The voluminous filings of patent cases in the U.S. District Court for the Eastern District of Texas in Marshall has slowed the “rocket docket” that Judge T. John Ward launched in early 2001 by promulgating rules meant to expedite the disposition of patent infringement suits.
Jeffrey Plies, an intellectual property litigation associate with Dechert in Austin, says the Eastern District has become a victim of its own popularity.
“It’s attracting a lot of patent cases, but that’s meant it’s drowning in its own success,” Plies says.
Plies says Dechert filed a patentee’s suit in the Marshall Division on Dec. 31, 2007. At a July 29 status conference, Ward set the case for trial on June 6, 2011, he says.
It wasn’t an isolated case. U.S. Magistrate Judge Chad Everingham of Marshall says he and Ward held July 29 status conferences for about 30 cases, the bulk of which were filed in the latter half of 2007. Trial settings for those cases are in the summer of 2011, Everingham says.
Everingham says his best guess is that cases being filed now will be set for trial in late 2011 or early 2012.
Appointed to the federal bench in 1999 by then-President Bill Clinton, Ward adopted rules for his court in early 2001 to speed up the handling of patent cases. Ward says the rules he adopted are a modified version of the patent rules used by federal courts in the Northern District of California. In 2005, the other judges in the Eastern District – which includes courts in Beaumont, Lufkin, Marshall, Sherman and Texarkana – adopted those rules districtwide.
Ward attributes the current long delay between the time patent suits are filed and the time they go to trial to the large number of case filings.
“There are just so many cases, I can’t handle them all,” Ward says.
The Eastern District of Texas had the highest number of patent suits filed in the United States in the last fiscal year, which ended Sept. 30, 2007. According to statistics provided by Dave Maland, clerk of the court for the Eastern District, plaintiffs filed 358 cases in the district last year, compared to the 334 filed in the Central District of California in Los Angeles, the runner-up, for the same period.
“The numerosity cropped up in Marshall particularly,” Maland says. His statistical charts show 232 patent cases were filed in the Marshall Division in the last calendar year, compared to 79 in Tyler, the division with the second highest number of filings in 2007.
Everingham, who served as Ward’s law clerk before he became a U.S. magistrate judge in April 2007, says that in 2002 and 2003, the Marshall Division set cases for trial within 13 to 15 months after the suits were filed.
As noted on Maland’s statistical charts, patentees filed 31 cases in the Marshall Division in 2003. The number of filings in Marshall has climbed steadily since then, with 69 in 2004, 103 in 2005 and 134 in 2006.
Ward says Everingham has helped with the patent caseload and is trying cases in which parties on both sides have given their consent. “It helps a lot,” Ward says.
Everingham says he has tried four patent suits, including one that settled during trial, since taking the bench.
Maland says the number of patent case filings in Marshall is down slightly this year. During the 12-month period ending Aug. 11, the Marshall Division had 229 cases filed, Maland’s charts show. During the same 12-month period, the Tyler Division had 70 patent case filings; the Lufkin and Texarkana Divisions had 20 filings each; the Sherman Division had eight and Beaumont had three, according to the charts.
However, U.S. District Judge Leonard Davis of Tyler says he currently has about 100 patent suits pending and has not encountered difficulties in managing that caseload. Davis estimates that, in most instances, the patent cases in his court are going to trial within 24 to 30 months after they are filed.
“Our rocket is still flying high,” Davis says.
Ted D. Lee, immediate past chairman of the State Bar of Texas Intellectual Property Section and a shareholder in San Antonio’s Gunn & Lee, says the docket in Ward’s court is so clogged, because so many patentees file suit there based on the perception that the Eastern District is pro-patentee.
“The perception of the people who are getting sued is that the playing field is not level,” says Lee, who usually represents defendants in patent cases filed in the Eastern District.
Lee says it’s almost impossible for a defendant to get a motion for change of venue granted, because Ward places such emphasis on a plaintiff’s choice of forum.
Ward says, “I try to follow the law as I understand it.”
Patent litigator Doug Cawley, a shareholder in McKool Smith in Dallas, says the U.S. Congress has tried in its last three sessions to pass legislation that included provisions to limit forum-shopping by plaintiffs. Cawley, who follows such legislation, says the House passed H.R. 1908 in September 2007 but the Senate could not come up with a bill that would pass in that chamber.
Michael C. Smith, who also monitors patent legislation, says U.S. Sen. Patrick Leahy, D-Vt., abandoned the Senate’s version of the bill, S. 1145, in April after determining that he did not have enough votes to win passage.
“The legislation doesn’t appear to be going anywhere in this Congress,” says Smith, a partner in Siebman, Reynolds, Burg, Phillips & Smith in Marshall.
Cawley says he believes such legislation is unnecessary because of the length of time it takes to move cases to trial in the Marshall Division, combined with the fact that defendants are having good experiences with judges and juries in the Eastern District.
Several patent attorneys attribute the slowdown in the rocket docket to the combination of increased filings and the requirement that courts hold hearings in patent suits to interpret the claims in patents. In 1996′s Markman, et al. v. Westview Instruments Inc., et al., a unanimous U.S. Supreme Court affirmed the Federal U.S. Circuit Court of Appeals’ decision that the construction of a patent, including terms of art within the patent claim, is an issue of law to be decided by a judge, not a jury.
Patent attorney Joseph Grinstein, a partner in Susman Godfrey in Houston, says if the number of personal-injury cases filed in the Eastern District matched the number of patent suits filed there, the personal-injury cases would go to trial quickly. But in patent cases, he says, the judge must conduct a Markman hearing before trial.
“The claim construction process really slows things down,” says Grinstein, who represents plaintiffs in patent litigation.
Everingham says it usually takes him about three hours to conduct a Markman hearing but that he must do a substantial amount of preparation before the hearing. Following the hearing, Everingham says, he must write and issue a memorandum opinion, which can take anywhere from a few days to about 90 days, depending on the complexity of the case.
Smith, who represents plaintiffs and defendants, says the Eastern District judges who hear patent cases are able to do only between 65 and 75 Markman hearings a year – substantially fewer than the number of suits filed annually.
“No one seems to want to settle until after the Markman hearing,” he says.
Smith, who monitors the Eastern District’s patent docket for his Web log, www.EDTexblog.com, says that since Jan. 1, nine patent cases have gone to trial in the Eastern District – four each in Marshall and Lufkin and one in Sherman.
A delay in getting a patent suit to trial hurts the patentee, Smith says. “If you think the defendant is manufacturing a product that infringes on your patent, until you get the case to trial, you can’t collect royalties for the use of your patent,” he says. “It’s a huge benefit to defendants.”
Steven R. Daniels, a partner in Dechert’s Austin office, who represents plaintiffs and defendants in patent litigation, says the longer it takes to get a case to trial, the longer the defendant has to build a defense.
If it takes from three to four years to get to trial, the defendant has time to challenge the validity of the patent, Daniels says. Such challenges involve asking the U.S. Patent and Trademark Office to re-examine the patent.
“It takes about two years from the time the office grants a petition for a re-examination to make a final determination,” Daniels says.
But Daniels says that having a lengthy period between the filing of a patent case and the trial raises the costs for the patentee and the defendant.
The costs for patent litigation are high, even without delays. In 2007, the median cost of a patent suit in which less than $1 million was at risk was $350,000 through discovery and $600,000 if the suit went through a trial, according to the American Intellectual Property Lawyers Association 2007 member survey. When more than $25 million was at risk, the median cost was about $3 million if the suit concluded after discovery and about $5 million through trial, the AIPLA reported.
Despite the length of time it takes to get a patent case to trial in Marshall, Grinstein still thinks the Eastern District is “a great venue,” because the judges there are experts on patent matters, and there is a pool of experienced patent lawyers available to serve as local counsel. “It’s hard to say to a client, ‘You ought to go elsewhere,’ ” Grinstein says.
Smith says he has found that some patentees prefer to file their suits in Marshall. “Generally, I assume they’re going to want to go to one of the quicker venues,” he says. “But to my surprise, they prefer to go to Marshall, where the judges have the expertise.”