There is a new leader in the number of
patent suits filed in district courts.
According to E. Leon Carter and Daniel E. Venglarik of the Dallas, Texas-based law
firm of Munck Butrus Carter, P.C., in 2006,
the Eastern District of Texas passed the
Northern District of California in number of
patent suits filed; in 2007 the Eastern
District of Texas surpassed the Central
District of California to become the top
patent venue in the country.
As a result, some Northern California
companies have found themselves in patent
disputes in the unfamiliar environs of
Marshall, Tyler or Texarkana, Texas —
which can sometimes be a disconcerting
twist. However, recent trends reveal that the
negative view of some of the Eastern
District and its handling of patent cases is
unwarranted.
Smart Business spoke to Carter and
Venglarik about the significance of how
patent cases are shaping up in the Eastern
District of Texas.
Who’s filing patent cases in the Eastern
District of Texas?
Although criticized as a ‘patent troll’ haven
in 2007, the Eastern District of Texas has continued to see patent cases brought by a variety of domestic and foreign tech companies,
such as Motorola, Sharp, Fujitsu/Hitachi, LG
Electronics and Hewlett-Packard, to name
a few.
Other patent infringement plaintiffs during
that time include medical device and pharmaceutical companies, such as Medtronic
and Aventis, energy sector companies, such
as Weatherford and Halliburton, defense
contractors, such as Raytheon, universities,
such as CalTech, and ‘niche market’ enterprises, like Callaway Golf and Reebok. Even
the harshest critics acknowledge that about
60 percent of recently filed Eastern District
of Texas patent suits were not brought by
so-called trolls.
A predictable process governed by local
patent rules [modeled after those pioneered
in the Northern District of California], experienced patent jurists and comparatively
fast disposition times continue to attract all
types of enterprises seeking to enforce their
patent rights.
Do patent cases ever get transferred out of
the Eastern District of Texas once filed there?
Venue is an issue that is not unique to
patent cases, and is therefore controlled by
the regional circuit — the Fifth Circuit, for
the Eastern District of Texas — rather than
by the specialized patent appeals court in
Washington, the Federal Circuit. Recently,
the Fifth Circuit overruled an Eastern
District of Texas venue order in a products
liability matter, stating in essence that the
plaintiff’s choice of venue is not controlling.
Rehearing of that decision has been requested, and a subsequent venue order in an
Eastern District of Texas patent case suggests that patent venue will not necessarily
be decided in the same manner as general
venue due to factors such as the existence
of local patent rules and fast disposition
times. Nonetheless, the Fifth Circuit’s decision has the potential to improve the odds of
removing a patent dispute from the Eastern
District of Texas for Northern California
companies in particular, since the Northern
District of California has similar local patent
rules and disposition times.
What else can be done to get patent cases
out of the Eastern District of Texas?
Another mechanism for effectively changing forum in a patent dispute is to request reexamination of the asserted patent(s) at the
USPTO, and then request a stay of the district court proceeding until that re-examination is concluded. Unlike other top patent
venues, this tactic had little success in the
Eastern District of Texas — until recently.
Several Eastern District of Texas decisions
in the past year granted stays for pending reexaminations.
Who’s winning patent cases in the Eastern
District of Texas?
Out of nine Eastern District of Texas
patent jury trials in 2007, the patent owner at
least partially prevailed on both infringement and validity in only four cases, one of
which was subsequently overturned by the
judge. That overall win rate of 33 percent is
about half the national average. Factor in
bench trials and summary judgments in
favor of the defendants and the Eastern
District of Texas has become, as one commentator states, ‘demonstrably where bad
patent cases go to die.’
How long do patent cases last in the Eastern
District of Texas?
The Eastern District of Texas’s fast and
firm trial settings — which can save both
sides as much as $1 million in litigation
costs — continue but are slipping slightly
due to increasing volume. Trials in 2007
were of cases that had been pending about
16 to 20 months. Looking forward via recent
scheduling orders, however, trial settings
are generally at about 20 to 24 months.
How often is the Eastern District of Texas
‘getting it right’?
While the ‘right’ outcome always depends
on one’s perspective, rates of reversal on
appeal are telling. In 2007, the Eastern
District of Texas continued its seven-year
streak of extremely low reversal rates on
judgments, discovery orders and claim constructions. The two judges that handle
more than half of the Eastern District of
Texas patent cases were never reversed in
2007.
LEON CARTER is a trial attorney and DAN VENGLARIK is a patent attorney with Munck Butrus Carter, P.C., each practicing in the
firm’s Dallas and Marshall, Texas, offices. Reach them at [email protected] and [email protected], respectively.