of One Era for EDTexweblog.com - The Beginning of Another

I wanted to thank my readers over the past 13 years for the time they've taken to read my blog on practice in the Eastern District of Texas, and invite all of you to follow the blog's next, upgraded phase.  

After 1.57 million page views of the over 2,220 posts on the existing site, effective today EDTexweblog.com will have a new face.  The address will stay the same, but the blog itself starts over on a new and upgraded platform. I encourage you to sign up on the new weblog, and see the new bells and whistles at work.

For some time now I have wanted to write a larger number of more in-depth posts on issues, and organize the information on the weblog in a way that it is more accessible and useful to subscribers. Accordingly, the new site will:

• Index posts by judge, division and topic
• Provide more detailed analysis of trials and verdicts, including copies of verdict forms
• Include documents, such as key cases, seminar papers, etc., with posts
• Provide more complete analysis of local developments

Access will remain free for emails with summaries of posts, as well as for government and public sector lawyers.  If you have been receiving the weblog's posts via emails through Feedblitz, you will continue to receive them through our new site's email service.  

For private sector lawyers and corporate subscribers full access will remain free of charge for two months for you to give the new expanded format a test drive, after which subscriptions to the full content, including the expanded analysis of cases and developments, will be available $99 for the first full year (through February 28, 2018).  After that date subscriptions will increase to $299 per individual.  If your firm or entity would like to arrange for an entity-wide subscription, email me, but otherwise subscriptions are on an individual basis only.

I have been cross-posting for several months now, so there will be overlap of recent posts, but anything before that will remain available on the former site at http://mcsmith.blogs.com/eastern_district_of_texas/ .  I am not moving all the 2,200+ prior posts over, but I am not taking anything down.

Again, thank you so much to all of my regular readers, and I hope you follow me on my new site.  I promise you that the best is yet to come.

 

2016 EDTX patent verdicts review; 43% Marshall/Tyler win rate; 52% overall; competitor cases increase

2016 saw 19 patent trials in the Eastern District of Texas.  Plaintiffs won 43% in the patent-heavy Marshall and Tyler divisions, but the overall outcome was 52% due to three plaintiff wins in the traditionally less patent-intensive divisions of Sherman and Beaumont.  

The nine defense wins also saw five invalidity findings, so in almost half the noninfringement verdicts the jury (or in one instances the court) went ahead and invalidated the asserted claims as well.

JMOLs

Court watchers know how rarely verdicts are set aside on postverdict JMOL, but this year saw three.  Judge Schroeder set aside the first VirnetX verdict in the spring, and Judge Gilstrap set aside the Gonzalez verdict on 101 grounds, as well as setting aside the damages verdict in one of the two Core Wireless trials.  For statistical purposes I count JMOL outcomes on liability as wins for the defendant, which is why I am trying not to refer to "verdicts" this year, in most cases, but outcomes.

Beaumont & Sherman

Judge Mazzant tried two patent trials in Sherman this spring, and Judge Clark had one, a medical device case, in Beaumont last month.  All three juries returned verdicts for the plaintiff, for $1.2 million, $6 million (later enhanced to $20 million) and $17.4 million (the medical device case).

Tyler

Plaintiffs almost broke even in Tyler with three outcomes for plaintiffs and four for defendants, with VirnetX chalking up one for each side during the year.  The outcomes represent the range of patent verdicts, with VirnetX over $300 million, the second $22 million, and the third $324,000.

Marshall

Plaintiffs didn't break even in Marshall either, with four plaintiff wins compared to five defense wins. 

The parties and the awards in those cases also illustrate an increasing trend in Marshall filings that I have posted on previously - the district in general and Marshall in particular is seeing more competitor cases and substantially fewer NPE cases, with only a few of the latter going to trial.  Of the four plaintiff wins, two were by Core Wireless, which obtained jury verdicts of $3.5 million and $2.3 million, but Judge Gilstrap set aside the first for insufficient evidence.  The other two verdicts - Genband's $8.1 million and Arthrex' $17.4 million were both in hotly contested cases between competitors.  In fact four of the nine trials were between competitors, and of the three NPEs that did go to trial in Marshall, two out of three lost, with one losing its patent as well.

Which underscores that asserting patents comes at some risk for competitors - interestingly all four of the trials in which juries invalidated patents were in competitor cases, while none of the patents asserted by nonpracticing entities were found by juries to be invalid (although as noted above, Judge Gilstrap did invalidate one postverdict).

So the net outcome for NPEs in Marshall in 2016 was two losses, one win for $2.3 million and a second win for the same plaintiff on liability, but with the prior finding of $3.5 million to be retried.

 

 

Marshall News Messenger review of local court activity in 2016

It's the time of year for 2016 reviews, and today's Marshall News Messenger had one I thought readers might be interested in  Judicial system in review: Marshall courts saw throng of good, bad activity in 2016 in which the paper's local courts reporter  Robin Y. Richardson lists the most significant events in Marshall courts both state and federal during the year.  (As readers know, Robin bird dogs all the local patent trials, so this isn't just state court).

The most significant, she reports, are the local homicide trials that I'll spare you the details on, but the most memorable occurred on National Adoption Day last month, which 71st District Judge Brad Morin (pictured) observed is one of the court's "better days."   "We don't have anybody that walks out of the courtroom unhappy,"

The only activity in federal court that merited mention was a product liability trial in which a local jury found that a defective child seat caused brain and spinal injuries to a child, and assessed $34.4 million in damages.

The absence of Marshall Division patent cases in 2016 isn't surprising.  As I'll discuss in another post, in 2016 accused infringers won five patent cases that went to trial in Marshall while plaintiffs only won four.  Judge Gilstrap vacated the damages award in one of those five, and in the other three the one NPE case was $2.3 million and the other two - both competitor cases - were $8.1 and $17.4 million, respectively.  So the single products case was the only significant verdict of the year, and as an adoptee myself, I'd vote for National Adoption Day as well!

2016 SBPS - Marshall Christmas Card

Well, it counts as long as the cards were printed before Christmas.  That's my story.

This year's SBPS - Marshall Christmas cards are in the office and (slowly) going out.  This year's feature an original watercolor painting by Carol Pace "Thirty Years of Wonder", which commemorates the 30th anniversary of Marshall's Wonderland of Lights festival with a scene of ice skaters on the rink next to the historic old county courthouse.

The card reminds me of the first time someone proposed building an ice rink on the square in Marshall.  It was the late 1990's, I believe, and I was a city commissioner in, I think, my second term.  At the time Marshall Festivals, Inc, was operating the Wonderland festival, and wanted to install a seasonal ice rink on the brick parking space next to the courthouse, but didn't have the money, so the City of Marshall lent it the funds (one of the more bizarre votes I remember while I was in office).  Since then the city has taken over operating the festival directly, and has funded the necessary expenses for the rink.  Many Texas cities operate golf courses or swimming pools - ours has a skating rink as well.  (Did I mention it'll be 75 F on Christmas Day this year?  Always a challenge keeping the rink in operation in warm weather).

The rink has been sponsored by the local Ford Lincoln Mercury dealership for the last few years, and before that Samsung had it for a couple of seasons, which has recently led to the tall tale that Samsung built and paid for it, apparently by people who can't imagine that an East Texas town would already have an outdoor ice skating rink, thank you very much.   Nope - we actually have had it for many years as part of our Wonderland of Lights festival, and it is a favorite of families with kids during the Wonderland season.  

It's good to have it on one of our cards finally.

 

Motion for Early Construction of 3 Claim Terms Granted

Most of my workshop projects don't involve repetitive tasks. Whether it's a ship, a plane, or a spacecraft - kitbashed or scratchbuilt, generally there isn't a need to repeat a task precisely - each is slightly different.  But sometimes you run into a situation where a special tool allows you to address a recurring issue more efficiently.  

For example, the Launch Umbilical Tower (LUT) I am building from scratch for my 1/200 scale Apollo Saturn V has eighteen (18) levels, all of which are essentially identical, and all of which must be precisely leveled and aligned, or the final result will look like the Leaning Tower of NASA.  To help me avoid this problem, I made a the template or jig shown at left out of sheet plastic which can be placed at each level to precisely set the level above, and includes cutouts for various parts (elevator shaft, supports & bracing, etc.).   It wraps around the elevator shaft like an overprotective parent, and can be pulled away once the glue has dried on the level above.

Sometimes courts find similar opportunities to achieve efficiencies in addressing repeat issues through special procedures or processes.  One such process in the Eastern District of Texas is the "mini-Markman" which was a procedure first used by Judge Leonard Davis several years ago in the Parallel Networks cases to address dispositive claim construction issues early in cases.

In that case, the 120–odd defendants argued that the plaintiff's settlement model was based not on the merits of the case but on the cost of defense, and that the case could be resolved by the expedited construction of three terms. After hearing those arguments at a scheduling conference Judge Davis agreed, stayed all discovery in the case, and proceeded to an expedited Markman hearing on those three terms. He ended up agreeing with the defendants, and issued constructions that permitted summary judgment as to approximately 100 of the defendants.

 

The mini-Markman process has since been codified into a procedure that exists as a standing order, by which parties can request expedited consideration of a limited number of terms in cases where they believe that such a focused proceeding would be helpful. Judge Gilstrap has recently referenced the process in an order as well, and while it isn't always the right tool in a case, when it is, to quote Ferris Bueller, "it is so choice. If you have the means, I highly recommend picking one up."  (Yes, it's been 30 years.  Can you believe it?)

 

Which is exactly what happened in Lexos Media IP, LLC v. Apmex, et al., 2:16cv747, when three defendants asked Judge Roy Payne for an early claim construction on the magic number of three terms appearing in the asserted claims. "Defendants allege a pattern by Lexos of serially filing groups of cases and then settling those cases before the Court has had a chance to construe the asserted claims," Judge Payne wrote. "The Court finds that the determining the meaning of the three terms identified by defendants as early as possible may aid in the just and speedy resolution of this in future cases in which Lexos asserts the' 102 and' 449 patents."

 

Accordingly, Judge Payne granted the request for early claim construction and ordered the parties to jointly submit a briefing schedule. The court deferred the issue of whether to stay further discovery and proceedings until it had established a workable early claim construction briefing schedule, but did observe that it did not intend the process to delay the disposition of the case.

 

(Ed. note: shortly after writing this post I discovered that while the LUT jig was working fine, my calculations on the size of the levels was off, requiring me to rebuild the first two levels, which as you can tell, are not simple structures.  It's like that sometimes.  The procedure is impeccable, but the substance turns out to be crap.  But then I already knew that from practicing law.)

Patent Infringement Verdict in Medical Implant Cases

Well, it pales in comparison to those billion-dollar verdicts they hand out in medical cases in Delaware, or even to the $85 million verdict from Oregon the last time these two competitors clashed, but a Marshall jury in Judge Roy Payne's court rendered a verdict in favor of plaintiff Arthrex, Inc., a Florida-based maker of orthopedic products against competitor Smith & Nephew Inc. in a case involving allegations of copying of designs for medical implants.

The jury found all six claims infringed and willfully so, and none of the claim shown to be invalid by clear and convincing evidence. It awarded damages of $12,250,000 on one patent, and $5,150,000 on the other patent. I am not totaling these numbers because I do not know whether they are cumulative, or the larger number would incorporate infringement of both patents. As I have previously posted, sometimes cases are submitted with damages on a patent by patent basis so that if one patent is found to be invalid, there is still a separate damages verdict for the remaining patent. See Mirror Worlds v. Apple.

In a sidecar of sorts to the case, patent owned by a different plaintiff was alleged to have been infringed as well, and the jury found that it was not.

I mentioned the prior litigation - in 2011, a federal jury in Oregon awarded Smith & Nephew $85 million against Arthrex over a patent covering suture anchors use to reattach damaged tissue and bone.  The district judge set the jury's verdict aside, finding that it was not supported by substantial evidence, but that finding in turn was set aside by the Federal Circuit later when it affirmed a $99 million judgment in that case.

Summary Judgment of Noninfringement Granted

Summary judgments of noninfringement are always worth noting when they come out because they give insight into how attorneys effectively persuade judges that a determination that is usually fact-intensive still doesn't raise triable factual disputes.

This was the case in Perdiemco, LLC. v. Geotab, 2:15cv727 in which Judge Rodney Gilstrap recently concluded that the plaintiff had not raised a triable issue with respect to two asserted claims because it had not shown that particular steps are met by the defendant's use of the accused system.  The crucial analysis came when the plaintiff argued that its contentions were sufficient to satisfy the test for divided infringement. The case wasn't analogous to the circumstances considered by the Federal Circuit in Akamai, and while that decision did hold that "other factual situations may arise" that warrant attributing others' performance of method steps to a single actor, the Court concluded that this was not one of those scenarios.

The Court noted that as there wasn't a factual dispute as to what happens in the relevant scenario, just the legal one of whether that could constitute infringement, and thus summary judgment was the appropriate tool to resolve it.

Injunction Junction - What's Your Function?

I can't think very long about injunctive relief without hearing that the Schoolhouse Rock classic "Injunction Junction, What's Your Function?" If you weren't blessed to get to hear these classic the first time around, take a few minutes to listen.  It doesn't rise to the heights of the episodes on the Preamble (which we used to sing to Professor Jordan in Policy Development class in graduate school whenever she said the words "The Constitution..." (okay, try to picture Barbara Jordan saying "The Constitution ..." with that voice of hers and a dozen students starting singing "We the Peo-puull, in ooorder to form a more Perrfect Yewn-Yun..."  Trust me, it was just the best. Ever.

Or the kingfish "I'm Just a Bill (Sittin' on Capitol Hill)" (hysterically parodied on SNL recently  by comparing it to an executive order) but it's still up there, as ear worms go.

The function of pretrial injunctions is, candidly, not much in most patent cases because the standard is so high.  In one conference on the issue I heard a judge analogize the likelihood of one being granted to that of the sun rising in the west.  But a couple of recent opinions granting injunctions underscore that they still can still play a role in the right cases.

In the Mylan v. Aurobindo Pharma case, Judge Payne granted the plaintiff's motion, finding that it had established the four factors of (1) likelihood of success on the merits, (2) likelihood of irreparable harm; (3) balance of equities tipping in its favor; and (4) injunction is in the public interest.  But it took a while to get there - after eight pages of preliminaries, Judge Payne spent 36 pages on likelihood of success, analyzing claim construction, infringement and the asserted defensive issues (invalidity, etc.), then another five pages on the three other factors before concluding that an injunction barring the defendant's sale of isosulfan blue formulations used in mapping the lymphatic system was appropriate.  (I knew I was seeing a gap in the shelving next to dandruff shampoos.  Now I know why).

Similarly, in Tinnus v. Telebrands, Judge Love referenced an earlier-issued injunction involving a manufacturer of an accused product "Battle Balloons" and considered the effect of extending the injunction to the remaining stock of these play aids held by various retailers (estimated at 200,000 units).  The Court concluded that the injunction should be extended to existing stock at the various retailers.

So they do get issued.  And these two opinions provide a good summary of caselaw on when.

O2 vey - Raising Claim Construction Disputes at the Pretrial Stage

One of the effects of O2 Micro is that the raising new claim construction issues on the eve of a trial is unfortunately not terribly rare.  But few cases present a situation like this one where a party's rebuttal expert reports served on the eve of trial triggered a complaint that they raised eleven (11) new claim construction issues, as well as three other broader ones.

In reading the latest opinion by Judge Love in the Chrimar case , I had this mental image of a pitcher throwing a dozen balls at the same, forcing the umpire to make a dozen calls simultaneously.

In general, the motions were denied where they raised arguments that were inconsistent with the Court's prior constructions, with the Court at some points noting that that "time and time again" it had resolved the dispute and yet the expert was continuing to include arguments that had been previously rejected.  It did note several times that the fact that an expert was opining using a claim term that term hadn't been identified for construction wasn't a basis for exclusion per se, and that some issues were simply disputes as to whether certain claim elements were met, not claim construction disputes.  According this "cross-examination" business was the way the issue should be handled.  There were some instances where an additional claim construction might be necessary, and the court (I'm between the words "reluctantly" and "exasperated" here - will update when I decide which fits better) provided a framework for any such challenges.

Motion to Switch Curtain #1 for Curtain #2 Denied

Remember Let's Make a Deal with Monty Hall?  The game show where contestants had to chose their prize by picking a curtain?  Remember how badly the contestants wanted to change their mind after there was a goat behind the curtain they chose - and a new car behind the one they didn't? 

Well, a somewhat similar situation was presented in Script Security Solutions v . Amazon.com, 2:15cv1030, in which the defendant filed a motion for summary judgment on one of the three patents in the case, but not the other two (never happens in my cases, but different strokes ...).  

Before its response was due, the plaintiff dropped that patent, and defendant responded by filing a motion for leave to file an out of time motion for summary judgment as to one of the other patents that it hadn't previously challenged.  (The argument it was raising had allegedly not been set forth previously in letter briefing nor, plaintiff contended, in its invalidity contentions either, but those issues didn't end up mattering to the Court's decision).

Visiting Federal Circuit Judge William Bryson denied the motion, finding insufficient justification for the untimely motion.  Judge Bryson noted that the local rules' 60-page limit for summary judgment briefing could have covered the additional motion, that his review of the proposed new motion indicated that that was the case, and that the defendant could have sought additional pages if it needed it.  He also didn't fault the plaintiff for dropping the patent that the defendant had challenged.

"Significantly," he concluded, the validity of the additional patent was still in the case - it just wasn't going to be considered as a dispositive motion.

New York Times Updates Status of Little League Football in Marshall, Texas

Back in 2014, New York Times reporter Ken Belson had an article on the front page of the Gray Lady on the declining status of tackle football in Marshall due to the risks of head injuries, Football's Risks Sink in, Even in the Heart of Texas.  It noted the cancellation of seventh grade tackle football, as well as the program offered through the Boys & Girls Club.  It even quoted me on why my sons weren't playing tackle football.  "Smith’s oldest son played a couple of years of youth football,"  he wrote.  "but his two younger sons are not following him."

Well, yes, but it's more because they're about as fast as Galapagos turtles, and would rather play on the computer than go outside when it is, you know, hot.  Even Grayson decided not to continue, not because of fears of head injury but of sweat.  And of course because he preferred building computers, taking electronics apart and preparing for a career inventing things.  (He'll be starting college at a to-be-named engineering school next fall, and is lobbying me hard to get him a lawyer to help with his first patent application.  Only I could have a kid who wants a patent lawyer for Christmas).

Yesterday's New York Times carried an updated piece Football Makes a Comeback in the Heart of Texas by Belson which tells the story of a new private tackle football program in Marshall founded by parents who wanted their sons to have the experience of full-contact football both to build character and to give them an opportunity to use football as a pathway to educational opportunity that they couldn't otherwise afford.  The article points out important demographic information about my hometown that is often missed due to the emphasis about the patent docket, including the role that football has played for generations in giving young people a chance at the education that can mean a better life for their families.

That item is not an inconsiderable one because it's where I came from - after a successful football career in Marshall, my dad went to LSU on a football scholarship where he also majored in - wait for it - engineering.  The photo at right shows him in his glory days before the Tulane game his sophomore year. (Tiger fans will be able to date the photo based on his jersey designation - Daddy wore "E7" that year, and no, that's not a typo.)  After his playing days he and my mother resumed their courtship from high school in Marshall and they were living in Baton Rouge with my mother teaching at LSU after finishing graduate school when I showed up. So Geaux Tigers!

It's a good article, although the photos available online reveal the extraordinary depths of substandard journalism to which our mainstream media has sunk - the photos of a recent Marshall High School football game include a photo of a visiting band member from Hallsville.  That is just not right, and I even suspect it's a woodwind player.  This shoddy journalism needs to stop.  Cameras need to be on the Marshall band.  And preferably the trombone players.

 

Exceptional Cases

Just over four years ago, Dallas lawyer Austin Hansley was working handling DWI and small criminal cases, with a memorable TV ad complete with flashing police lights and inmates in orange jumpsuits. 

But for reasons unknown, at least to me, in the spring of 2012 he began appearing as counsel for plaintiffs in patent cases.  It started slow, with 13 cases that year, but grew quickly, and over the next four years, he would file approximately 650 patent cases, including over 400 in the Eastern District of Texas in 2015 alone.

The cases that he filed generated enormous negative attention nationwide, and for the past year or two it seems a week didn't go by that I didn't read an article citing his cases as a reason for legislative or judicial action, thus I thought a brief recap of what has happened to Mr. Hansley and his cases might be of interest.  Mark Twain once said that history doesn't repeat itself, but it does rhyme, and if that is true, this is a tune that you would be well-advised to avoid whistling.  And if you hear it being hummed a little too loudly in a courthouse near you, this should be a useful summary of the tools available to litigants and courts to respond.  Of interest to me at least is the remarkable consistency with which courts across the nation handled similar allegations regarding the lack of merit of claims, and the corresponding requests for "exceptional case" status under 35 U.S.C. Section 285.

Eastern District of Texas - eDekka

In 2015, Mr. Hansley took over filing cases in the EDTX for a plaintiff named eDekka.  That company had filed a number of cases in 2013-2014, but its counsel left after Alice came out in 2014 and motions to dismiss under 35 U.S.C. Section 101 became common.  After beginning representation of eDekka, Mr. Hansley filed approximately 101 cases for them in 2015 - all after Alice.  In fact approximately 500 of his total filings for multiple clients were after Alice. 

Most readers of this weblog know what happened next.  In the summer of 2015 Judge Rodney Gilstrap set a hearing on the eDekka defendants' motions to dismiss under Section 101 for lack of patentable subject matter, and following the hearing granted the motions last fall, resolving the entire 101 defendant litigation approximately 5 1/2 months after the first of the 2015 cases were filed.  The Court then found the case "exceptional" under the new test set forth in Octane Fitness and awarded the remaining defendants approximately $390,000 in attorneys fees in January of this year.

Mr. Hansley's filings in the district dropped from approximately 425 cases in 2015 to 11 in 2016.  But worse was to come, both inside the EDTX and outside it.

District of New Jersey

As I have previously noted, on March 30 of this year U.S. District Judge Jerome B. Simandle of the District of New Jersey in Garfum.com v. Reflections by Ruth, 14-5919 also found the claims by one of Mr. Hansley's clients lacking under Section 101, and assessed 285 sanctions for similar conduct – in fact quoting from Judge Gilstrap’s opinion in eDekka.

The amount of the award in New Jersey is not yet set, which is a little interesting in itself.  That case was filed seven months earlier than eDekka, and the fees motion was filed four months earlier than eDekka.  The 285 award was made a little over three months later than eDekka, but eight months later (now ten months after eDekka and counting) neither the amount of the fee nor the plaintiff's motion for reconsideration has been ruled on, perhaps due in part to the notices of supplemental authority on, among others, recent Federal Circuit decisions on 101.   As the fees were for the period following the plaintiff's response to the defendant's motion to dismiss under Section 101, my guess is that the fees awarded for the relevant time period would be between $10-20,000, but that's just a guess, based on the timing of the period the judge awarded fees for, and knowing that the plaintiff's last settlement offer before the 101 motion was filed was, according to the judge's order, $2,500.  (Judge Gilstrap observed in eDekka that the final settlement offers after the 101 hearing was set were $3,000).

Eastern District of Texas - Marshall Feature Recognition

In the fall of this year Mr. Hansley's last two Eastern District cases came to an end following a hearing before Judge Payne in Marshall on motions to dismiss for want of prosecution.  At that hearing Judge Payne was blunt about the allegations. "Mr. Hansley," he said at the beginning of the hearing, " I can tell you that there is a pattern that has displayed itself in these cases and apparently in other cases, based on what I'm reading from the citations provided by the Defendants, of your clients not complying with deadlines that have been set by the Court.  I'm trying to figure out what is causing that, and the motion [to stay] that you filed cited reasons that I don't find convincing."

Judge Payne gave Mr. Hansley's client Marshall Feature Recognition 30 days to enroll new counsel, and set a followup hearing for November 16.  On that date, while my wife and I were across the street preparing to celebrate our 20th anniversary that evening, Judge Payne was watching the time for the hearing come and go without an attorney or representative of MFR darkening the door of his courtroom or take any further action to prosecute matters on behalf of MFR.  

In a short order filed later that day, the Court wrote that "[a] review of the record, and the argument at the hearing, shows that Plaintiff has consistently failed to abide by the Court’s deadlines or to meet its discovery obligations. Plaintiff has failed to respond to interrogatories, failed to produce documents, failed to engage in the meet and confer process attempted by Defendants’ counsel, failed to timely file claim construction briefing, and failed to timely respond to motions. When confronted with these failures, counsel for Plaintiff advised that he is not in a position to represent Plaintiff at this time and that Plaintiff has declined his request to retain other or additional counsel. Despite the passage of nearly two more months since the September hearing, Plaintiff has taken no steps to remedy the defaults. Under these circumstances, Plaintiff has made it impossible for the Court to proceed with the adjudication of the claims. The record makes clear that Plaintiff’s representatives, and not just its counsel, are aware of the defaults in this Court, as well as those in the Northern District of Illinois and the Northern District of Texas. Defendants have shown through their filings that they have incurred significant expense in attempting to defend this case. A dismissal with prejudice is the only appropriate remedy for these violations."

Northern District of Illinois

November 16 was not going to get any better for Mr. Hansley or his client after Judge Payne's order came down.  On the same date that Judge Payne dismissed Mr. Hansley's last two cases in the EDTX, U.S. District Judge Sharon Johnson Coleman of the ND Ill. denied MFR's motion to reconsider her prior order awarding the defendant in that case attorneys fees in the amount of $148,201.  The court noted the similar issues regarding Mr. Hansley's request to withdraw from the case, and held a hearing where MFR was represented by local counsel in Illinois.  It noted that MFR wholly failed to appear for the prior hearing, but nonetheless found that "the totality of the circumstances renders this case exceptional. The Court certainly has never seen another case like it." (Emphasis added).

Judge Coleman rejected MFR's argument that responsibility for the fees should be shifted to MFR's attorneys, but with a caveat. "MFR failed to appear at the hearing on attorney’s fees and failed to file timely objections. The Court is not addressing MFR’s options in other forums, therefore, if MFR so chooses, it may pursue relief against its counsel elsewhere."

Northern District of Texas

The next shoe to drop came from Chief Judge Barbara Lynn of the Northern District of Texas, who had previously temporarily suspended Mr. Hansley from practicing in the NDTX "until such time as Mr. Hansley demonstrates to the Court that he is able to comply with the Orders of this Court and conduct litigation properly" and required him to submit a report under seal advising the Court of the specific steps he has taken to address the circumstances that led to his
suspension and demonstrate his competence to resume the privilege of representing clients in the Northern District of Texas.

The report wasn't filed, a Show Cause order was issued requiring a written response, and that order was similarly not complied with.  As a result, yesterday Judge Lynn issued an order permanently prohibiting Mr. Hansley from practicing in his home federal court of the Northern District of Texas.

 

 

 

EDTX Court Preliminarily Enjoins New Overtime Exemption Rules Nationwide

Yesterday afternoon Judge Amos Mazzant, who sits in the Sherman Division of the Eastern District of Texas, issued a preliminary injunction prohibiting the U.S. Department of Labor from implementing new overtime exemption rules issued in May of this year that were set to go into effect on December 1.  The action was in a case brought by the attorneys general of 22 states, and also saw amicus briefs from numerous third parties interested in the issue.

While the order is not a final one - as your O'Connor's tells you a preliminary injunction is followed by a permanent injunction which is decided under a different standard - the order of denial is immediately appealable to the Fifth Circuit Court of Appeals, and after that potentially to the U.S. Supreme Court.  There are also numerous variables depending on what Congress or the incoming administration decides to do on this issue.

If you're advising a client on what to do in this area, you could do worse than read this summary by Seyfarth Shaw's wage & hour litigation group explaining just how confused this area now is. 

Motion to Consolidate Cases For Trial Denied Under 35 USC § 299

Remember that case I posted on yesterday where the two defendants were seeking a severance, and the court denied it, subject to addressing the issue at the pretrial conference?  Well, this is a different case in which the same plaintiff sued a number of other defendants, but in separate actions this time, and sought an order consolidating all of these actions for a single trial.

Plaintiff Chrimar argued that consolidation for trial was appropriate because all of its claims are related to the same IEEE standard, all Defendants’ accused products allegedly comply with the standard, some Defendants sell products sold by another Defendant, the accused products are all similar, some Defendants have overlapping subcomponents, the damages period for each Defendant is the same, Defendants share certain experts, and Defendants share overlapping defenses and counterclaims.  

Judge Love denied the motion, concluding that while the question of whether the claims of Chrimar’s asserted patents read onto that standard would be uniform across the various cases, the key question under 35 USC § 299 of whether Defendants’ accused products comply with that standard will inevitably vary unless the Defendants share the same accused products. And on this crucial point while Chrimar pointed to some alleged shared subcomponents, such as PoE
controllers shared across certain Defendants, it did not identify any uniform thread across all Defendants that would warrant combining all seven cases for a single trial.  Judge Love concluded by returning the question to the statute's language:

"Ultimately, none of the similarities pointed to by Chrimar are sufficient to pass the transaction and occurrence test set forth in § 299(a). While there will be some overlap as to certain defenses and witnesses, the actual questions of infringement and the amount of damages (both the appropriate royalty rate and base) are indisputably different among the Defendants. For these reasons, the Court finds that Chrimar has failed to show that joinder is proper under § 299.
Moreover, the Court finds that the similarities pointed to by Chrimar do warrant any special circumstances to consolidate all the Defendants for a single trial under the Court’s discretionary authority.

Motion to Sever Denied (rinse, repeat)

Chrimar v. Adtran, et al. is a patent infringement case involving two defendants. It is not case in which the plaintiff filed separate actions against defendants based on infringement, but one in which from the outset the plaintiff asserted claims against two unrelated defendants in the same action.

At the outset of the case the defendants did not raise any misjoinder or severance issues, but instead jointly moved to transfer to the Northern District of California. However, two months before trial defendants filed a motion to sever, raising the relatively rarely considered issue of whether joinder was proper under 35 USC section 299, which provides a special rule for joinder in the patent infringement context. Joinder in other cases is determined pursuant to Fed.R.Civ.P. 20(a)(2), which is a kissing cousin to 299.  Well, perhaps the better metaphor might be the twins in Disney movies where one is studious and uptight and the other has an English accent and is looking for excitement.  But not too much.  It's that kind of statute.  Sort of the 1998 Lindsay Lohan of the patent infringement statutory scheme.  (Personally, my household preferred Herbie, but Parent Trap was good as well).   

Anyway, on October 25, Judge Love denied the motion, finding that the requirements of both the rule and the statute were met because both defendants were accused of infringement based on the sale of some of the same products – not just because they were both accused of infringing the same patent. "At a minimum, common questions of infringement exist as to both Dell and Aerohive with respect to the shared accused products," the Court wrote.

Judge Love further found that even if joinder were improper under 299, the limitations of that statute were waived under 299(c) by the defendants' affirmative representations made in asking jointly that the case be transferred to the Northern District of California. Nonetheless, the Court indicated that it would discuss appropriate streamlined trial plan for the trial of the case based on the issues raised in the motion at the upcoming pretrial conference.  (The pretrial conference is December 5, so we do not yet know what the trial plan will be, assuming both defendants are still in the case at trial).

The defendants immediately filed a motion for reconsideration which Judge Love denied this past Friday, finding that the defendants had not shown that the stringent requirements for reconsideration had been met.

Enhanced damages of 20% awarded under Halo

Back in September, a Marshall jury in Judge Rodney Gilstrap's court returned a unanimous verdict finding that the claims asserted by Core Wireless against LG were infringed, willfully infringed, and not invalid. The jury set the damages at $2.28 million. Since the jury found that the infringement was willful, Judge Gilstrap exercised his discretion under 35 USC 284 to decide whether to award enhanced damages, noting the Supreme Court's recent decision in Halo, which gave district court's discretion in deciding whether to award enhanced damages, and in what amount.

The Court decided that an award toward the lower end of the spectrum was appropriate in this case, and set the award at $456,000 (20% of the potential 200%). The court noted the following factors as supporting an award in this range:

First, the court noted that it was undisputed that defendant LG had detailed knowledge of the patents in suit long before the filing of the lawsuit. That it was able to present a noninfringement position at trial the court concluded did not necessarily insulate it from enhanced damages. Additionally while it asserted and invalidity defense, the court noted that LG's corporate representative testified in his deposition that after a thorough review of the patents in suit he had concluded that the patents were novel and nonobvious.

But most important to the court appeared to be the manner in which LG abruptly terminated licensing negotiations.  After requiring the plaintiff to send a representative to Korea, LG simply delivered a one page document stating that it would prefer to litigate the portfolio and wait until another major cell phone manufacturer had licensed to the portfolio and established a royalty scheme. The court concluded that this meant that LG's decision to continue operations without a license was driven not by the merits or strength of its noninfringement and invalidity defenses, but its resistance to being the first in the industry to take a license.

Beaumont Jury Awards $20.34 million in medical device case

Last week a Beaumont jury in Chief Judge Ron Clark's court returned a verdict in favor off the plaintiff in Barry v. Medtronic, which dealt with devices used in scoliosis surgeries.  It found all the asserted claims infringed and willfully so, and that none of the defensive issues had been shown by clear and convincing evidence.  It awarded a total of $20,346,390.

Visiting Judge Kim Day in Marshall

I had the pleasure today of taking Judge Young Gi Kim of the Uijeongbu District Court from the Republic of Korea around Marshall today to see how our local court system works.  

The judge is already familiar with our federal courts, as he is currently in Tyler on a fellowship watching EDTX patent trials after attending UCLA for his LLM in law, and has already logged more patent trials in a few months than many federal judges see in a career.  (Yes, Marshall and Tyler is where you go for postgraduate work after finishing at UCLA - everybody knows that).  He spoke last week at the EDTX bench/bar about the activities of the Korean court system vis a vis intellectual property cases.  Hilariously, he told the Marshall reporter that after he and his family received such a warm welcome in California while he was studying there, he wondered if East Texas could be as friendly.  (We have nailed that scalp to the wall, guys).  

After spending a day with me going through the old courthouse, the historical museum, and every judge in the state level from JP through district as well as paying another visit to the federal courthouse, the judge understands the difference between Fred and Robert Newhouse, the significance of the portrait on the Confederate $100 dollar bill, what color suits are permitted next to Lady Bird Johnson's gown, and why just about every door in a Texas county courthouse except the men's room is a steel vault door.  He even got to see our skating rink (which was not built by or paid for by, nor is it sponsored by, Samsung, just to make that clear) under construction on the square as we prepare for Wonderland of Lights.  (Candidly, we've just taken to calling it the Samsung skating rink anyway.  It really annoys Marshall Ford-Lincoln, which actually sponsors the thing).

Judge Kim still can't figure out which branch of government a "county judge" in Texas fits into, but neither can anyone else, so I told him not to worry about it.  It's sort of the platypus of elected officials, so in retrospect, it was a little cruel for me to even bring it up.

We're honored to have Judge Kim with us, and wish him the best of luck with the remainder of his fellowship.  Next week he watches another patent trial in another division with a different judge, and will try out the video conferencing system - he tells me there's a similar system in effect for Korean appellate courts so they can hear experts by video.  Well now wouldn't that be cool to spring on the Fifth Circuit sometime!

EDTX Bench/Bar - Day 2

Unlike yesterday, the bench bar didn't start off with a bang. (ba-da-bing).  But so far we've had:

• EDTX Women's Lawyers breakfast - women taking the lead role at trial
• Opening remarks
• Discussion of the patent system - PTO Director Michelle Lee
• The panel up now is discussing how judges and businesses make decisions in the current unsettled legal environment, with CAFC Judge O'Malley D Del Chief Judge Stark, EDTX Judge Gilstrap, and corporate counsel Tina Chappell from Intel and Ken Korea with Samsung, moderated by former EDTX Judge Leonard Davis.

The day is a monster one, programmatically speaking, with the rest of the morning having:

• social media in selecting juries
• does the patent system need fixin' or putting the fix in?

After lunch we'll have:

• Conversation with CAFC Chief Judge Sharon Prost
• diversity and youth in trial teams
• Defending smaller patent cases under the new federal rules
• pros and cons of special patent courts
• trials with magistrate judges
• General Michael Hayden providing the keynote address on cybersecurity issues, followed by a panel on the issue.

The evening closes with Emerald City providing music for dancing with made to order ice cream sundaes.

2016 EDTX Bench/Bar - Wednesday

The 2016 EDTX bench/bar (our 20th) started today in Plano with handgun shooting, shotgun clay pigeon shooting and golf in the morning, and afternoon sessions at the Plano Marriott Legacy.

Today's panels - Day 1 of three days - are joint with the Institute for Law & Technology of the Center for American and International Law PTAB Bench Bar Conference.  They include:

• Local Rules/Standing Orders/Stays Pending IPR - which is going on right now - at the moment talking about the changes in sealability of trial proceedings based on confidentiality at the moment (hint, it's harder.  Get over it).
• District Court & PTAB Interplay
• Role of Post Grant Challenges
• Hatch-Waxman/ITC/PTAB/ITC & EDTX (we like focused topics, you can tell)
• PTAB Proceedings
• Bench Observations on Alice, Hall & Stryker

The afternoon's sessions are followed by the opening reception, the infamous former law clerks party, and late night in the president's suite.  All are subject to the EDTX Bench/Bar privilege, which is basically what happens at the bench/bar stays at the bench/bar (with the exception of activities observed pursuant to official duties by the Marshal's Service).

Shaping up to be a great conference.  Tomorrow is Michelle Lee talking about the future of the patent system.

Verdict on invalidity & damages in Chrimar v. Alcatel-Lucent

A Tyler jury in Magistrate Judge John Love's court returned a verdict in Chrimar v. Alcatel-Lucent Enterprise, USA, Inc. last week.  The defendant had stipulated to infringement, so the jury was just presented with invalidity, damages, and a couple of enforceability theories.  The jury found that the claims hadn't been shown by clear and convincing evidence to be invalid, set damages at $324,558.34, and parenthetically noted that this was $1.2067 per part.  It went on to find that Chrimar had not been shown to have committed fraud on the defendant, nor had it breached a contract with the IEEE.  Had it answered "yes" to the last question it would have answered another question asking it where the defendant was a third party to that contract.

 

Nominations Open for The Luther (Luke) Soules III Award for Outstanding Service to the Practice of Law

The Luther (Luke) Soules III Award is presented in January of each year by the Litigation Section of the State Bar of Texas at the Litigation Update Institute. The award is given to an attorney who embodies excellence in the practice of the law and exemplary service to the Bar. It is designed to recognize Texas legal practitioners who demonstrate outstanding professionalism and community impact.

Luther (Luke) Soules, III, was the first recipient. Past Honorees include Jim Coleman, the Honorable Royal Furgeson, Dicky Grigg, Kim Askew, George W. Bramblett Jr. and Eduardo Rodriguez Jr.

The next award will be presented at the 2017 Litigation Update Institute in San Antonio on January 26-27, 2017. The recipient will attend the Litigation Update as a guest of the Litigation Section, attend the speaker’s dinner with their guest, and an honorarium in the amount of $1500.00 will be made to the legal charitable organization of the recipient’s choice. There is a short ceremony during the update and the recipient is given time to make short remarks.

Selection Criteria And Rules:

The Nominee should embody the following:

•   Demonstrated commitment to equal justice under law.

•   Conduct promoting the rule of law.

•   Outstanding examples of professionalism.

•   Community impact as a result of the practice of law.

•   One or more significant contributions as a result of legal representation.

The nominee must be an attorney admitted to practice law in the State of Texas for a minimum of 10 years and be in good standing with the Bar.

The nominee cannot appear on a ballot in a contested race for elected office in the same year as nominated for the award.

The nominee cannot currently serve as a member of the Litigation Section Council of the State Bar of Texas.

Nomination Application Information:

The nominator should provide the following information:

1. Name, address, telephone number and email for nominator and nominee.
2. Provide (either in a curriculum vitae or in a one page synopsis) the following information about the nominee:

A. Schools attended (degrees, honors)

B. Professional affiliations

C. Published works and legal presentations 

D. Other background information

 3. One Page Explanation stating the reasons why the nominator believes the nominee should be selected to receive the Award, again in light of the Selection Criteria:

A. Demonstrated commitment to equal justice under law. 

B. Conduct promoting the rule of law.

C. Outstanding examples of professionalism.

D. Community impact as a result of the practice of law.

E. One or more significant contributions to either the community where they reside, the State of Texas, or on a national level, as a result of legal representation. 

Nominations must be submitted by November 1, 2016, and can be submitted by email to me as chair of the Litigation Section's Luke Soules Award committee at [email protected].  Nominations will be reviewed by the committee , and the 2017 recipient announced prior to the Litigation Update in January.  For more information about the award or the award process, please contact me at 903-938-8900 or at [email protected].

EDTX motions to transfer grant rate rises to 57%

Good article by Wei Wang, Gregory H. Lantier, Derek Gosma, and Mindy Sooter in WilmerHale's Eastern District of Texas Newsletter this month on motions to transfer in the district.  

In it, they note that the number of motions to transfer filed in EDTX cases dropped over half from 2014 to 2015, from 135 to 63, while at the same time success rates rose from 34% to 43%.  They note that filings of motions to transfer are up somewhat this year so far, which I in turn note makes a lot of sense when you consider that the motions to transfer in the large number of Thanksgiving Specials that were filed in late November of last year would have been in 2016.  But, importantly, thus far in 2016 the success rate for motions to transfer has leaped again, to 57%. That's a 60% increase in the grant rate over just two years ago.

They conclude that the higher success rate is the result of better-supported motions, and not because the standard the Court has applied has changed - which I'd agree with. But I'd also note that as with rulings on 101 motions, motions to dismiss and motions for summary judgment it also reflects the significant bubble of relatively weaker cases filed in 2014 and especially 2015 which largely dissipated locally after the eDekka 101 and 285 rulings around the end of last year and the beginning of this year. (More in this in real terms soon).  Also, the standards for venue motions in patent cases filed in courts applying Fifth Circuit law have been pretty stable for several years now, so the variations aren't because the law has changed or was changing during the period, as I'd argue was the case in 2009-2012-ish.

In short, the variable wasn't the judges or the law - it was the quality of motions and the quality of the facts they were based on.

No infringement; claims invalid in MTel v. HTC case

Chalk another one up for the double loss column for plaintiffs.

After a pair of plaintiff wins last week in Tyler and Marshall, a patent plaintiff lost on both infringement and invalidity today.  A Marshall jury in Judge Gilstrap's court in MTel v. HTC found Intel's asserted claims not infringed, and also concluded that HTC had shown be clear and convincing evidence that they were invalid. 

Cybersecurity for Law Firms - Presentation at 40th Annual Page Keeton Civil Litigation conference

Well, if you're going to miss me talking about the effect of the new federal rules on discovery and pleadings on patent litigation in Plano in November, or moderating a panel on trade secret litigation at the EDTX bench/bar in Plano (or opining online about the challenges of scratchbuilding the Apollo/Saturn V Launch Umbilical Tower in 1/200 scale) never fear - you can still catch me talking about cybersecurity for law firms with Robert L. King of Silicon Labs in Austin next month.

I am honored to be participating in UT Law’s 40^th Annual Page Keeton Civil Litigation conference, scheduled for October 27-28 at the Four Seasons Hotel and Suites in Austin.  Attached is a PDF of the program brochure. Download PL16_brochure

Leading litigators, judges, and law professors will be at the Four Seasons Hotel in downtown Austin to provide updates and analysis of important developments in civil litigation practice, with substantive coverage of practice tips, advocacy strategies, and important trends.

2016 Conference highlights:

·         Get the latest updates on Texas civil procedure, changes in FRCP, and insurance law developments

·         Hear premier Texas litigators discuss challenges and opportunities in the arenas of damages, contorts, and alternative dispute resolution in 21st century litigation

·         Get a Texas Supreme Court Justice's point of view on significant decisions from the past term

·         Learn tips for handling common issues that arise in litigation in the bankruptcy court and in civil litigation affected by bankruptcy

·         Learn what lawyers and law firms need to know about data security to avoid losing clients and getting sued (this is my part)

·         Look at important hearsay issues, with an emphasis on hearsay appearing in social and other electronic media

·         Hear about the practicalities lawyers and courts face as jurors increasingly live online and have new expectations for access to the facts, and lawyers have new access into jurors’ lives

·         Explore new opportunities in employment law for civil litigators

·         Earn up to 3.50 hours of ethics credit

You can see the program agenda and register online at www.utcle.org/conferences/PL16. Special group registration rates are also available by calling 512.475.6700.

I hope to see you there.  Meanwhile, I am available for WebEx presentations on the Saturn V LUT thing.  Seriously.  The LUT is the great white whale for baby boomer plastic modelers, and I am after it.  Hard.  (I have to have something to fall back on if this whole Dak Prescott thing doesn't work out).

Institute for Law and Technology’s 54th Annual Conference on IP Law - Plano, TX

My cochair Steve Malin (Chen Malin) and I would like to invite you to attend the Institute for Law and Technology’s 54th Annual Conference on Intellectual Property Law.  The program will be held November 14-15, 2016 at the Center for American and International Law in Plano, Texas.

This long running program brings together leading intellectual property practitioners from around the country for outstanding substantive and procedural programming, as well as numerous networking opportunities.  You can view the schedule and faculty here.

Topics include:

• Networking Breakfast Presented by the Women in IP Task Force
• Annual IP Law year in Review Presentations
• Section 101 Deep Dive for both Prosecutors and Litigators
• USPTO Enhanced Patent Quality Initiative
• Drafting Claims while Avoiding Indefiniteness and Other Pitfalls
• Changes to Pleading and Discovery Rules in ED Tex.
• 5 Things You Should Know About the Amended PTAB Rules
• Two In-House Counsel Panels
• Comparison of Federal and Texas Trade Secret Acts
• F/RAND Issues from both Sides of the ‘V.’ – the Good, the Bad, and the Ugly

CLE credit will be available. View the full agenda and register now. For more information, click here or contact Lilly Hogarth at [email protected] or 972.244.3424

Nokia Engineer Week in the EDTX Concludes With Verdict in Core II

Last week was apparently Nokia Engineer Week in the Eastern District, as two juries found for two plaintiff patent holders asserting patents by Nokia engineers.  

As I posted last week, on Thursday a Tyler jury in Magistrate Judge K. Nicole Mitchell's court found that Apple willfully infringed a patent by a Nokia engineer on wireless communication technology and awarded $22 million.  On Friday, a Marshall jury in Judge Gilstrap's court assessed damages in a retrial of a March 2016 patent trials at $2.3 million.

Why Nokia patents? Industry followers may recall that Nokia sold off large numbers of its patents beginning in 2011 after selling its cell phone business to Microsoft.  While I do not know what the respective splits any proceeds from last week's verdicts would be, a 2011 story reported that proceeds from at least some of the patents would be divided in thirds between the acquiring entity related to the plaintiff in last week's case, Nokia and Microsoft.  See  Mosaid Acquires 2,000+ Nokia Patents, Will Handle Licensing & Litigation For A Cut. 

Is This That Damages Retrial Of Which You Spoke?

Actually, no. Readers may recall that in March a Marshall jury in Judge Gilstrap's court also found against LG and in favor of Core and awarded $3.5 million in damages.  In August, Judge Gilstrap set aside the damages verdict in that case, finding that there was insufficient evidence to support the damages verdict, and ordered a retrial.  This is not that case.  It involved smartphone user interfaces, while last week's case involved patents dealing with battery life and voice quality.

 

Tyler Jury Renders $22 Million Verdict Against Apple on Patent by Nokia Engineer; Apple Trial Outcomes Analysis

Yesterday a Tyler jury in Magistrate Judge K. Nicole Mitchell's court found that Apple willfully infringed a patent by a Nokia engineer on wireless communication technology.  The patent, which was acquired and asserted in the case by plaintiff Cellular Communications Equipment, a subsidiary of Acacia Research, dealt with managing the resources used to send data over a communications network, and the accused devices were Apple's iPads and iPhones.

The jury found all five asserted claims infringed, that none of the five had been shown to be obvious, and rejected a claim of improper inventorship.  The jury further found that the infringement was willful and awarded $22.11 million in damages.

The suit had previous included claims against the mobile carriers that sell Apple's devices (AT&T, Verizon, Sprint, Boost and T-Mobile) but Judge Mitchell severed and stayed the claims against the resellers, noting that the plaintiff couldn't get damages from both Apple and the resellers anyway.

"What about post-grant proceedings?" I hear you asking.  Yes, Apple filed a petition for IPR under the AIA, and the PTAB declined to institute review, finding that Apple hadn't established a reasonable likelihood of prevailing.  The PTAB had also denied IPR reviews by HTC, Dell, Amazon and other companies on the patent.

Apple at Trial in the Eastern District

For a little context on Apple's recent trials in the district, my notes show that a prior verdict against Apple in Tyler this year (VirnetX II and damages trial on VirnetX I) was set aside by Judge Schroeder, and the retrial in that case starts later this month.  Going back a little further, last year Apple tried three patent cases in the EDTX, all before Judge Gilstrap.  It won two and lost the third, but Judge Gilstrap later set aside that verdict.  Incidentally, the CCC case was originally assigned to Judge Gilstrap, but the parties agreed to trial before Magistrate Judge Mitchell, so Apple's immaculate record at trial with Judge Gilstrap continues.

To find a patent verdict against Apple that wasn't later set aside by the EDTX trial judge you have to go back to Mirror Worlds, which ... no, wait, Judge Davis set that one aside as well.  Hmm.  Okay, here we go - there is one for $9 million in 2011, and another for $19 million in 2009.  To my knowledge neither resulted in a change on appeal (appeals may have been filed, but didn't result in a decision as best I can tell).   There was also the original VirnetX verdict in 2012, which the Federal Circuit affirmed on liability and reversed on damages, and that is the Sisyphean ball that is going up and down the stairs on the old side of the Tyler courthouse again this year.  

Running the numbers on those results, and assuming CCC doesn't change at trial or on appeal, it looks like Apple has won two at trial, lost three (totalling $42 million), and gotten three (for $208 million, $532 million and $624 million respectively) set aside by EDTX judges at the JMOL stage, and a fourth for $368 million set aside at the Federal Circuit (subject to the aforementioned retrial on damages).  That's a 62% win rate at the district court, rising to 66% counting the appeal.

But I really don't think that takes fully into account Apple's success in getting $1.36 billion in verdicts set aside at the JMOL stage.  To better evaluate this, perhaps a useful way to look at that is this.  Apple has been successful in setting aside 98.5% of the damages assessed against it by Eastern District of Texas juries at the district court level.  Including the appellate success, its set-aside rate rises to 98.8%.  Even assuming Judge Mitchell denies any JMOLs in the CCC case (Apple has only lost three of eight JMOL rulings, but let's assume they lose this one), the success rate would only drop to 97%. 

(A note on Mirror Worlds: For calculation purposes, I am - as always - using the number $208 million for the jury's verdict because it gave the same damages number for each of the patents.  However, since the accused products were the same, the damages were duplicative and had Judge Davis not set aside the entire verdict on other grounds, the judgment would have been for $208 million plus interest, costs, etc. It would not have been $624 million, as it is often reported in the media.  The jury was asked separate damages questions on each patent to avoid the need for a retrial if the judge set aside some, but not all, of the three asserted patents, since there would be damages awards based on each patent on which a judgment could be based. Since he set aside all three, the issue became moot, but it was an example of verdict form craftsmanship since it would have avoided an unnecessary retrial on damages if only one or two of the three patents had been set aside.)

2016 EDTX Bench/Bar Conference - Oct. 19-21, 2016

The agenda is out for the 2016 Eastern District of Texas Bench/Bar conference, which will be held again at the Plano Marriott Legacy in Plano, Texas. Download EDTX_Bench_Bar_2016

Events start Wednesday morning, with optional (1) golf; (2) handgun shooting; and (3) shotgun clay pigeon shooting excursions.  Wednesday afternoon is joint panels with the Institute for Law and Technology of the Center for American and International Law and the PTAB Bench/Bar Conference, followed by social events in the evening.

Thursday morning the conference kicks off with a presentation by Michelle Lee, Director of the U.S. Patent & Trademark Office, followed by other presentations and panels, and culminating in a keynote address by former CIA and NSA Director General Michael Hayden at the President & Chief Judge's dinner.  The evening concludes with an interactive conversation with Judge Young Gi Kim in the Presidential Suite about the Korean patent litigation system and its IP Court.

Friday includes panels with the chief judges of the Federal Circuit and the Fifth Circuit, followed by a panel I am moderating on trade secret cases, including under the new DTSA, trials in East Texas, jury selection and the Sherman Division.

The following is a list of the judges who are speaking or appearing. 

Chief Judges

• Sharon Prost (Federal Circuit)
• Carl Stewart (Fifth Circuit)
• Ron Clark (ED Tex.)
• Barbara Lynn (ND Tex.)
• Leonard Stark (D. Del.)

Other Appellate Judges

• Raymond T. Chen (Fed. Cir.)
• Kathleen O'Malley (Fed. Cir.)
• Gregg Costa (5th Cir.)

District Judges Outside EDTX

• Lee Yeakel (WD Tex.)
• Richard Andrews (D. Del.)

EDTX Judges

• District: Clark, Crone, Gilstrap, Mazzant, Schroeder;
• Magistrate: Craven, Giblin, Hawthorn, Love, Payne, Mitchell, Nowak, Priest Johnson

Judges Outside the U.S.

• Young Gi Kim (Uijeongbu District Court in Republic of Korea)
• The Honorable Michael Fysh, QC SC (UK - former)

Registration information is on the brochure.  I look forward to seeing many readers there!

 

Motion to Dismiss 13 Defendants Granted after Sua Sponte Expedited Claim Construction Hearing

Yesterday Judge Gilstrap granted motions to dismiss infringement claims against thirteen large tech defendants after sua sponte setting an expedited, focused Markman hearing when his initial review of the motions indicated that there was a single potentially dispositive issue 

As the opinion raises numerous issues that reflect both filing trends and procedural tools used by local judges to handle patent cases I'll follow up with a longer post tomorrow.  

Offshore Drilling Platforms Support Personal Jurisdiction & Venue

Motions to dismiss for improper venue require the plaintiff to show that the chosen venue is improper.  In Elbit v. Hughes Network Systems, 2:15cv037 (Schroeder, J.) Judge Schroeder denied the defendant's motion to dismiss for improper venue, finding that the claimed acts of infringement occurred on offshore drilling rigs which were within the limits of national jurisdiction and offshore from the Eastern District, thus satisfying the tests for personal jurisdiction and venue.

Two of Three Intellectual Ventures Patents Invalidated Under Section 101

Last week Judge Gilstrap ruled on another set of 101 motions, this time by defendant J. Crew Group against plaintiff Intellectual Ventures.  The Court granted the motion as to two of the three patents, finding that both were directed at patent-ineligible subject matter.  The Court found that the third was not, however.

Discovery Standards in the Eastern District of Texas: From "Bears Significantly" to Proportionality - 1991-2016

This fall represents the 25th anniversary of the Eastern District's 1991 experiment in limiting costly pretrial discovery by, among other things, reducing the otherwise applicable scope of discovery.  I thought I would take a few moments this morning to briefly summarize how it came about and how we got to where we are today. Much of this post is derived from my article Man With The Plan: Successful Eastern District Practice Requires Understanding History in the April 11, 2011 Texas Lawyer, but focuses on the evolution of discovery standards.

 

Litigants in the Eastern District of Texas often remark on the local rules and procedures many of the judges follow, including mandatory document disclosures, page limits on briefs, limitations on permissible activity in depositions and a hotline for discovery disputes.  But many of these procedures, which provide the basis for much of the district's current reputation as a forum for complex litigation, such as patent infringement cases, date back to the same thing that occurred in 1990.

 

It all begins with Dan Quayle. 

 

In 1990, Vice President Quayle chaired the President's Council on Competitiveness, which made recommendations on improving the civil justice system. In his overview of that committee's recommendations, Solicitor Gen. Kenneth W. Starr noted that the Council had recommended "the adoption of a rule requiring prompt and voluntary disclosure of all basic information relevant to the case."

 

Later that year Congress, agreeing with the Council's concerns regarding the increasing cost of civil litigation, enacted the Civil Justice Reform Act of 1991, 28 U.S.C. 471, et seq. (CJRA) which required each U.S. district court to implement a CJRA plan to improve litigation management. Even though the Eastern District was not one of the districts initially required to produce a plan under the CJRA, then-Eastern District of Texas Chief Judge Robert M. Parker of Tyler appointed an advisory group in accordance with the statute. Then, after reviewing that group’s recommendations, Judge Parker promulgated on behalf of the judges of the Eastern District the district's Civil Justice Expense and Delay Reduction Plan, adopted Dec. 20, 1991.  which became known locally as “the Plan". 

 

The Plan dominated local practice for the next nine years as part of the local rules, and its major provisions continue to this day to guide practice across much of the district, and in particular the district’s heavy patent docket in Marshall and Tyler.  To give you an idea of how important it was, when I finished my clerkship with Judge Hall in 1993 , I asked him to autograph my copy of the Plan, and it's been on a shelf in my office ever since.  (Or maybe I stole the copy he'd signed to show it was his.  I forget.  In any event, it's mine now).

 

The Plan's Restrictions on the Scope of Document Discovery

 

Since the primary concern of the CJRA was containing the costs of discovery, the Plan consisted primarily of extensive changes to discovery procedures. My 2011 article discusses these in more detail, but for purposes of this post it restricted document discovery in two ways: (1) it eliminated requests for production of documents; and (2) it required each party to provide certain mandatory disclosures early in the case. These disclosures included a computation of damages and, most importantly, a copy of documents. 

 

But, importantly, the standard for production of those documents was not same as the standard of discovery relevance under FRCP 26, which at the time was information "relevant to the subject matter of the case".  Instead, the Plan implemented a far narrower standard - that of documents likely to "bear significantly" on "any claim or defense".  That term came from the then-current draft of the proposed 1993 amendments to FRCP 26 - which contemplated replacing traditional requests for production with a duty to disclose all documents that "bear significantly" not on the subject matter but on the "claims and defenses".  The oft-heard description was that it required producing the needle, not the haystack.  Or to be more precise using the major issue of the day, it required producing the needle rather than requiring the opposing party to go inspect the haystack in a reading room.

 

Importantly, the Plan also provided guidance on the new term “bears significantly on” that would define parties' discovery obligations.  Most helpful, in my experience, was the Plan's observation that it is information that: (1) “reasonable and competent counsel would consider reasonably necessary to prepare, evaluate, or try a claim or defense”; and (2) "is likely to have an influence on or affect the outcome of a claim or defense."  This citation to reasonable and competent counsel echoes what Michael Macagnone's article referred to this week when he noted that it requires both judges and practitioners to keep cases moving, and in my experience in the Eastern District attorneys have been held accountable for their obligations in this regard.

 

In practice over the last 23 years, I have found that when all else fails these two phrases can resolve many discovery disputes because even on a phone call it is difficult to keep a straight face when arguing that a particular piece of information is or is not discoverable under these two standards.  It is main hard, as the saying goes, to respond to the argument that you wouldn't want this document if you were on the other side in situations where the document is really significant.  Or to respond when your opponent identifies the documents that accomplish what you're looking to do that are substantially less burdensome to locate and produce than the one(s) you were asking for.  I don't mean to imply that this resolves all discovery disputes by any means because parties often have legitimate disputes over what the issues are and what information is necessary to evaluate them.  But in my experience it has dramatically reduced them - when people look at them through the correct analysis, as opposed to simply wanting to get as much as possible or to produce as little as possible.

 

In any event, the Plan became a prominent feature of Eastern District practice through the 1990's, and its mandatory disclosures and firm trial settings are consistently cited as why Texas Instruments began filing its patent infringement cases in the Eastern District beginning in 1992.  The district’s judges later folded its provisions into the Local Rules in 1997, and most of the important provisions became part of CV-26.

 

The 2000 FRCP Amendments

 

But the innovative "bears significantly" language and mandatory disclosure requirements that were the basis for the Eastern District's Plan did not fare so well at the national level. The Dec. 1, 2000 revisions to Federal Rule of Civil Procedure 26 did restricted the scope of discovery, but only from "relevant to the subject matter" to "relevant to the claims and defenses" - not to "bears significantly" to the claims and defenses. In other words, the haystack is smaller, but it's still a haystack.

 

And while it did require initial mandatory disclosures nationwide by eliminating districts' ability to opt out, it watered down the scope of the disclosures by having them only apply to information relevant to the claims and defenses that a party may use to support its case.  Information relevant to the claims and defenses that did not support the disclosing party's contentions was still discoverable, but had to be obtained through requests for production, thus creating a two-tiered system of discovery.   Worse, while the new rule was intended to prevent districts from opting out of mandatory disclosure entirely, it had the likely unforeseen effect of eliminating rules like the Eastern District's that limited disclosures even more broadly than the national rule - while still permitting such provisions by order, thus encouraging what has become a balkanized practice on this point where disclosure obligations can vary almost on a judge by judge basis. 

 

As a result, the Plan’s mandatory initial disclosure provisions were eliminated by the Eastern District judges from the local rules in late 2000 in General Order 00-11.  As 2000 was my first year as chair of the Eastern District's Local Rules committee I wrote and spoke extensively on these changes, including in The Advocate's Fall 2000 issue, which I just found a copy of this morning - I thought I'd thrown it out.  Other than O'Connor's Federal Rules * Civil Trials, which I had been editing parts of for a few years by this point, I think this was my first published article.

 

But after seeing how effective they have been in practice, a number of the district’s judges continued to implement the major provisions of the Plan by orders in individual cases, as Rule 26 permits, typically by broadening the Rule 26(a)(1) initial disclosures from information “that the disclosing party may use to support its claims or defenses” to the new Rule 26 language of  “relevant to the claims and defenses of any party” and including documents.

 

And the language that had defined "bears significantly" in the former Plan had been so successful in helping attorneys resolve disputes over the scope of document discovery that that language was maintained in the local rules as defining the standards that applied to the new standard for discoverability "relevant to the claims and defenses." Attorneys can see this in still-extant Local Rule CV-26(d), which notes, “The following observations are provided for counsel’s guidance in evaluating whether a particular piece of information is ‘relevant to the claim or defense of any party.’ ”  Thus the term "relevant to the claims and defenses" while having a certain meaning nationally, actually has a narrower meaning under CV-26(d) - it is a term of art in the Eastern District that arose out of the old "bears significantly" language of the proposed FRCP 26 amendment being discussed in 1991 when the Plan was written.

 

Excluding E-mails from Disclosures

 

In practice, the inclusion of e-mails in the mandatory disclosure requirement became problematic, so in 2012 the local scope of discovery was restricted further, at least informally, when the court adopted the recommendation in the Federal Circuit Advisory Committee's ESI Model Order that exempts e-mails from disclosures completely, as well as its structure that restricts e-mail discovery to what can be loosely characterized as a "Go Fish" approach to email discovery.  Under this, parties can require their opponents to search up to eight email custodians' files for up to ten e-mail terms.  Essentially, it is a carefully calculated sampling of the e-mail universe of documents, rather than the prior obligation to search all the emails for anything "relevant to the claims and defenses".  

 

Since the adoption of the order, e-mail discovery disputes have  largely disappeared from motion practice, at least in my experience.  Don't get me wrong - we still fight constantly on the number of the custodians and the number and content of search terms, but rarely fail to reach agreement, and I have not seen any party ask the Court for a substantively different mechanism.  So we are still fighting, but we're doing it in the Tyler Walmart parking lot, and not the grand ballroom of the Dubai Ritz.

 

The 2015 Amendments to the Scope of Discovery

 

The Eastern District of Texas wasn't the only entity which considered that restricting the scope of discovery was a way to make discovery more efficient.  Effective December 1, 2015 the scope of permissible discovery in FRCP 26(b)(1) was narrowed again, this time to require not just that discovery be "relevant to the claims and defenses" but that it also be "proportional to the needs of the case" and the advisory notes makes clear that this change "reinforces the Rule 26(g) obligation of the parties to consider these factors when making discovery requests, responses or objections."

 

Thus after the 2015 amendments two rules serve to limit the obligation to produce documents relevant to the claims and defenses in the Eastern District.

1. Under CV-26(d), using Judge Parker's 1991 language, it must be information that: (1) “reasonable and competent counsel would consider reasonably necessary to prepare, evaluate, or try a claim or defense”; and (2) "is likely to have an influence on or affect the outcome of a claim or defense."
2. It must be proportional to the needs of the case, taking into accounts the factors set forth in FRCP 26(b)(1)

There is some overlap between the way the Plan cut down the scope of discovery and the way "proportionality" does, but I have found in practice that they work well in conjunction - whittling requests down to what is reasonably necessary and is likely to influence the outcome of the case, and then considering whether further reductions are needed as a result of the needs of the case.  Taken together, they are a pretty effective whipsaw to use against excessive discovery requests.

Proportionality:  Sharknado or Meh?

 

When the addition of proportionality to the definition was proposed, many practitioners, including me, believed that the new language would cause discovery disputes to explode as parties routinely claimed that "proportionality" prevented the discovery of information that was previously routinely produced.  Others, most notably Judge Gilstrap at last year's bench/bar (if memory serves), felt that this would not be the case, and that parties would be able to integrate the new standards into their negotiations over what should be produced without a significant increase in motion practice.

 

It appears Judge Gilstrap was correct, and not by a little.  While other districts have seen some discovery disputes involving the new proportionality test, a search on numerous databases this morning that the Eastern District has not. For example, there are no cases, published or unpublished, on Westlaw discussing the issue of proportionality in the Eastern District since its addition to FRCP 26(b)(1), and only four cases even mention it.  Three, including one in a Marshall patent case, simply quote the amended rule's language without relying on it or discussing it in any way, and the fourth, a personal injury case in Sherman, denies the defendant's request for mirroring of the plaintiff's electronic devices concluding that it is not "proportional", but goes on to permit limited copying of certain types of files. 

 

Looking at other patent case-focused databases Docket Navigator and Lex Machina, one has 13 rulings where according to its search criteria proportionality objections were lodged in 2016, but none are from the Eastern District.  The other has a different count but, again, I cannot find any orders from the Eastern District that address disputes regarding proportionality issues in patent cases. Parties appear to be working these disputes out. 

 

Does Proportionality Apply To Mandatory Document Disclosures?

 

I heard an interesting argument yesterday for the first time, which was that because the mandatory disclosures language in judges' orders has not yet been revised to explicitly incorporate the new "proportionality" language, that the Eastern District judges are not applying the new "proportionality" standard.  It is true that the orders don't yet expressly reference the standard in their boilerplate language, and parties sometimes resolve any potential questions over this by explicitly noting in the discovery order that the "proportionality" standard applies, as in, for example the Rothschild Connected Innovations LLC, Phoenix Licensing and Blitzsafe cases). But to my knowledge no party has to date claimed that they do not do so at least implicitly. 

 

But I believe we can consider Implicit that they nonetheless intend to incorporate the current FRCP 26(b)(1) standard. And that's both because I really think it is implicit and because in the Implicit case, 6:16cv078, which is the only Eastern District patent case that considers the proportionality standard expressly, Judge Gilstrap concluded a little over a month ago, three weeks after directing the parties to submit a discovery order including his standard disclosure provisions, that "[h]aving considered the Motion, the Court is of the opinion that [the requested] discovery is proportional to the needs of this case." (Emphasis mine). 

 

Law Office Management: Coat Hooks

After yesterday's blizzard of posts on cases and broader docket-related issues (sometimes when I start thinking, I don't stop) I decided I'd follow with a somewhat less substantive post.

Consider the coat hook.

No, seriously.  If visiting 7,500 Texas lawyers' offices this spring while campaigning for State Bar president taught me anything, it's that you can make a definite impression on visitors to your office by paying attention to the little things.  Like coat hooks.

Most visitors to a law office will have coats, and, this being Texas, will often want to take them off while in your office.  At which point they'll start looking around for a hook.  And you won't have one.  Oh, sure, there might be a coat rack someplace, but it's never where they need it.  You know where you can put your coat, but they don't.  Most offices just don't think about hanging storage for visitors once you get past the receptionist. So if it's winter and you have an overcoat (which covers about five days of the year down here) you're set there, but most of the time you don't remove a coat until you're in an office or meeting space - and there is invariably nothing there.

On the coat hook front, the high point of my office visits was when I went to a new office - may have been Haynes & Boone's Dallas offices -  and each office had an unobtrusive coat hook (not shown in the attached photo for some reason) on the wall next to the door for a coat, eliminating the need for a coat rack.  (It was probably made of recycled something or other - that office is big on being green, and it's always pleasure to visit.  Until you need to find the restroom, at which point you need Tom Hanks from The Da Vinci Code to figure out which arcane symbols and hidden doors they're behind.  I've found it's usually easier to just listen for flushing sounds.)

On the other hand, the low point was that the hotel I usually stayed at in Dallas did not have coat hooks anywhere on the acres of marble in the lobby men's room where I typically changed out of my suit for the drive home.   (The photo is an exemplar from the Internet - I was not photographing men's hotel room stalls for future weblog posts).  So on a sometimes daily basis I had to either balance suit jackets, trousers, belt, tie, briefcase and who knows what else on my suitcase while simultaneously extracting a pair of khakis and comfortable shoes, or carefully study the condition of the floor before reluctantly laying a nice suit on it.

As a result, one of the first things I did when I got back to my office in April was to put up (actually, to have Grayson put up) coat hooks on practically every surface that would take a screw, with an eye towards where I see visiting lawyers needing a place to hang something.  We selected the triple-swing hooks shown above in a finish that matches the Hub's other hardware after my experiences in the hotel lobby mens' rooms trying to hang six things on one cheap piece of chrome. You can never have too many hooks.

Here are the places I'd suggest:

• Every restroom door
• No, seriously.  Put one on the back of every stall.  No exceptions.  This matters.
• Office doors
• Walls or trim in conference or meeting areas (if no coat rack is available).  Get creative. It's a conversation starter.

It's a small thing to add, but for a visitor, it's an unexpected luxury to be able to hang a coat up instead of just wrapping it around the back of a chair.  And if your visitors are like mine and often do change out of a suit after a hearing before starting the drive back to Dallas, it's nice to make the process as convenient as possible. 

Recent Trends Affecting EDTX Patent Dockets

In recent days I've read three good articles dealing with trends in patent litigation, and wanted to discuss a few of them, because in many ways they contradict the conventional wisdom about patent dockets, and I think in some cases correctly so. 

 

The Effect of the 2011-2016 Changes in Patent Litigation ... and the the 2015 FRCP Amendments

 

First of all, in The Face Of Patent Litigation After Federal Rules Amendments Marc Pensabene and Sarah Pfeiffer  of O'Melveny & Myers LLP discuss the effect of the December 2015 federal rule amendments on patent litigation, putting the new federal rules in the context of the other recent dramatic alterations to the patent litigation landscape.  "In the past five years," they write, "patent litigation has seen the implementation of the America Invents Act and several significant U.S. Supreme Court cases that have dramatically altered the patent litigation landscape. . . . [m]uch has been written about the impact of various provisions of the AIA, and the significant impact of inter partes review, post-grant review and covered business method review in dampening the willingness of patent owners to subject their patents to such review. The Supreme Court’s recent decisions have similarly been widely acknowledged as having deterred new patent actions. Alice set forth a new test for patent-eligible subject matter, and shortly after courts saw an historic increase in motions under Section 101, with an equally historic increase in the success rate of those motions. In Octane, the Supreme Court “lower[ed] considerably the standard for awarding fees” to prevailing parties in exceptional cases."

 

"Taken together," they write, "these changes have tipped the balance of power in patent litigation a little more in the direction of the accused infringers. The recent amendments to the Federal Rules of Civil Procedure, which went into effect on Dec. 1, 2015, are likely to have a further impact on that balance by heightening the pleading requirements and reducing the ability of patentees to use onerous discovery as leverage for settlement."  The authors note that the filing of new patent cases has dropped in the most recent six months by nearly 30 percent nationwide, and note the belief among some that 'the patent litigation playing field has become more level and there is less incentive to file meritless claims in hopes of a quick settlement."

 

The Effect of Filings on Undermanned Courts

 

Then on Monday of this week Michael Macagnone of Law360 in Judicial Nomination Logjam Strangles Texas Docket discussed the effect of undermanned courts on dockets in Texas' federal courts, with substantial discussion about the effect of the three current vacancies on the other five remaining judges of the Eastern District of Texas. He notes that the amount of work facing Eastern District judges "blows every other district in the country out of the water" with the three vacancies in the Eastern District having a weighted number of annual filings at 1,261 when the next heaviest district is 696, in Kansas.  (Read that sentence carefully - that means that the five judges with weighted filings each of 1,261 are also absorbing on average another 700 each from the vacancies - for a total of around 2,000).  

 

 The article goes on to quote several distinguished practitioners to the effect that the backlog of judicial nominations is delaying trials in Texas federal courts, but I think the facts may have gotten a little confused because while that is certainly the case through much of the state and possibly parts of the Eastern District, it conflicts with my experience in patent cases locally. The specific comment was that "Markman [hearings] running two years and trials running two and a half."  Actually, that's not the case.  A couple of weeks ago I had two Markman hearings in Marshall before Judge Payne.  They were in cases which were filed on September 22 and 25, 2015 respectively and had their Markman hearings on August 2 and 4 - thus a little over ten months after filing.  That's been pretty consistent for over four years now - Markmans are typically 6-8 months after the status conferences and trials are 6-8 months after that, meaning typically patent cases go to trial within 15-18 months from filing.

 

Why the continuing short times in light of the increased filings - in fact in spite of them?  A couple of reasons, starting with a very specific judicial management decision.  Macagnone writes that "Judge Gilstrap helped to rein in the worst of the wait just after coming on the federal bench . . . by 'playing chicken with his own docket' and scheduling a large number of trials close to each other."  But that quote (which is from me, displaying my sophisticated legal verbal skills) requires a bit of an explanation.  

 

"Playing Chicken With His Own Docket?"  Do Tell.

 

As practitioners know, judges typically schedule cases at each batch of scheduling conferences for trial after the batch that was heard at the previous conferences.  When Judge Gilstrap took the bench in December 2011 as I recall the time to trial was 24-28 months from the status conference - not because the cases needed that much time but because there weren't trial slots available before then (which actually goes back to Texas' Congressional redistricting in the early 2000's, but that story is too long to tell here).

 

So what happened in the early months of 2012 was that Judge Gilstrap scheduled trials for 14-18 months out from the scheduling conferences, and rescheduled many recently set cases forward.  I'll never forget getting a call from the court's clerk around then asking if we could move a just-scheduled case forward a bit.  I said we probably could - how much was the court thinking?  "A year," was the answer.  Sure enough, the existing schedule essentially had almost a year of dead time, so the parties agreed and moved the trial date up a year.  As Sun-Tzu once said, cleverness has never been seen associated with long delays.

 

But sharp readers will have noticed that there were already cases scheduled for that same time period - which is why I refer to the Court's scheduling practices at that time as "playing chicken with his own docket."  If the cases Judge Ward set for 2013-2014 went at the usual rates and so did the ones Judge Gilstrap set, as Dr. Spengler put it in the original Ghostbusters, "it would be bad."  (You see what I did there - Sun Tzu to Ghostbusters?  Can't say I'm not a Renaissance man).    

 

But that same period 2012-2014 saw large numbers of cases transferred under new Federal Circuit caselaw on 1404, and numerous other cases settle early or voluntarily dismiss as the AIA's post-grant procedures (remember the initial "patent death squads"?) and Federal Circuit and Supreme Court caselaw on damages and other topics (including Alice, which you'll recall percolated at the Federal Circuit for some time before the Supreme Court's 2014 opinion) further thinned the docket in ways that couldn't have been anticipated in 2010-2011.  As a result, as my Markman hearings illustrate and as I expect we will continue to see at the status conferences in Marshall next week, time to trial locally has stayed remarkably consistent at 12-16 months after status conference (15-19 months after filing), and no chickens were killed in the management of the court's docket.  It didn't have to happen this way - but it did and that one decision had the effect of permanently putting the docket back on a 18-month time to trial, give or take.

 

Thus when the influx of post-AIA filings began to impact the district in early 2014, as shown in the Lex Machina chart below comparing EDTX and DDel filings broken down by high volume/low volume, the district was able to absorb the filings with relatively minor effect on time to trial, since cases were already being setting assuming much higher mortality (or at least settlement) rates. (Did I mention the patent death squads?) 

 

Patent Filings and Patent Assertions

 

I think it's a fool's errand to compare patent filing statistics before the enactment of the AIA in 2011 with those after, but since then it is undisputed that the number of patent cases filed has increased.  That was the case until this year, when, as previously noted, overall filings are down substantially and in the Eastern District by almost half over the prior year.  And as I noted a few weeks ago, and as also shown to the left the statistics are also showing a decided decrease in filings by bulk filers/patent assertion entities/high volume plaintiffs/patent trolls.  In the Eastern District, for example, Lex Machina's data showed that the decrease was so pronounced that the majority of patent cases filed in the EDTX in the first two quarters of 2016 were not by "high volume" filers at all - and that such non-NPE filings had been increasing since the fall of 2014, even as NPE filings were dropping.  I have written about this rise in "competitor cases" previously - at least four of the first ten trials this year were competitor cases, not NPEs.

 

But why are they down?  Well, Pensabene and Pfeiffer, supra provide five years' worth of reasons, but as as I discussed in a previous post, the effect of the Section 101 dismissals and Section 285 sanctions assessed by Eastern District judges since last fall, with eDekka being the most notable, appear to have played a major role.  We saw a 94% reduction in the top three NPE filers in the first few months of 2016, with the trend continuing through the second quarter of the year and across other filers as well. 

 

But I mentioned that there was a second interesting factor at play, and that was illustrated by another article from last week The Number of Unique Patent Assertions Has Been Declining Since 2010 by Pedram Sameni on IPWatchdog.  In that article, Pedram notes that while patent case filings increased from 2011 to 2015, the number of unique patents asserted each year has been declining.  In fact since 2010 the number of patents asserted has declined 23% from where it was in 2010.  

Taken together, these changes may indicate that while absolute levels of patent filings were up - at least through last fall - the number of patent assertions has been decreasing for three years.  And while the number of parties is not irrelevant, since the number of defendants drives the number of motions to transfer and to dismiss, not to mention discovery disputes and so forth, the decrease in the number of patent claims to process means that there is at least potentially less complex patent work for the court on the back end of cases.  And especially beginning in 2015 there is a massive decrease in the average number of patents asserted in each case, which likely has an effect as well.

 

As Michael Macagnone notes in his article cited above, and as I posted a few weeks ago, to handle Judge Schneider's senior status, and possible retirement, Chief Judge Clark transferred Judge Schneider's Tyler criminal docket to himself, and his civil docket to Judge Schroeder, who is already handling most of the patent docket in Tyler. It may seem counterintuitive that one of the patent judges laboring under such a massive docket is being given an additional docket load, but recall also that as I posted last month, Judge Schroeder and Judge Gilstrap recently did away with the letter briefing requirement that many of the district's patent judges had used for several years to help manage to heavy patent docket - one of the more or less emergency procedures that had been put in place to help with the influx of patent filings.  As I suggested a few weeks ago, it is possible - even likely - that these changes reflect what yet another writer referred to as the "hot, but no longer boiling" nature of the patent docket.

 

Fewer Trials?

 

Finally, the changed docket profile may be having another effect as well.  An interesting statistic I ran across while studying recent verdicts - and am trying to confirm - is that while January - March had three patent trials each month, it appears that there were only two patent trials in the next five months combined.  The most recent defense verdict was last Friday, and there hasn't been a plaintiff's verdict since March (and that one had the damages verdict set aside last week).

 

That gap coincided approximately with the hole where the patent cases that weren't filed from January through April would have gone for status conferences and to have their motions to transfer/dismiss worked on - again, that was a 40% reduction so we're not talking peanuts.  And it was when Judges Schroeder and Gilstrap deliberated on and eventually issued their standing orders doing away with "in-person" meet and confers on discovery disputes and with letter briefing for summary judgment motions.  And - and this is only anecdotal at this stage - it seemed to be when rulings started creeping earlier on everything from motions to transfer to 101 motions to the new Twiqbal motions to dismiss.   

 

Only time will tell what comes next.  But I did think that some of these trends were worth noting, because the conventional narrative is that filings are always going up, up, up, and as we can now tell, not only is that no longer true, it has been overlooking important characteristics about the content of those filings going back several years.  And those characteristics and changes are now having a demonstrable effect on the docket.

2016 EDTX patent trials update - 36% win rate for plaintiffs

I get asked a lot what the current statistics are for patent trials in the district - is this a 2013 where defendants are winning 2-1 or a 2014 where it's the other way, or a 2015 where it's even.  Well, yes, no and yes.  So far.

There have been twelve patent trials in the districts so far this year, but I count once (Metaswitch) twice because both sides were claiming their patents had been infringed, and the Marshall jury found none were infringed, and, hysterically (easy for me to say because I wasn't in the case) both sides' patents were invalid.  Of those twelve, juries found for the plaintiff six times and the defendant six times, for a win rate at trial of 50%.

However, postverdict two and a half of those verdicts for plaintiffs were later set aside by judges.  

• In the first, the court found the patent invalid under Section 101, so the result was flipped from a plaintiff win to a defense win.
• In the second, the court set aside the verdict and two new trials - one on damages only (since the Federal Circuit had affirmed the infringement verdict) and a second on infringement and damages.
• In the third the court upheld the jury's infringement/not invalid verdict, but set a new trial on damages.

This drops the win rate to four for plaintiffs and seven for defendants, with a new trial coming on one case.  As the two damages-only trials won't affect the numbers since the infringement/not invalid findings are already reflected in the statistics, that's a win rate of 36%.

Incidentally, 2015 was 50-50 on verdicts as well, dropping to 42% postverdict.

Plaintiff's Postverdict Motion for Fees Under Section 285 Denied; Injunctive Relief Granted in Part

Motio, Inc. v. BSP Software LLC et al, 4:12cv647 (8/22/16) (Mazzant, J.)

 

Apparently it's JMOL week.  Earlier this year a Sherman jury in Judge Amos Mazzant's court found for the plaintiff, and assessed a little over $1.1 million in damages.  Earlier this week Judge Mazzant ruled on the postverdict motions.  He denied the motions challenging the jury's verdict, and resolved the parties' disputes on the calculation of interest and court costs.

 

The Court denied the plaintiff's request that the Court find the case to be "exceptional" under 35 U.S.C. 285 and assess attorneys fees against the defendant.  But it did grant in part the plaintiff's request for an injunction, finding that injunctive relief was appropriate, but the plaintiff's proposed injunction was overbroad.

Defendant Granted New Trial on Damages

Core Wireless Licensing S.a.r.l. v. LG Electronics, Inc. et al, 2:14cv911 (8/23/16) (Gilstrap, J.)

 

In March of this year a Marshall jury in Judge Rodney Gilstrap's court returned a verdict that the asserted claims were infringed and had not been proven by clear and convincing evidence to be invalid, and set damages at $3.5 million.

 

Yesterday Judge Gilstrap ruled on the pending motions for judgment as a matter of law.  He denied the defendant's motions as to infringement and invalidity, but granted the defendant's motion for a new trial on the issue of damages, enumerating issues with the plaintiff's damages expert's opinions that rendered the jury's verdict as to the amount of damages unsustainable.

Motion to Transfer to MD Fla. Granted

Intelligent Automation Design, LLC v. Zimmer Biomet Holdings, Inc., 5:16cv011 (E.D. Tex. 7/16/16) (Craven, J.)

 

This is a patent case involving solutions for stripped screws intended for use in human bone (probably not involving a giant pair of pliers, but you never know).  Judge Craven found that the Middle District of Florida was clearly more convenient, noting that the factor of cost of attendance for willing witnesses weighed heavily in favor of transfer.

Eastern District of Texas's Newest Corporate Citizen - The Dallas Cowboys Football Club

I am remiss for not posting that as of yesterday, the Eastern District has a new corporate citizen - the Dallas Cowboys, who as you may be able to tell, my family is somewhat partial to.

Yesterday the Cowboys cut the ribbon on their new $1.5 billion-ish world headquarters known as The Star in Frisco, Texas, moving from their prior headquarters in the Northern District of Texas.  The club started with offices and stadium in Dallas in 1960, then moved both stadium (1971)  and later offices (1985) west to Irving, then even further west to their current stadium in Arlington (2009) before deciding to head if not exactly behind the Pine Curtain at least in that direction this year for a new headquarters.  

The facility includes a 12,000 seat enclosed stadium known as the Ford Center that will be used by all eight Frisco high schools on Thursday and Friday nights.  Actually all eight will be playing each other this weekend, including Saturday to kick off their use of the new stadium.  (No clue how they'll determine who the home team is).  It will be the second-largest high school stadium in Collin County, behind Allen (18,000 seats), which is just down the tollway, although the Toyota Center, which also hosts Frisco high school games but built primarily for soccer, does hold 20,500.  The new stadium under construction in McKinney, just a tad further down the tollway is set to hold 12,000 as well. 

The facility is located in Collin County a few miles north of the federal courthouse in Plano.  You can drive by and see it while at this year's bench/bar in Plano in October - the hotel is even closer than the courthouse is.  I don't believe it is open for tours yet, but I understand it will be at some point.

Tyler Jury Returns Defense Verdict in Patent Case

A Tyler jury in Judge Rodney Gilstrap's court returned a noninfringement verdict in favor of defendant Friday afternoon in a case involving expandable interveterbral implants (I didn't check to see if Dr. Octavius was the inventor or just another piece of prior art).   There were three claims across two patents.

The case has a few interesting pretrial rulings by Magistrate Judge Mitchell which were subsequently adopted by Judge Gilstrap, including a grant of summary judgment as to the plaintiff's doctrine of equivalents claims on one of the patents, with a denial on the other, as well as the grant of a motion to exclude the plaintiff's damages expert's reliance on a prior settlement agreement and after that was excluded, on the jury verdict in the same litigation.  

I was also pleased to see something I was just talking about a couple of weeks ago in some brief remarks I prepared for some young lawyers with tips on motions in limine.  One of my suggestions was to have a set of disputed motions in limine, with an eye towards Judge Schroeder's rule that there be no more than ten whether you're before Judge Schroeder or not, as well as a set of agreed ones, since it's not a bad thing to have a court order backing up parties' agreements (trust me on this).  Judge Mitchell's order resolves the disputed ones, and then includes the agreed topics so everyone has a handy reference as to what's in and what's out.  

That's not just for us OCD types - I have been in trials where a lawyer who was brought in late in the game to try a case saw the court's rulings on the disputed motions, but blew right through an agreed one, probably because the only place it was memorialized was in correspondence or perhaps the pretrial conference (which the lawyer wasn't present for) transcript.  When questioned by the judge, the lawyer admitted as much, and the judge docked his client's time at trial fifteen minutes.  When you only have 11-13 hours a side (I can't remember what we had there, but it was probably 13 and this was halfway through the evidence) and time for each witness is carefully budgeted, that's a painful loss.  So including it in an order, as Judge Mitchell did, is a very helpful way to make sure that everyone is one the same page - literally.

Teachers Law School

Great to be in Texarkana at Teachers Law School sponsored by East Texas ABOTA today. We are streaming live to Marshall as well (a TLS first, but an important step for a rural chapter like ours) helping give school teachers tools to educate their students about the rule of law and the importance of our system of justice. Teachers will be hearing from over a dozen lawyers, professors and judges about these very important topics through the day, including two Federal judges. A lot of people talk about the lack of basic civics education for our young people. We are doing something about it.

Letter Briefing - sources for more information on the practice

Since the abolition of letter briefing in patent cases last week I have had a number of people ask for more information on the subject - where did it come from, how does it work, etc.?

Readers looking for information on the procedure should look first at the Patent Case Management Judicial Guide put out by the Federal Judicial Center in 2009.  It identifies as the "Recommended Approach" for streamlining the summary judgment process in patent cases "letter briefs followed by summary judgment motions," with another option being limiting the number of motions or number of pages of summary judgment briefing.  Pages 6-9 and 6-10 of the Guide set forth the pros and cons of the different approaches.  

Another data point is provided by the language in Judge Gilstrap's orders in pending cases this week in which he provides a brief explanation for the deletion, writing that "[a]fter carefully considering any gains in efficiency over the added steps needed to carry out [letter briefing], the Court has now determined that the Federal Rules of Civil Procedure and the Local Rules of this Court adequately streamline this process, and the Court elects to discontinue its prior letter briefing policy for summary judgment motions."  

Note that the EDTX local rules have included page limits for I think 12-14 years or so, and I would also note that some courts in the Eastern District have also used limits on numbers of motions as well. My experience with that "one motion absent leave" rule in patent cases is limited - but in my experience under that rule every SJ motion we filed ended up being granted.  For whatever that is worth.

Obviously different courts find different practices to work better for them, and as I posted last week, it's not uncommon for those practices to change over time.  Since my practice has apparently seen the last of letter briefing for now I'll leave the opining on the relative pros and cons of the practice to others.

I hope readers find this useful.

Elimination of Summary Judgment Letter Briefing Clarification - 101 Motions Were Exempted From Letter Briefing Last November, Not Last Week

Just saw an article "East Texas judge backs off restrictive “abstract” patent motion rules: Section 101 is a powerful tool for patent defendants, if they can get heard" on Ars Technica, which pointed out that "[l]ast year, the patent rules for Gilstrap's court held that defendants seeking to file a motion under Section 101 "may do so only upon a grant of leave from the Court after a showing of good cause, which shall be presented through the letter briefing process.""

Yes. Last year.  

Around the middle of last year Judge Gilstrap did briefly extend the then-in-effect letter briefing requirement for summary judgment motions in patent cases to motions raising 101 issues, but less than six months later, as I posted on November 11, he took all motions raising 101 issues - including summary judgment motions - out of letter briefing completely.  Perhaps coincidentally (or perhaps not) this was just a few weeks after he granted the lack of patentable subject matter motion in the 100-defendant 2015 tranche of eDekka cases, which had gone through normal - not letter briefing - channels. 

Last week's order eliminated letter briefing for all other summary judgment motions in patent cases. But the article's assertions that last week's change had anything to do with 101 motions is incorrect. 101 motions have been free range locally since last November.

Crafting Snappy Captions - Scott P. Stolley

One of the nice things about being active in bar work is that you get to meet really talented lawyers who are used to giving their time and talent back to the profession in the form of speaking or writing on topics that help all of us.

One example I met this year on the campaign trail is Dallas appellate lawyer Scott Stolley, who recently wrote an article for the Dallas Bar Association's Headnotes Crafting Snappy Captions (go to p. 14) that I thought did a good job not only encapsulating the things I wish I did more regularly when writing, but gave me numerous new ideas.

 There is advice on choices as far as type fonts and sizes - for example, did you know that letter recognition is easier if the letters vary in height?  I did not.  Or that "large and small caps" add dignity?  I always thought they did, but I thought it was just me and I was a little nervous to say it out loud.  And Scott and I agree that exotic fonts are an abomination because ... of course.

Scott also covers issue captions, factual captions and argument captions, which I just generally refer to as the bolded parts that break up long stretches of text when I get embarrassed at how much I've written.   But there are cool rules here too.  For example, always use regular letters (not caps), make it a sentence, and don't use initial caps because They Make Your Writing Appear Stilted.  Who knew?  And don't underline them because - again - it affects readability.  See what he means? I did not know this stuff.  

And here's a neat suggestion - the captions should "imply a benefit if the court keeps reading."  I don't think he means starting each caption with "Wherefore, premises considered" but that'd be a great benefit according to most judges I've talked to.  He also points out that good captions help make your table of contents look good and read even better, and some judges actually rely on the contents to get an overview of the brief.

When it comes to levels of captions, Scott hews to the Modified Garner school, suggesting bold Arabic with slightly enhanced font size, followed by capital letters in bold face, then parentheticized (which might be a word, but spell check says isn't) Arabic in bold italics, followed by small letters in parentheses.  If you go below that, Scott agrees with me that you've done something wrong.  He also suggests not using Roman numerals because they're "stuffy".  Ouch.

Finally, Scott provides some good advice on white space, including the way that different rules for text and caption over on the right side of the page can make the brief more readable.  This reminded me of something similar Alan Flusser has said about the way that the right combination of shirt, jacket and tie can be more than the sum of the individual parts, with empty space sometimes doing as much as pattern or texture to enhance the appearance.  

Scott's observation on the aesthetics of the brief teaches us something similar - that the tailoring of your brief - because that's what this is - can enhance its content, and white space plays the same important role on the page (or screen) that silence does when speaking.

All in all, a good article.  I highly recommend it.

"When the Horse Dies, Get Off" - Willful Infringement Finding Generates Enhancement and 285 Award of Fees

Few issues are of more interest to patent practitioners in the Eastern District these days than rulings on motions for attorneys fees under section 285.  Of course both prevailing plaintiffs and defendants can seek an award of fees under Section 285 if the statute's standards are met, as recently clarified by the Supreme Court in Octane Fitness.  And in cases where either side's positions are so weak as to make a fee award likely if the case runs its course, both might be well-advised to consider the old Cherokee proverb to the effect that when the horse dies, it's time to get off.

But as with most other areas of civil law, since approximately 94% of all cases filed are either settled or dismissed (voluntarily or involuntarily) only the small percentage of cases which result in a resolution on the merits either at trial or on summary judgment, or which resulted in a settlement which did not preclude the filing of a section 285 motion, can potentially generate a Rule 285 motion and decision.  Thus the size of the Eastern District's patent docket means that it is one of the few venues in the nation that has a sufficient number of cases to generate a relatively steady stream of rulings under Section 285.  This is helpful because when the same judge is ruling a motions under the same law, at least the variables are reduced to the facts of the operative cases, and not the judge's experience with patent litigation or subjective beliefs as to when a particular set of facts does or doesn't rise to the level of "exceptional case" - a decision the Supreme Court has recently held is subject to review only for abuse of discretion.  So it's very interesting to see when the same judge that has rejected a request for fees in one case finds that they are appropriate in another.

 

One of these situations was recently presented in Georgetown Rail Equipment Company v. Holland, L.P. in a case dealing with railroad track inspection technology.  This was a competitor case, and a rare instance of a patent case generating injunctive relief during the pendency of the case, as in early 2014, Judge Davis found that all the relevant factors supported entry of a preliminary injunction.  The case proceeded to trial in April 2015, and the Tyler jury found infringement, willful infringement, and assessed damages of $1,541,333, which was the exact amount the plaintiff sought.  Last month while I was on vacation Judge Schroeder ruled on the postverdict motions, including not just the usual JMOLs, but also motions for a permanent injunction and for fees under Section 285.

JMOL & Permanent Injunction

In a 54 page opinion, Judge Schroeder denied the defendant's request for JMOL on infringement, willful infringement and the plaintiff's lost profits damages model, finding that a reasonable jury could have found as it did on all three issues.  He also entered a permanent injunction against the defendant.  There was no JMOL on invalidity, as the Court noted that defendant dropped its invalidity case two days before trial

Willful Infringement

The Court also found the infringement to be willful, noting in its analysis of the objective prong of the test that the defendant's noninfringement defenses through trial were unreasonable, and that despite seeking an obtaining early claim construction and moving for summary judgment of noninfringement, none of its claim constructions were adopted (the order found them "self-contradictory"), and its motion was denied.  It further noted that the defendant's fallback position of divided infringement following claim construction was wrong as a matter of law, noting that it had denied summary  judgment on that ground as well as a request to file a third motion on similar grounds. The defendant then proceeded to argue divided infringement to the jury anyway as if this was a method claim, despite the charge to the jury submitting the case as a system claim.  

The defendant argued that the fact that the plaintiff did not move for summary judgment precluded a finding of willful infringement but the Court disagreed, noting that the plaintiff did not receive the source code until after the deadline to file letter briefs for summary judgment.  In light of this, the Court concluded that the plaintiff had produced clear and convincing evidence of willfulness.  The Court agreed that "simply because a defense to infringement proves to be unsuccessful does not make that defense unreasonable.  However, as has been demonstrated above, Holland continued to rely on arguments through trial that were substantially weak and rejected time and again."

Enhanced Damages

Analyzing the Read factors, the Court found that that some- the existence of "strong evidence of copying", no good faith belief of noninfringement, and an attempt to needlessly multiply proceedings and prolong the litigation (although no litigation misconduct) supported enhancement, and various other factors either slightly supported enhancement or were neutral.  With three factors supporting, three slightly supporting, and three neutral, the Court declined to enhance the $1.5 million award to $4.6 million, but did enhance it by $1 million for a total of $2,544,333.

Exceptional Case & Attorneys Fees Under 285

Judge Schroeder noted that a willfulness finding supports a finding of exceptional case, and also addressed specific "glaring examples" of litigation strategies by the defendant that multiplied the proceedings and needlessly increased costs.  As these are something readers may want to write down in ink, I have noted them below, with a facepalm reference because I just couldn't help myself.

• "Significant disparities" between a declaration and the witness' testimony at the preliminary injunction hearing.
• Producing source code it claimed made clear that the claim of infringement was sanctionable, then later challenging its authenticity.
• Continuing to asserted divided infringement of a method claim at trial after the Court ruled it was a system claim.
• Moving to strike plaintiff's expert's reliance on articles, website pages & other "irrelevant hearsay"  despite FRE 703, then following up with a limine motion and threats of sanctions on the same grounds after the motion to strike was denied.

"It should be noted that none of Holland’s actions, in isolation, was so egregious as to make this case exceptional," Judge Schroeder wrote. "Though unfortunate, there is nothing “exceptional” about a party resisting its discovery obligations, maintaining already rejected objections to exhibits or testimony into trial, filing weak Daubert requests, or even making repeated Rule 11 sanction threats. However, when a party does all of these things, and continues to raise rejected arguments that are found to be objectively unreasonable, the Court can only conclude the party needlessly multiplied the proceedings at the expense of the opposing side and the Court. This Order should not be read to condone a “kitchen sink” approach to a motion for fees—but in the rare case where the court and jury have found willful infringement and the accused infringer engaged in conduct that needlessly drew out resolution of the issues to the extent that is present here, the totality of the circumstances warrants the award of fees."

The plaintiff sought and the Court awarded $1,566,540.35 in fees, which the Court noted was below both the Texas average of $2 million and the national average of $2.1 million.  The defendant did not contest the reasonableness of the fees (although the Court noted that it did object to cost amounts as small as $1.76 which the plaintiff "easily substantiated").

The Court concluded with a brief observation after reviewing the defendant's reference to its Rule 68 offer of judgment where it offered to abide by a permanent injunction of its own terms and the plaintiff's explanation of why that offer was rejected.

Having agreed with the jury that Holland willfully infringed, the Court cannot from its current vantage look back over the litigation and determine precisely when Holland should have conceded to Georgetown’s demands or what the exact form of those demands should have been. Hindsight bias clouds a fair and accurate assessment. However, given the history between these two companies, the weakness of Holland’s litigation position, and the fact that the jury found willful infringement, the Court can say with confidence that Georgetown has not compromised its position by viewing the Offer of Judgment as too little, too late.

 

 

More Adventures in Grounds for Dismissal Under the December 1, 2015 FRCP Amendments

The conventional wisdom about lawyers is that we don't really pay attention to rule amendments, and to an embarrassing extent that is true.  A few weeks ago I saw a really fine lawyer making an argument based on language that had been deleted over 25 years ago.  Oops.  I just saw a filing this morning that reflected lack of awareness that the applicable local rule/standing order had been changed months ago.  Double oops.  

I took federal courts in my last quarter of law school the winter of 1990-1991, and I recall vividly my professor's promise that if we didn't know the December 1, 1990 amendments to the FRCPs - we would not pass the class.  That had the effect of meaning that I knew the fairly significant changes to subpoena range that were enacted that winter when it seemed no one else did, but more importantly, it got me in the habit of checking rule changes, and eventually of becoming the guy people called to ask about rules and how to use or work around rules.  It would be years before I found that that would be another one of those things about me - like considering organizing a source of entertainment - that just isn't normal.  Well, maybe this case will change that.

As I have posted previously, last December 1 was a red letter day for FRCPs (for those like me that are interested in that sort of thing).  Three of the most significant changes were:

1. elimination of the Forms, meaning that Form 18 was no longer the standard for sufficiency of allegations of patent infringement;
2. the time for dismissal for failure to serve (absent good cause) was shortened from 120 to 90 days; and
3. the standard for discovery was changed to require discovery to be "proportional" as well as relevant.  

As readers know, many patent cases were filed in the run-up to those changes under the questionable belief that cases filed before the changes wouldn't be subject to them.  I sometimes refer to those as "Thanksgiving specials" because I get asked - not infrequently - about the relative merit of those cases compared to other patent cases filed in the district.  They are, generally speaking, different, and here's another example how.

A few days ago I posted on the dismissal of patent plaintiff Ruby Sands' Thanksgiving specials as to certain defendants for failure to sufficiently allege its claims of direct and indirect infringement.  Today Judge Gilstrap dismissed another of Ruby Sands' cases filed on November 30 for failure to serve the defendant within 90 days or show good cause for its failure to serve.  I noted months ago that in another case filed just before the rule change Judge Gilstrap made clear that he was applying the amended version of the rules to service issues, but in that case found good cause to extend the date.  But in this case it wouldn't have mattered - the service was outside the 120 days as well.

I can't help but observe that from an organizational perspective, it would be really cool if another Ruby Sands case could generate a ruling as to whether certain discovery was "proportional" or not.  But given that the plaintiff has now voluntarily dismissed four other cases and I just saw yet another judicial dismissal of a Ruby Sands Thanksgiving special, this time for failure to respond to a motion to dismiss at all, I have a feeling none will be around long enough to generate one. 

"Hot But No Longer Boiling" - EDTX Patent case filings down almost half; new case allocation and procedures (no more letter briefing for SJ motions)

At the conclusion of the first quarter of this year I posted on the filing trends I was seeing in the Eastern District's patent cases.  In short, filings were down substantially, with the major portion of the decrease coming from bulk filers (the top three were down 94%).  Looking at statistics after the second quarter, the trend is continuing.  Although the Eastern District is seeing the same "bounce back" in filings as other districts in the nation, as discussed in this very good article by Gabe Friedman in Tuesday morning's Bloomberg Law, the filing rate is still down approximately 40% from last year.  (There is another article out today in Texas LawBook - East Texas Patent Litigation Still Hot But No Longer Boiling by Jeff Bounds that makes the same point, noting that filings are down almost half in the first six months of the year).

Gabe's interview with Lex Machina data analyst Brian Howard also provides a useful metric that confirms what I have been seeing, which is that the reduction in filings is coming from what he calls "high volume" plaintiffs, i.e. those which had filed more than ten suits the previous year, and not in other more traditional patent cases (which is supported by the fact that a substantial percentage of recent trials are in "competitor cases" and not cases filed by a non-practicing entity.  The chart below from the article compared high and low volume filings in recent years in Delaware and EDTX.  There are three observations that I think are worth making here:

• Bulk Filer Cases Down - note the downward trend  in recent quarters in the district's "bulk filer" filings following last fall and this spring's 101 grants and awards of attorneys fees under 285 in prominent bulk filer cases in the district.  
• Traditional Patent Case Filings Up - also worth noting is the steady increase in the non-bulk filer cases over the last year and a half, which does not have the dramatic up and down swings caused (presumably) by the federal rules changes and 101 and 285 rulings of the past year.  
• Fewer Bulk Filer Cases Than Traditional Cases- most notable of all is that the second quarter of 2016 marks the second consecutive quarter that "high volume/bulk filer" cases made up less than half of the patent filings in the EDTX.  

So what do you do when you have on average 100 fewer patent cases a month being filed?  Well, changes in filing trends and judicial capacity manifest themselves in a couple of ways on the ground - changes in judicial case assignments and in local procedures.

Case Assignments

The last time the district had a new case assignment order was in late 2014 just before the two most recent district judges came on board, providing the district with a full complement of eight district judges.  That lasted three months before the district lost one judge to senior status, then two months later another to retirement, and then at the beginning of this year to senior status about to mature into retirement, leaving the district with five active judges and two senior status accepting new cases - and three judicial vacancies of the eight judgeships assigned to the district.

For patent practitioners, the most notable effect of that 2014 assignment was that Judge Gilstrap and Judge Schroeder shared the Marshall, Texarkana and Tyler patent dockets, with  Judge Gilstrap having 80/20/30 and Judge Schroeder having 20/80/70, respectively.

Last week Chief Judge Clark issued a new case assignment general order which reflected the most recent senior status change in Tyler, where Judge Schneider's departure from active duty means that for the first time since at least 1947 (with the exception of the brief vacancy in 1968 after Judge Sheehy passed and was replaced by Judge Justice) Tyler has no active federal district judge.  Tyler's patent cases were already being covered by the judges from Marshall and Texarkana - the change is that Judge Schroeder will also plug the hole in the civil docket, and Chief Judge Clark will plug the hole in the criminal docket.  

Presumably the downtick in new patent filings as well as dropping his share of the Marshall docket from 20% to 5% gives Judge Schroeder the capacity to handle some additional Tyler work.  Judge Clark gets there by handing off the half of the Sherman civil docket he had to Judge Mazzant.  Judge Clark still has 35% of Beaumont and 100% of Lufkin.

Procedures

Like judicial assignments, local procedures change on a regular basis based on experience and the demands of a changing docket.  With the number of patent cases decreasing, and more going away sooner than scheduled for various reasons (101 dismissals, transfer, and getting Ruby Sand-ed come to mind) some of the more "emergency" procedures that local judges have adopted are going away as well.  

For example, several months ago Judge Gilstrap discontinued the use of letter briefing for 101 motions, and more recently the "in person" meet and confer requirement for discovery motions was removed from pending and newly-filed cases.  This week he issued new docket control orders for patent cases which also discontinued letter briefing for other types of summary judgment motions in patent cases, and replaced them with requirement for submission of paper copies (with some electronic requirements as well) in the court's preferred format.

 

 

Serial Litigant's Case(s) Dismissed For Failure to Adequately Plead Infringement

The senior lawyer at the first law firm I ever worked for was Franklin Jones, Sr., (always referred to as "Senior") who had a rule for the last young lawyer he hired (sometime around 1970) which was that nobody at his firm used forms. You prepared documents from scratch.  Now, that was a truism in those pre-word processing days, when regardless of the genesis of a document's language, it would be dictated by lawyers, but a recent opinion from the Eastern District underscores the importance of the careful use of form pleadings and other documents in our "cut-and-paste" world.  

The threshold issue in many patent infringement cases is whether the plaintiff's complaint adequately pleads direct infringement. In the wake of the December 1, 2015 amendments to the Federal Rules of Civil Procedure, the issue has changed from whether an allegation satisfies Form 18  to whether it satisfies the standards of Twombly/Iqbal.  But few cases have seen the facts - or the result - of Judge Gilstrap's recent opinion in  Ruby Sands v. American National Bank, et al.

To start off, Judge Gilstrap found that the amended complaint "plainly fails to state a claim for relief that is plausible on its face" in a case where the plaintiff made no factual allegations that "even remotely" suggested that the defendant "makes, uses, offers to sell, or sells mobile devices." In the face of these allegations, the Court concluded that it could not make a plausible inference of direct infringement based on the facts pleaded in the amended complaint. "Instead," it wrote, "the Court is left to wonder whether Ruby Sands performed a thorough pre– suit investigation, as required by the Federal Rules, to craft a plausible infringement theory before filing its complaint."  

Wait - it gets worse.  Much worse.  Can't get worse than "no plausible infringement theory" you say?  Just wait.

The Court went on to observe that language was included in the amended complaint "inadvertently" from a pleading directed to a different case, which was completely unrelated to the patent in suit. The court concluded that this was the type of "cut–and–paste pleading practices" that the rule was meant to address.

Repeatedly including phrases irreconcilable with the '633 patent not only renders Ruby Sands' indirect infringement allegations implausible, but it also alerts the Court to the lack of care with which Ruby Sands drafted and filed its pleadings. That Ruby Sands amended its complaint two months after filing suit and still failed to correct this error only magnifies such carelessness.  Unfortunately, this series of missteps amounts to more than mere inadvertence. This Court cannot fairly go so far as to reconcile such a glaring discrepancy with the Federal Rules' basic requirement that litigants must plead facts to plausibly support their claims for relief."

As a result, the Court dismissed the case with prejudice, without leave to replead. "This is a highly unusual case," the Court wrote, "which presents the court with a serial litigant who not only failed to plead plausible claims of direct infringement but also repeatedly filed (and failed to correct) pleadings containing indirect infringement allegations replete with extraneous language clearly lifted from some unrelated case."

 

WD Wash transfers patent case to ED Texas

No, I'm not dyslexic. One June 13 the WD Washington transferred a pending patent case to the Eastern District of Texas in Cray v. Raytheon, finding that the interests of justice required transfer due to previously filed and overlapping litigation was already pending before Judge Gilstrap and Judge Payne.