© 2015 The Texas Lawbook.
By Jeff Bounds
(Jan. 7) – Judges Rodney Gilstrap and Robert William “Trey” Schroeder III together were assigned nearly all of the 2,540 infringement cases filed in the Eastern District of Texas last year. More than three-quarters of that litigation came from plaintiffs that sue regularly.
Even by the Eastern District of Texas’s lofty standards as the patent lawsuit capital of America, its 2015 tallies on new infringement litigation are breathtaking.
The Tyler-based jurisdiction set at least three records last year, according to California data provider Lex Machina:
• Plaintiffs filed 2,540 patent suits in the Tyler-based district in 2015. That was nearly 70 percent higher than the previous record, when 1,495 suits were filed in the East Texas system in 2013.
• About 43.6 percent of the United States’ 5,830 patent suits were filed in East Texas. The most any district had previously registered was 28.1 percent – which the Eastern District set last year.
• District Judge Rodney Gilstrap handled nearly two-thirds of the Eastern District’s new patent lawsuits last year. By taking on 1,684 cases, the Marshall-based jurist – already the busiest patent judge in the country – shattered his own record by 70.4 percent for patent cases assigned in a year to one judge. He received 988 the year before, which broke his record from 2013 of 965, Lex Machina numbers show.
Those records date to the year 2000, when Lex Machina began keeping tabs on patent litigation.
Other 2015 numbers on the Eastern District’s patent caseload may not have broken records, but are eye-popping nonetheless.
One was the speed with which district judge Robert William “Trey” Schroeder III became one of the busiest patent judges in the country.
After starting his gig in Texarkana in December 2014, Schroeder last year took on some 835 patent cases, or nearly a third of those filed in the Eastern District in 2015, Lex Machina data shows. Including Gilstrap and Schroeder, the Eastern District has eight district judges and eight magistrate judges.
Schroeder and Gilstrap absorbing nearly all of the Eastern District’s new patent cases last year isn’t the only striking item in the Lex Machina data.
Nearly 77 percent of all new patent suits in the Eastern District last year came from what Lex Machina calls “high-volume plaintiffs,” meaning patent owners that have filed at least 10 cases per year.
All told, suits from high-volume plaintiffs in East Texas accounted for about one out of every three new patent cases in the United States in 2015.
Even veteran intellectual property litigators were taken aback by inventors’ rush last year to the East Texas courthouse.
“I’m not aware of a comparable phenomenon in the history of U.S. courts,” said Scott Breedlove, a Dallas-based partner in the intellectual property area at Vinson & Elkins. “These are really some powerful statistics.”
Why patent owners favor East Texas courts
The 2015 numbers are part of a multi-year trend of plaintiffs nationwide concentrating increasingly more of their patent suits in East Texas, said Thom Tarnay, a partner and leader of the intellectual property group in Sidley Austin’s Dallas office.
East Texas offers rules that streamline patent litigation, along with judges like Gilstrap who have wide-ranging seasoning in handling the peculiarities of those cases, he said.
“The local patent rules and experienced judges make for a predictable forum, which is a big deal in litigating a case,” he said. “The sheer number of cases that our judges handle lead to many court decisions covering almost every aspect of patent litigation. This makes for a predictable process.”
In addition, Eastern District judges are skilled at keeping patent cases moving – an attribute which some jurists elsewhere do not share.
“While cases in other districts drag on, the judges in East Texas force the parties to stick religiously to their case schedules, ensuring that cases will stay on track regardless one or many dozens of defendants are involved,” Tarnay said. “Other districts have not been as effective at maintaining schedules as caseloads increase. That factor steers plaintiffs away from those districts.”
Some rules help high-volume plaintiffs
Attorneys on both the plaintiff and defense side of the Texas patent bar agree that Eastern District judges and juries are viewed in some quarters as biased toward plaintiffs.
To be sure, some of the district’s patent case rules can be beneficial to plaintiffs, especially frequent case filers, many of which prefer to land quick settlements rather than spend money fighting in court, lawyers say.
East Texas rules, for instance, require both sides to produce all “relevant” documents during discovery.
“While this arguably simplified document production, it typically places greater burdens on larger defendants than the smaller patent plaintiffs,” said Alexander Gasser, senior counsel at Skiermont Derby in Dallas.
The result, lawyers say, is that large corporate defendants in East Texas can face pricey legal bills for handling discovery – which can push those companies to settle the cases as a cost-saving measure.
Also working in favor of frequent plaintiffs, lawyers say, are procedural rules in East Texas that also require patent parties to receive a judge’s permission before filing motions for summary judgment.
Even if a judge nixes a summary judgment motion, fighting the other side’s request can consume a significant amount of lawyers’ time – and thus drive up costs for small plaintiffs, attorneys say.
East Texas’ requirements for judicial permission to file summary judgment motions “increase the likelihood of a settlement or trial, although the time to trial in the district is increasing,” Gasser said.
But no evidence of pro-plaintiff bias
Eastern District judges have also proven more reluctant than their peers in other jurisdictions to throw out plaintiffs’ patents on software-related inventions on the theory that the inventions cover abstract ideas that aren’t eligible for patent protection, attorneys said.
A pair of 2014 rulings from the U.S. Supreme Court has fueled a rise nationwide in requests from litigation defendants to invalidate patents on those grounds, lawyers say.
Nonetheless, IP litigators from both the plaintiff and defense bars say they do not perceive pro-plaintiff bias in either the judges or juries in East Texas.
In September of last year, for instance, Judge Gilstrap dismissed via summary judgment some 168 patent cases filed by a business called eDekka, noted Kelly Kubasta, a shareholder at Plano’s Ferguson, Braswell & Fraser.
“This represented nearly 10 percent of (Gilstrap’s) patent docket,” Kubasta said.
Gilstrap also tossed out – on abstract-idea grounds – a patent over which eDekka had sued at least 219 defendants, court records show.
Those defendants were primarily online retailers that offer a shopping cart feature on their e-commerce web sites, court papers say. State records list a Plano address for eDekka, which in October appealed Gilstrap’s order.
In addition, Kubasta noted, Gilstrap in December granted a consolidated request from the eDekka defendants for attorneys’ fees in the case.
Beyond the eDekka case, the Eastern District has also seen a large number of defense verdicts in patent cases recently, according to Brett Govett, a Dallas-based partner at Norton Rose Fulbright.
In November of last year, for example, an East Texas jury ruled that electronics giant Apple had not infringed five patents owned by ContentGuard, a Plano-based technology firm in which Time Warner has a stake.
The Asia-based electronics firm Samsung has also landed an East Texas win against ContentGuard, Govett noted.
Govett spearheaded a defense win of his own in November, leading a team of lawyers that secured a take-nothing verdict in Marshall for Indiana’s Reflectix Inc. The plaintiff in that case, Promethean Insulation Technology, had sought $4.4 million, an amount that could have been tripled if the jury had found that Reflectix had willfully infringed on Promethean’s intellectual property.
“The Eastern District has a proven track record of efficiently disposing of patent cases, saving time and money for all parties,” he said.
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