In another standing order just issued, Judges Gilstrap and Schroeder have adopted an order eliminating the "in person" meet and confer requirement for discovery motions contained in existing discovery orders. The new order replaces it with the following:
The commentary to the rules notes the unintended problems in the current "in person" requirement, including cost, delay, and potential use as a tool to delay discovery disputes. In addition, the requirement that lead and local be present has been manipulated by designating someone who is not in fact lead counsel as lead, or co-lead, or "lead for discovery/meet and confer purposes", frustrating the intent of the rule.
The commentary notes alternative procedures used in Tyler and in the Northern District of California, and explains the rationale behind the new procedures, including the new requirement that during the pre-hearing meet and confer, only lead and local counsel participate. This limitation on participants is explained in blunt language - it "avoids the sort of one-upmanship sometimes exhibited by junior attorneys seeking to impress their superiors at the expense of efficient dispute resolutions." (I know, I know, where would they get that idea, right?)
Finally the order addresses "questionable lead attorney designations" by requiring only one be designated, and changes be made by motion and order.
An important issue to many practitioners whose clients have confidential or trade secret information is the ability to protect that information from public disclosure. Several weeks ago Congress enhanced the protections available for trade secrets by passing the Defendant Trade Secrets Act. But when confidential information, including trade secrets, becomes an issue in court proceedings, the parties and the court have to balance the owners' interest in protecting that confidential information against the public's interest in open trials - an example being Judge Craven's recent opinion in favor of an intervenor that I posted on a couple of weeks ago.
Relevant to that second issue is a new standing order entered Wednesday by U.S. District Judges Rodney Gilstrap and Trey Schroeder and applicable to their shares of the Marshall, Texarkana, and Tyler dockets, which encompasses most of the patent cases filed in the district. The order addresses the protection of confidential information to be presented to the Court during motion and trial practice, and provides a consistent and uniform practice for minimizing disruption during such practice. It provides:
The order applies to all pending cases as well as cases which may be assigned to the judges in the future.
Accompanying the order is a useful commentary that sets forth the basis for the Court's reference to a "strong presumption in favor of public access to judicial proceedings," including citations to the U.S. Supreme Court, and the Fifth and Federal Circuits. "The U.S. Supreme Court has emphasized the societal importance of open trials," the Court notes, "writing that they 'assure the public that procedural rights are respected, and that justice is afforded equally' and cautioning that closed trials 'breed suspicion of prejudice and arbitrariness, which in turn spawns disrespect for law.' See Richmond Newspapers, Inc. v. Virginia, 448 U.S. 555, 595 (1980)."
The commentary recites the history of redaction rules locally, focusing on the 2008 enactment of CV-5.2, and the resulting influx of post-hearing requests to redact or "seal" confidential information other than the personal identifiers set out in Fed. R. Civ. P. 5.2. It then states that the new rule "is based upon and codifies the existing case law which balances the interests of parties seeking to protect confidential information against the strong presumption in favor of a common law right of public access to court proceedings noted above," and that it does so by providing guidance as to when such requests should be made, and what standards apply to such requests.
1. When Should the Request Be Made?
The standing order makes clear that requests to seal or otherwise protect information from public disclosure during a hearing or trial should be made before the public disclosure of the information. This avoids the current problem it identifies of parties "mistakenly assuming that redaction and sealing requests can be made after the fact, as is the case for requests to redact information referenced in Fed. R. Civ. P. 5.2(a)." This timing also gives parties the maximum opportunity to work out sealing and redaction issues by agreement, using alternative means of presentation (redactions of numbers or dollar amounts or party names, or restrictions on use of information on slides are some common methods).
Requests to seal or protect information after its public disclosure at a hearing or trial are not prohibited under the order, but must, in addition to the normal requirements, show "good cause" why the motion was not made in advance of the disclosure. "Failing a clear showing of good cause," the commentary states, "such requests should be denied."
2. What Are the Standards for Sealing/Redaction?
The standards for sealing and redaction are well-established, as noted above, and the above standing order makes no substantive change to them, but instead simply brings them to the parties' attention. Again, the latter requirement gives the parties and the Court the ability to utilize alternative methods of presentation to avoid unnecessary sealing of the courtroom, and redactions to the transcript, as well as opportunities to minimize the inherent courtroom disruptions that the sealing process includes.
For new readers the Hub is the historic (1897-2001) shoe store building that houses my law firm on East Austin Street in Marshall. Since 1897 it has had an oversized wagon wheel hub on the post out front, which we carefully maintain in recognition of the store's history, as memorialized on the historic marker on the front of the building.
I was out of the office yesterday in Dallas cochairing the planning meeting for the 2016 Annual IP Law Conference by the Institute of Law and Technology (about which I'll post more on presently) when my ace paralegal Charla Foster (who is allergic to bees) called in the local beekeepers to handle a little issue we apparently had with a bee hive in the front wall of our law office.
This morning's Marshall News Messenger had the story on the front page, with action shots of the Marshall Beekeepers Association (which I'll note is not a small group - it's a significant local industry). It chronicles how Charla got in touch with the association thanks to the local ag extension office and (truth be told) Facebook, and tells the story of how the hive was located and the honeycomb extracted (by beekepers from among others Always Misbeehaven Farms (which ought to tell you that my puns could be far, far worse)) and moved to the beekeepers' farm where it will join other hives making honey which is then harvested for sale.
I can't promise that no bees were harmed during the writing of this post, but they saved every one they could.
Yes, we live in interesting times.
Dr. Joel Gregory, Professor of Preaching at Baylor University’s George W. Truett Seminary , will be the speaker at the annual spring meeting of the Davidson Foundation held at the Josephine Davidson Memorial Chapel in the pine-clad woods near Harleton, a part of one of the most unique events in Harrison County. This event begins at 11a.m. on Saturday, May 21, 2016 and following Dr. Gregory’s appearance, all those in attendance are invited to remain and enjoy a complimentary catered lunch on the chapel grounds.
Joel C. Gregory holds a BA summa cum laude from Baylor University, a Master of Divinity Degree from Southwestern Baptist Theological Seminary and a Ph.D from Baylor University. After serving churches throughout Texas (including as Pastor of the First Baptist Church, Dallas and as Pastor of the Travis Avenue Baptist Church in Fort Worth—two of the Denomination’s largest and most prestigious churches), he joined the faculty at Truett Seminary as Professor of Preaching and Evangelism where he now serves. He has twice served as President of the Baptist General Convention of Texas. Joel and is wife Joanne are the proud parents of four adult daughters. Having celebrated his 50th year of preaching and having preached at locations around the globe (last year he spoke or taught 170 times in 32 churches and 20 conferences in 18 different states) he is a man whose renown homiletic skills will be both inviting and compelling. The public is urged to attend.
Judge Payne recently granted a motion to transfer a patent case originally brought against eleven defendants (four appear to have been dismissed) including Google from Marshall to the Northern District of California. The motion was by Google, and the other defendants joined in it. Following a May 3 evidentiary hearing, Judge Payne issued a short order which noted that that "Defendants presented evidence at the hearing that the majority of party and third-party witnesses who have knowledge of the accused features are located in the Northern District of California. Plaintiff did not present meaningful countervailing or rebuttal evidence."
I recently posted on a local case where the Electronic Frontier Foundation (EFF) had been granted leave to intervene in a pending case to challenge the filing of certain document under seal.
Yesterday Judge Caroline Craven granted EFF's motion to unseal court records, and in doing so provided an overview of the law governing the sealing of court records. "[C]ourts have recognized '[t]here is a strong presumption in favor of a common law right of public access to court proceedings.' The presumption must not be dismissed lightly given the dangers that come from
restrictions on public access.'" (Internal citations omitted).
The Court went on to note that in the Fifth Circuit, it is an abuse of discretion for a district court to seal documents without first determining whether the rationale for sealing justifies depriving the public access, and that the presumption of public access applies to judicial records, including court decisions and filings on which those decisions rest. "Even if a party may legitimately claim confidentiality in some information contained in a court filing," Judge Craven wrote, "that does not justify completely sealing that entry from public scrutiny. Even with documents implicating the most sensitive national security concerns, '[i]t is difficult to conceive any circumstance under which permanent sealing of the entire file, including the order itself, could ever be justified. . . . Legitimate confidentiality interests will almost always be fully accommodated by redacting the troublesome words or passages.'” (Again, internal citations omitted).
Heading over to the Federal Circuit to have a look-see at its standards on this issue, Judge Craven noted that it, too, has cautioned against excessive sealing practices—for example, of a party’s legal arguments—that “bespeak an improper casual approach to confidentiality markings that ignores the requirements of public access, deprives the public of necessary information, and hampers [a] court’s consideration and opinion writing.” (Again, well, you get the picture about internal citations. But love the use of "bespeak" w/2 of "improper casual").
After reviewing the applicable law, the Court gave the parties 14 days to file redacted copies of certain filings, specifically the summary judgment briefing, briefing on a motion to strike, and three reports and recommendations, with particularized showings required regarding any portions that it seeks to seal. It chose this procedure over EFF's proposed procedure that would have required the parties to file motions for protective order, noting that the burden was still on the party seeking to protect the information to both file a redacted version, and to make a showing as to anything sought to be redacted, and that the proposed procedure would prolong the issue. It specifically noted that "[t]he Court favors unsealing all of the Court’s Reports and Recommendations and the objections/responses thereto," but that before doing so, it would allow the parties to address whether there were any limited portions that contain confidential information.
Finally, the Court considered the plaintiff's argument the Court should deny access because the documents may be used for improper purposes, such as embarrassment and harassment or to reveal sensitive business information. Plaintiff noted that EFF has said bad things about it, and claimed that EFF is promoting the agenda of one of its contributors, Google. The Court disagreed that this required sealing. "EFF is a public interest organization," the Court wrote, "actively involved in the patent reform debate. EFF relies on publicly available documents, including court filings, to inform the public about the debate and to report on abusive patent litigation tactics. EFF acknowledges it has written about Blue Spike’s allegations of infringement in the past and argues it has a continuing interest in understanding Blue Spike’s claims." Noting that the power to seal must be used sparingly, the Court concluded that the asserted confidentiality right had not been shown to overcome the "strong competing right in public access."
I mentioned the other day that my "unscientific guess" was that on average, locally one 101 dismissal generates about half a dozen dismissed cases. Well, it's a little more than that, at least in some cases. Yesterday Judge Schroeder affirmed a report and recommendation recommending dismissal on 101 grounds by Magistrate Judge Love. The report was objected to by the plaintiff and supported by the remaining eight (8) defendants, out of the original 54 or so that the plaintiff had sued.
Judge Schroeder rejected the argument that Judge Love should have converted the motion to a summary judgment motion and considered a proffered expert declaration, noting a subsequent Federal Circuit case that held that "[t]he mere existence in the record of dueling expert testimony does not necessarily raise a genuine issue of material fact." Judge Schroeder also affirmed Judge Love's finding that the patent was directed to an abstract idea, and that it didn't contain an inventive concept that transformed the nature of the claims into patent-eligible subject matter.
Killing Four Birds With One Stone - Earlier this week, Judge Bryson, sitting by designation in the Eastern District of Texas, granted four motions to dismiss under Section 101 in a medical records system patent case, ordering the claims against the four defendants dismissed. That puts it pretty far back in the pack as far as numbers of defendants dismissed on 101 grounds granted locally - eDekka dismissed as to 24 or so defendants, Rothschild, Loyalty and Telinit I think dismissed in the high single digits.
Keep in mind that while a decision granting or denying may just be entered in one case, when multiple infringement cases are brought asserting the same claims, i.e. "bulk filer" cases, the ruling is dispositive of the issue in all cases which involve the same claims. Thus, for example, Judge Bryson's ruling in one case dismissed four cases, and Judge Gilstrap's in eDekka in one case dismissed over two dozen. So the numbers of orders and the number of cases dismissed as a result of those orders are not the same - and in courts where "bulk filers" are active, they aren't even close. My unscientific guess is that on average, locally one order generates about half a dozen dismissed cases. There are a few one-defendant orders, but generally there seem to be two or three defendants that benefit from a 101 grant.
Do You Want the Good News or the Bad News? - Meanwhile, back in DC Judge Bryson's colleagues just reversed a district court's grant under 101 in Enfish v. Microsoft, finding that the claims weren't directed to an abstract idea, but then affirmed the district court's summary judgment of noninfringement. This marks only the second time in the past 18 months - the first being DDR Holdings, that the court has affirmed a patent in the face of a 101 challenge - and the first in which the Federal Circuit has reversed a grant of summary judgment on 101 grounds. DDR was a denial of the motion (although as Alice came out after the district court ruling but before the CAFC ruling - at least that's my recollection - the procedural context wasn't as significant.
Each year sees trends in filings and cases, and 2016 thus far is no different. As I've posted recently, while the biggest trend is the dramatic fall-off in "bulk filer" patent infringement cases, with last year's top three filers off over 90% in the first quarter of 2016, resulting in an overall decrease in filings of around half, there is a second one of interest, which is an uptick in "competitor cases" at trial.
By "competitor cases" I mean a plaintiff that makes products that practice its patents and is accusing a competitor who is making a competing product of infringement. Before this week, four of the district's ten patent verdicts were in competitor cases, and last week saw a fifth tried in Judge Schroeder's court. The cases themselves are not new - they are filed by the dozens (even hundreds) each year, but they don't reach trial with the frequency they have lately.
This past Friday a Tyler jury in Mars Petcare US v. True Science Holdings LLC found the plaintiff, manufacturer of Greenies breath-freshening treats for dogs, accusing the defendant, manufacturer of the competing Minties treats of infringement. The jury found that the accused dog treats didn't infringe - and invalidated the asserted claims (shades of the recent trial in Marshall where the jury found neither sides' products were infringed, and all of the asserted claims were invalid).
Interestingly, the Eastern District hasn't been the only place where these companies have, uh, dueled. True Science filed a dec action seeking a judgment of noninfringement of four Mars patents last week (this time on cat treats) in the Eastern District of Virginia after a Utah court dismissed a similar dec action last year for lack of subject matter jurisdiction. And there is another case pending in Tennessee on patents dealing with pet food for arthritic animals.
President Obama just signed into law S. 1890 - Defend Trade Secrets Act of 2016 authored by Sens. Orrin Hatch and Chris Coons with numerous cosponsors. The legislation enjoyed massive bipartisan support, passing the House 410-2 and the Senate 87-0.
As recently as two years ago, Texas practitioners had only common law to look to when it came to trade secret misappropriation. In 2013, the Texas Legislature passed the Texas Uniform Trade Secrets Act (TUTSA), which included significant parts of the Uniform Trade Secrets Act (UTSA). The new DTSA creates a private cause of action for trade secret misappropriation that can be brought in federal courts by amending the Economic Espionage Act (EEA) to, among other things, incorporate some of the concepts in the UTSA.
Dennis Crouch has created a mark-up (with commentary) of the new law that shows the DTSA as amendments to the Economic Espionage Act (EEA), along with links to his numerous posts on the Act here at Patently-O.com. Peter J. Toren also has a useful article on the Act here at IPWatchdog.com.
The DTSA has been described as the most important IP legislation to be enacted in quite some time, as it creates a fourth form of federally protected intellectual property, with trade secrets joining patents, copyright and trademark as IP the taking of which can be heard in federal court. While the DTSA's definition of misappropriation isn't new to those that spend their evening curled up with a glass of wine and a dog-eared copy of the UTSA, its definition of what constitutes a "trade secret" is somewhat broader than state law. If that novel development isn't enough to get your blood going, it provides for ex parte seizures of misappropriated trade secrets (didn't see that coming, did you?) and has protections for whistle blowers, i.e. disclosures to government officials or attorneys to report a violation of law.
Due to State Bar campaigning rules I haven't been able to say anything about this on the weblog before now - all activity has to be on dedicated campaign internet and social media websites - but back in December my friend Tom Vick and I were selected by the State Bar Board of Directors' nominations and elections committee to serve as the two candidates for president-elect of the State Bar of Texas for 2016. We were officially nominated by the full board on January 21.
Our selection kicked off a 4 1/2 month whirlwind of activity preparing for the March campaign period (president-elect candidates can't campaign outside the office before March and can't campaign at all after March). Voting started April 1 and ended today at 5.
You hear that Texas is a big state, but you have no idea what that means until you try to cover the entire state in one month using only a pickup truck, the occasional flight out of Dallas or Houston, and the all-important brochure.
A word about the brochure.
The State Bar reimburses travel expenses up to a certain point for candidates, you cannot create any other campaign materials or take out ads - all you can do is hand out copies of a preapproved brochure that are a standard size. We design it and send it in for approval, and the Bar prints 10,000 gratis for us to use in the campaign, and mails copies of both candidates' brochures to all 100,000 Texas lawyers with their ballots. So the brochure is a big deal - you list your experience, honors and activities but because at this level all of that is assumed, you spend most of your space saying who you are and why you would do a good job as president-elect.
The pdf is attached here - Download Michael Smith for SBOT PE brochure - and the individual pages are reproduced here as jpgs. By far, the favorite picture was the one of the boys and I at Abbey Road. I was really surprised how many people recognized it, but more than one attorneys' office actually had a Beatles display. So it's apparently universally recognizable.
What you do during the one month you can campaign outside the office is ... office visits, office visits, and more office visits Our days were filled with visits to 6-10 law firms a day where a friend at the firm walks you through the halls.
Here's what a day's worth looks like in your briefcase when you start the day (I usually carried 400-500, depending on the city). You try to plan the office visits to fall in the same or nearby buildings to save time, since we only have 23 week days during the campaign period. For example one day I did nothing but the two buildings in the 1100 block of Louisiana in Houston all day long. The day before was mostly 1000 block. In general, it takes about an hour and a half to hit 100 lawyers, but before 10 am and during spring break you get better mileage. So guess what a 230 lawyer firm visit looks like?
During the visits you walk into each individual lawyers' office, hand them a brochure and talk to them briefly about your candidacy. If they're not in, you drop one in their chair. And then do that again up to 500 times a day (my top day was actually 529). I ended up with a couple thousand brochures left over, so that means I handed out about 8,000 during the 23 days of the campaign. That's about normal - you hit around 8,000 individual lawyers' offices in the 22-23 days of the campaign.
You also visit courthouses and prosecutors' offices (here Collin County with DA Greg Willis and Harris County Attorneys' office with John Odam and Julie Countiss ) and speak to bar groups from El Paso and Lubbock (on back to back days with a major thunderstorm in between in our case) to Dallas, Houston and San Antonio. And Austin, where I got my picture with the statue of my old policy development professor Barbara Jordan. I have aged since we took this picture with my parents at my graduation in ... well, let's not actually put a number on it, but BJ is now ageless.
We typically got five minutes each when speaking, but some gave us as few as two minutes. When they gave us fifteen, Tom and I just looked at each other and explained that we couldn't talk for more than five. Which made us very popular.
How Many Lawyers Do You Have to Go Through to Find a Jerk?
One of the nice things about the campaign is how appreciative people are of what the candidates are doing. They recognize that it is volunteer work (and really volunteer work for three years for the candidate that wins) and are very happy to have the candidates come by for a visit. I was told by numerous previous candidates that throughout the process, meeting around ten thousand lawyers, there would be only one lawyer that would be rude or discourteous, and astonishingly, they were right - not until the last week did I have a lawyer meet that definition, and even then it was on the phone, not in person. So the answer is 7,500. And karma has been invoked.
Most of the bar groups Tom and I did together - TYLA, Amarillo, El Paso, Lubbock, San Antonio, etc., which isn't unusual - some election cycles the candidates actually drive to events together, and Tom and I did share some flights. It isn't unusual for the bar board to pick candidates that know each other, and Tom and I did more than most - we were actually in the same Bar board class from 2005-2008 so we had worked together before, and it was good sending the signal that collegiality and civility are an important part of practicing law in Texas.
Hi, I'm the Kid From the Mail Room.
Austin was a fun visit for another reason. My first job out of college 30 years ago while starting graduate school was in the mail room at McGinnis, Lochridge & Kilgore in Austin. One of the Marshall lawyers I'd been working for, former State Bar president Franklin Jones, Jr. called his friend and fellow former State Bar president Lloyd Lochridge in Austin to get me a job so I could continue to sleep indoors while studying. So a high point of the campaign was going back to Mr. Lochridge's office 30 years later and asking for his vote - for State Bar president. If you ever get the chance to ask some of the same lawyers you delivered mail to 30 years earlier for their vote for State Bar president-elect, I highly recommend it. It was a lot of fun.
In Houston, I also got to swing by my publisher O'Connor's to speak to the editorial staff and relay how astonishingly prevalent their books, including the Federal Rules * Civil Trial federal court handbook that I have edited for eighteen years - are. Other than the corporate floors, they are ubiquitous. I can't remember how many times I explained that yes, the skinny young guy on the back cover of your federal rulebook is me. No, seriously.
On the Campaign Trail
Of course after 5 weeks of daily campaigning from city to city, law firm to law firm you get pretty good at the logistics. My Apple Watch always told me where I was supposed to be next and how many brochures I needed to have so I could avoid overloading my bag unnecessarily. I kept notes of who I visited and who needed brochures or needed a pdf version, as well as lawyers' ideas about different issues facing the State Bar.
Some mornings, as I was told would be the case, I'd wake up and it would be a while before I remembered what city I was in. I put a lot of miles on the truck, (but that's what trucks are for) and I learned to be a ninja packer - swapping out new bags and pouches when I changed cities so that I could live out of a rollaboard no matter how long I was on the road. (Think of the resupply operation in The Martian. It was a lot like that, but in a truck and no one was there to appreciate it but me. My fellow OCDers out there will understand).
As any campaign is, it's hardest on your family - I wasn't there at all for five weeks to get the twins up and to school, and Jamie was only able to spend spring break week with me on the road in Houston & Dallas (yeah, no spring break for the kids this year - we'll have to make it up to them this summer), but other than that, I was on my own. But Jamie was a big help because, well, she does this for a living. She's in her sixth four-year term as Harrison County Treasurer here in Marshall, so she knows campaigning and going door to door for votes. Actually, it's how we originally met - she left a door hanger at my parents' house during her first race and I thought she was cute so I wrote her a note and asked her out.
But back to the campaign. I tried a driver the first week in Dallas, but after discovering Uber, just didn't need one. (Thanks to Tom for pointing that out). The first week I took my Amazon Echo along for company in the hotel room in the evenings, but decided that was a little creepy, so after that I just hung out with my Kindle. (Which is not creepy at all).
I got the call this evening that Tom had come in first, and called him immediately to congratulate him. I know he'll do a great job for the Bar, and it has been a pleasure running with him. It is disappointing to lose, but I certainly learned a great deal during the process.
I learned that as professional and courteous as you think lawyers ought to be - they exceed your expectations in person. I hit 7,500 lawyers' offices essentially unannounced (I can do a great impression of the "I haven't got my shoes on" face that I saw so, so many times) and not once - not once - was I greeted with anything other than courtesy.
I learned - even with my visits restricted to mostly larger firms - that lawyers practice in a wide variety of environments, and that, as I'll post on in the coming days, those environments are changing. Law firms are changing locations and even if they stay, they are restructuring how they work because the model that they knew 25-30 years ago is gone. Law firms don't look like they did, lawyers' offices don't look like they did - even lawyers don't look like they did, act like they did, or expect what they did.
I learned that not many lawyers are involved in bar work, and few are even interested in the Bar that represents their interests to the wider world. We only got to 19% voter turnout on the last day of voting. That's regrettable, and hopefully that's something that can change. It's a shame that more lawyers don't identify with the Bar, because it does so much for all of us, and would benefit from our involvement.
But once again, I'm thankful for the opportunity and the experience, and honored to have been selected in the first place. It's been a great ride.
Last year a jury in Judge Richard Schell's court in Plano returned a verdict for the plaintiff in Texas Advanced Optoelectronic Solutions v. Intersil Corp., 4:08cv0451, a complex breach of contract, trade secret misappropriation, tortious interference with prospective business relations and patent infringement case. The jury awarded various amounts under various theories, with the total around $88 million (of which the patent damages of $73,653.51 was less than one-thousandth of the total awarded), and included in its findings that the defendant had willfully infringed the patent claims.
This week Judge Schell ruled on the motions for judgment as a matter of law, and in doing so trimmed the damages to reflect duplicative awards under different theories (essentially cutting the tortious interference elements) to a final total of $77 million. The Court also ruled on the plaintiff's request for enhanced damages under Section 284 based on the willful infringement finding and for "exceptional case" status under Section 285.
In language reminiscent of Judges Yeakel and Costa rejecting 285 claims after defense wins at trial, Judge Schell agreed with the defendant that even though the jury rejected its noninfringement and invalidity arguments, the defenses were not objectively unreasonable. This finding defeated objective willfulness and thus enhanced damages under 284. For 285 purposes, the Court concluded that the plaintiff had not carried its burden to show that the case was "exceptional" for 285 purposes, and denied the request for attorneys fees.
I posted previously on the first four of the year, with the second ending the string of six defense wins that started last summer, and starting a string of three plaintiff wins - one each from Marshall, Sherman and Tyler. So 3-1.
After that it gets complicated. There was a plaintiff win at trial in Marshall for the princely sum of $75,000, but Judge Gilstrap subsequently granted the motion that was filed on the eve of trial to dismiss the claims under Section 101. Then a match set of verdicts - one for plaintiff and one for defendant in a competitor case from Sherman and Tyler. So ... 4-3, since I don't count it as a plaintiff win at trial if it's set aside during the postverdict (but pre-appeal) process.
Then came the "pox on both your houses" MetaSwitch/Genband trial where each side claimed the other side was infringing its patents and the Marshall jury found both sides' claims not infringed, and - this is the funny part if you aren't one of the parties - both sides' claims invalid as well. That just has to count as two defense verdicts I decided, so 4-5. Then comes last month's verdict for the plaintiff, so we're back to dead even at 5-5 for the year to date.
Last year ended at 7-7 before one verdict was set aside this spring, making the retroactive score for 2015 6-8. Which in turns drops the overall patent trial win rate for plaintiffs in the district from 2013 through the present (I think that's 52 trials) one verdict short of 50-50. At least as I am counting them. Your mileage may vary.
An interesting development is that by my count at least four of the ten trials this year so far were competitor cases. Also, the Sherman Division has the same number of plaintiff patent verdicts (two) as the Marshall Division, with Tyler holding one. On the defense side, Marshall leads with three (four if you count the JMOL) defense outcomes in patent cases with Tyler again holding one.
On March 30, 2016, the District of New Jersey in Garfum.com v. Reflections by Ruth, 14-5919 also assessed 285 sanctions against the same plaintiff’s counsel as eDekka for similar conduct – in fact quoting from Judge Gilstrap’s opinion in eDekka. The timing of the resolution of the case is also interesting. That case dealt with one remaining defendant as opposed to over two dozen in eDekka, and was filed seven months earlier than eDekka, and the fees motion was filed four months earlier than eDekka. The 285 award was made over three months later than eDekka. Thus the resolution that took 18 months for a case initially filed against three defendants before a judge who had 35 patent cases filed in 2014 (which is when Garfum was filed) took only nine months in a case initially filed against 101 defendants before a judge who had 988 patent cases filed in 2014 (and 1,686 the next year, which is when eDekka was filed and the motion to dismiss heard, granted, and briefing on 285 sanctions filed). Interesting.
The finding in eDekka was also cited in another recent EDTX grant of a 101 motion, which found that the asserted claims were similarly directed to the abstract idea of gathering and labeling information, and that like eDekka, the claim limitations were insufficient to demonstrate that the claims amounted to more than patents on abstract ideas.
Motions to strike defenses are not the most common initial pretrial motion, but they can be a useful tool to eliminate unsupported defenses, as well as test whether a particular defense is a defense at all.
Illustrating this was the recent order in Twin Rivers Engineering v. Fieldpiece Instruments, 2:15cv1838 (4/6/16) (Gilstrap, J.) in which the plaintiff sought an order striking various of the defendant's affirmative defenses under FRCP 12(f).
Plaintiff argued that Defendant’s fourth affirmative defense, which included “laches, waiver, estoppel, and acquiescence,” was improper, confusing and failed to give it fair notice. The Court concluded that Defendant’s Answer on this ground “falls well short of the minimum particulars needed to identify the affirmative defense in question” and found that Defendant’s fourth affirmative defense should be stricken. It similarly agreed that the Defendant's tenth defense (“no intent to deceive”) and eleventh defense (“no likelihood of confusion”) should be stricken because both were merely general denials of elements of Plaintiff’s affirmative claims. Defendant was given ten days to replead.
However the Court rejected the motion as to the Defendant’s eighth affirmative defense (“prior downstream or implied license”), finding that an allegation of implied license is an affirmative defense, and that the Defendant had provided a sufficient factual basis to support it.
In Blue Spike, LLC v. Audible Magic Corporation, 6:15cv0584 (4/18/16)(Craven, J.), nonparty Electronic Frontier Foundation (EFF) moved to intervene in the case in order to unseal certain court records. Judge Craven granted the motion and ordered additional briefing regarding the request to unseal specific documents.
Plaintiff had objected to the intervention as untimely, prejudicial and lacking standing - defendants didn't oppose the motion so long as they would be permitted to file copies of documents with legitimately confidential information redacted (EFF had proposed such redactions in the public versions of the filings where the Court determined that some portions of the sealed filings should remain sealed).
As readers know, two of the defense wins in the six-verdict defense win string last fall were by Google/Samsung and then Apple against plaintiff ContentGuard. Yesterday Judge Gilstrap denied ContentGuard's JMOL, as well as Apple's renewed motion for JMOL as to invalidity and lack of patentable subject matter (finding that the last ground wasn't properly a Rule 50 motion in the first place).
In Adaptix v. Alcatel, 6:12cv022 (3/18/16) (Schroeder, J.), a Tyler jury in Judge Schroeder's court found that the asserted claims were not infringed and were invalid.
In this order, Judge Schroeder granted the defendant's motion for fees under 35 USC 285 based on the plaintiff's late production of documents, which resulted in a 14 week continuance of the trial after the jury was qualified. The late-produced documents contained metadata that contradicted the previously-assumed conception date. Although the documents were eventually crucial to disposing of some of the defendants' defenses, the Court found that the case was in fact exceptional for purposes of the additional fees they caused the defendant to incur as a result of the continuance, and granted the motion on that basis. The parties were ordered to met and confer on the issue of what fees were recoverable and report back.
I wanted to congratulate my Baylor Law School mock trial partner Lin McCraw of McKinney on being nominated to fill the void left by the untimely death of TTLA President-Elect, Mark Kincaid. Mark was a good friend and an outstanding lawyer, and Lin knows he has big shoes to fill, but I know he's up to the task of President-Elect, even in a legislative year. Jamie and I had a good visit with Lin in McKinney last month and enjoyed catching up on what he and his family are up to. Apparently now it's going to involve a lot of Austin.
Lin and I had some good times in law school, where we not only were mock trial partners in Practice Court, but also volunteered for the "full discovery" option in our big trial, which included taking a deposition in front of our entire PC class, with Prof. Powell stopping to correct us as we went. Good times.
And six years ago (can it be that long? My svelte figure and poofy hair says it can) we tried a trucking case in Judge Ward's court in Marshall with Maria Wormington. You have not seen state of the art voir dire till you've seen Lin do it. I have never seen jurors apologize for disqualifying themselves before or since.
Lin was also one of my groomsmen when Jamie and I married 20 years ago this fall, but I am saving the picture of he and I in white tie for blackmail purposes. It has never failed me yet.
Congratulations again to Lin for taking on this leadership position in the bar. We're very proud of you.
In NexusCard v. Kroger, 2:15cv968 (3/24/16) Judge Gilstrap concluded that the claims that the “membership discount program” in the asserted claim was not patent-eligible because: (1) it claimed the abstract idea of a “membership discount program” where members have to register and (2) then it limits the implementation of that abstract idea to a network of connected computers. Accordingly, he dismissed the case as not "plausible" under Twombly. The dismissal was before the claim construction hearing.
At the time of the dismissal, Kroger was the only one of the three defendants originally named still remaining in the suit. And for what it's worth, the case, which was filed middle of 2015, falls into the category of filing attorneys whose filings are down 94% in the first quarter of 2016, as I posted on several days ago.
Speaking of Ryan Davis of Law360, Ryan just put out an article this morning EDekka Cools Off EDTX Patent Hotbed As Suits Drop 47% providing expanded analysis of the filing trends I identified in my post earlier this week. His number is a quarter to quarter comparison (mine was 2015 versus 2016 annualized based of first quarter filing stats) which is why the number is slightly different. But the trend is the same, and his article provides good analysis on it from both sides of the docket.
President Obama recently formally named several Texas lawyers as nominees for various judgeships in three of Texas' four districts. One was former Texas state court judge (and longtime Litigation Section colleague) Karen Gren Scholer for a vacant judgeship in Plano, which is within the Sherman Division of the Eastern District.
A recent article by Ryan Davis of Law360 provides a good background on Karen, and the effect that her addition to the Eastern District bench would have both on the Plano docket and the patent docket. It also provides some analysis into the Plano docket in comparison to the dockets of the other Eastern District divisions.
The Eastern District has eight authorized judgeships, and three are currently vacant (Plano, Tyler and Tyler). Of more interest with respect to the patent docket, the majority of that docket is normally shared by four district judges, typically those located in Marshall, Texarkana and the two located in Tyler (the Sherman Division has far more criminal cases, and a more varied civil docket). As noted above, both of the Tyler positions are vacant, and the judge located in Texarkana (Judge Schroeder) is currently assisting with the Plano criminal docket, in addition to his dockets in Texarkana, Marshall and Tyler. As a result, a disproportionate share of the docket in the district's eastern divisions is falling to the remaining judge, Judge Gilstrap of Marshall, who handles most of Marshall, part of Texarkana, and a substantial part of Tyler patent docket.
Filling the Plano seat (and eventually the Tyler positions) would result in a reallocation of the docket among the district's judges, as the article notes.
First of all, new filings are down - substantially. There were approximately 2,500 patent cases filed in the Eastern District in 2015. But through the end of the first quarter of 2016 less than 300 new patent cases were filed. Annualized to around 1,100 cases that represents a 56% reduction in patent case filings from 2015, representing a reduction to just under 2014 filing levels. The number isn't a new one - when I checked filings after the first several weeks of the year I came up with a 56% reduction then as well, so the level of activity is steady.
But the source of the reductions is pretty clear - it is coming disproportionately - in fact overwhelmingly - from the largest filers, meaning the plaintiffs filing cases against large numbers of defendants, or as I refer to them "bulk filers". For example, I checked the three law firms that filed the most patent cases in the Eastern District last year to see what they are up to in 2016. Last year they accounted for approximately a third of the 2,500 cases - but in the first quarter of 2016, the same firms filed only seventeen (17) cases. That annualizes to a 94% reduction by top three firms. Nor do they appear to be filing elsewhere. The firm that filed the largest number of cases in the EDTX last year (over 400) has filed a whopping seven this year after its client eDekka was tagged by Judge Gilstrap for fees under 285 earlier this year (incidentally eDekka was the largest single filer the past two years, and has I believe the largest single 285 award, and largest number of defendants receiving an award under 285 of any case in the nation, so there is a symmetry there for those of us that look for such things). But of interest, the firm has filed only four patent cases in other districts so far this year, so it appears that it is not shifting its filings elsewhere.
For those interested in cause and effect, the continuing string of 101 dismissals in the district (there was another the other day from Marshall that I'll get around to posting on hopefully end of this week) as the motions make it to the top of judicial desks might have something to do with the reduction in filings, as might fee awards like that in eDekka. But I would also point out that the enormous number of "November 30" filings due to the 2015 FRCP amendments to the discovery and pleading rules artificially inflated the numbers as well. And unnecessarily so, since at least one order I have seen from Judge Gilstrap recently made clear that he was applying the relevant amended rules in that case to pre-December 1 filings. In fact, I have never agreed with the logic of the pre-Dec. 1 filings, but that's an issue for another post. (I wouldn't call it the filing equivalent of a face piercing, but if you want to I'll back you up). So filings have resumed the slight downward trend they had before last year, and if reviewing the recent activities of bulk patent filers interest you, you may want to find another hobby to fill your spare time. Because it's not happening here, and as best I can tell, it hasn't gone anywhere else in large quantities either. As I hypothesized in my Texas Bar Journal article in January, it was going to take a few more months for the effect of 101 and 285 to be known fully enough to affect filing patterns in Texas federal courts, but I think that's now happened.
I was honored earlier this week to receive the Sam B. Hall Jr. Civil Service Award at East Texas Baptist University from ETBU President Dr. J. Blair Blackburn, and to present the annual Judge Hall lecture, this time on the importance of the rule of law. I included anecdotes from working with Judge Hall as his law clerk 23 years ago, and stories about the development of the rule of law beginning in medieval England and working my way forward through the Magna Carta, the English Civil War, the Glorious Revolution, the American Revolution, and the drafting of the U.S. Constitution and Bill of Rights. (It wasn't as bad as it sounds. At least I think it wasn't. I must note that Collin had that same look on his face before I started).
An alert weblog reader noticed that the invitations sent out for this year's Hall lecture at ETBU's Ornelas Student Center had a discrepancy on the date - the date of March 22 is correct, and that is a Tuesday, not Thursday, as the original announcements stated. ETBU has since mailed a revised invitation - but the date in the press release and the ad has always been the correct one.
I also wanted to provide a little more background about the event itself. The lecture series program commemorates the late Congressman and U.S. District Court Judge Sam B. Hall, Jr., of the Eastern District of Texas, Marshall and Texarkana Divisions, who was a Marshall native and an alumnus of the College of Marshall, ETBU's forerunner.
This year I will be speaking at the evening event on the topic “The Rule of Law” and will also reminisce (I am told) about my work as judicial law clerk with Judge Hall.
A significant portion of the proceeds from this year’s program will be contributed to the Sam B. Hall Jr. Scholarships for graduating seniors at Marshall High School. Two scholarships of $5,000 will be given. Proceeds from the event otherwise are applied to Sam B. Hall Endowed Programs at ETBU.
The program will also include presentation of the sixth annual Sam B. Hall Civic Service Award by Harrison County District Judge Brad Morin. Previous honorees were Madeleine Segal Hall (in memoriam), Ray and Mona Lawson of Marshall, Sue Jordan (formerly administrative assistant to Congressman and Judge Hall), Frank and Bonnie Strauss of Marshall, Sam R. Moseley of Marshall, and Glenn Bickerdike of Marshall. According to the press release, I am the honoree this year, but they could always change their mind, I suppose, and after hearing my talk, they might.
Tickets for the event are $65 per person and can be reserved by calling Janet Breckenridge in the President’s Office at ETBU at 903-923-2222 or by emailing firstname.lastname@example.org. Please inquire regarding table reservations- tables may be reserved at the Bronze, Silver, Gold, Platinum, and Diamond levels. Advance reservations are recommended by March 17 as seating is limited. (They're not kidding about that - the event is in the Woods and Cornish Great Rooms, but the adjective is more related to the height than the actual floor space).
The Sam B. Hall Professorship and the Lecture Series were endowed in 1993 by the family and friends of Judge Hall. A native of Marshall and an alumnus of the College of Marshall, now ETBU, and the Baylor University School of Law, Judge Hall served in and was president of several civic organizations and the Board of Directors of the Marshall Regional Medical Center before his death in 1994. The Hall Professor of History is Dr. Jerry L. Summers, Dean of the School of Humanities at ETBU.
Gonzalez v. InfoStream Group, Inc., 2:14cv906 (2/6/16) (Payne, J.)
Judge Payne recommended denial of the defendant's 101 motion in this case which began trial yesterday in Marshall. The Court found that the claims were not directed toward abstract ideas, and even if they were, the additional elements of the claim "transform the nature of the claim" into patent-eligible subject matter.
The Court also issued rulings on the parties' motions in limine, and denied the plaintiff's motion to strike portions of the defendant's expert testimony, with the exception of allegations that the plaintiff deliberately misled the patent office (because inequitable conduct was not asserted as a defense), any attempt by an expert to apply a claim construction used by another expert that the expert disagreed with, and any testimony that is prohibited by Rule 26.
Eastern District juries have returned a couple more patent verdicts in the past week. In the first, in Judge Mazzant's court in Sherman the jury found the asserted claims infringed, not invalid, and assessed $1,095,807.30 in lost sales and $129,148.57 in reasonable royalty damages. The case went to trial after Judge Mazzant denied the pending 101 motion, finding that the claims didn't run afoul of Alice.
Meanwhile, over in Tyler in Judge Schroeder's court a jury was passing on damages only with respect to some claims since infringement was found by a prior jury and that finding was affirmed by the Federal Circuit, and infringement and damages with respect to some newer claims. The jury found $334 million in damages for the first set of claims (the Federal Circuit had thrown out the prior damages finding of $362 million but affrimed the finding of infringement and not invalid), and infringement and an additional $290 million on the second claims, as well as willful infringement of those claims.
As readers know, I have been keeping a close watch on local trends in patent cases since the patent docket emerged in the early 1990's, from the plaintiffs' anni horribili of 2007 and 2013 - to which we can now add the long stretch from last fall, to the well-documented defendants' losing streak that ended in the fall of 2006, and all the dull intervening years where the verdicts just seesaw back and forth.
Week before last was easy - we won a noninfringement verdict for defendant Steelseries in Judge Payne's court (have I mentioned that before? - can't remember if I have, but yes, we did), and plaintiff Genband won the next day in Judge Gilstrap's court. But this week is a little harder to classify.
In Nichia Corporation v. Everlight Electronics Co., Ltd. et al, 2:13cv0702 (1/25/16) Judge Gilstrap conducted a bench trial on the plaintiff's claims of infringement. He found the claims infringed and not invalid, but the plaintiff had withdrawn its claim for money damages based on a reasonable royalty or other theory, and was only seeking injunctive relief. In a 134 page set of findings of fact (picture a JMOL ruling after years of performance-enhancing drugs and you'll get the idea of what FF look like) Judge Gilstrap denied the injunctive relief, finding that there was no showing of irreparable harm.
In the end, I think I'll just use the case's status as a bench trial instead of a jury verdict to ignore it, rather than try to figure out whether to classify it as a plaintiff or defense win.
Last week Judge Gilstrap granted another 101 motion in a multidefendant cases. Originally filed against nine defendants, and apparently still pending against five (give or take) at the time of the ruling, the patent asserted involved a system which the Court concluded lacked an inventive concept as required by Alice.
Ran across a really good article by Erin Coe of Law 360 Patent Fights Get Shake-Up Under Fed. Rules on Discovery last week. Don't agree with all of it, and there are some tactical nuances that remained hidden even after reading it, but overall it's a really good exposition of the way the new "proportionality" standard may affect discovery in patent litigation.
Readers might remember one of the defense verdicts last fall was for Apple in the ContentGuard case. Yesterday Judge Gilstrap awarded approximately $420,000 in court costs to Apple from the plaintiff.
Judge Gilstrap entered the fee award in eDekka yesterday, awarding amounting ranging from $13,000-$30,000 to the approximately two dozen defendants that sought fees, for a total of $390,829.
I am a few days late posting about this due to my trial that concluded yesterday, but my contribution to the 2015 Year in Review article in the Texas Bar Journal on patent litigation in Texas is out and available here. In the article, I review recent legislative activity in the patent arena both in the Texas Legislature and the U.S. Congress as well as notable activity in Texas during the year implementing recent Supreme Court cases, in particular Alice and Octane Fitness.
Judge Gilstrap's ruling in the eDekka case on the motion to dismiss for lack of patentable subject matter jurisdiction under 101 is discussed before I move on to activity from Texas district courts on fee applications under the new standard after Octane Fitness under 285. I covered the opinions by Judge Yeakel and Judge Costa that I previously posted on – obviously had Judge Gilstrap's opinion on 285 in eDekka come out before press time, it would've been included as well. (I tried - but there are limits to what even past TBJ chairs can pull off).
I hope readers find it useful.
I am very happy to be able to congratulate my clients Steelseries ApS and Steelseries North America Corp. and cocounsel Esha Bandyopadhyay, Jim Heiser, Josh Masur, Eric Silvestri, Sara Ghadiri, and Louis Wai on a win in Better Mouse Company v. Steelseries today before a Marshall jury in Judge Roy Payne's court. After hearing approximately two days of evidence, the jury found that the asserted claims were not infringed.
For those keeping count, that's six consecutive defense verdicts in patent cases in the Eastern District. There is another trial going forward in Judge Gilstrap's courtroom upstairs this week, so it'll either break the string or become number seven.
Can't tell you happy I am for our hard-working trial team. And it'll be good to see my kids again, and there's this woman living upstairs in my house that I think I used to know ...
Plaintiff Rothschild Location Technologies LLC has filed 55 patent infringement cases - 21 in Delaware in 2014, and 34 in the Eastern District of Texas in 2015. It does not appear that the 2014 Delaware cases have resulted in a determination on the merits of its patents, but earlier this week the 2015 Eastern District of Texas cases did. Judge Love granted the motion to dismiss in this case (which consolidating the 2015 actions) under section 101, finding that the patent was "plainly directed to an abstract idea performed on components with well – known, conventional, and routine functionality." This joins Judge Gilstrap's recent opinion in the eDekka litigation in granting 101 motions directed to "bulk filer" cases, as well as orders by Judge Schroeder and Judge Bryson granting on 101 grounds in more thinly populated cases.
Similar to eDekka, Judge Love found that the 101 issue was ripe at the pleading stage, and that claim construction was not required. He further found that even adopting the plaintiff's proposed construction would not impact the analysis. "The parties have not sufficiently identified any claim dispute or factual issue. Accordingly, there is no reason to delay a 101 ruling and require the parties to expand additional resources that ultimately will not impact or aid the patent – eligibility determination."
Although termed a report and recommendation, Judge Love's order notes that some of the remaining defendants have consented to him for trial (the plaintiff had), so I assume the report will actually operate as an order granting the motion to dismiss in those actions. The plaintiff would have the option of filing objections to the report with Judge Schroeder as to the remaining defendants.
I wanted to make sure that everyone was aware that the seminar that I had posted on previously by the Federal Circuit Bar Association Transitions: The Profession and the Next Generation is going forward January 21, 2016 at the Center for American and International Law in Plano. The brochure for the event is attached here. Download Fed Cir Transitions Program 012016 . As previously noted, the event is intended to raise awareness of the need to provide young and diverse lawyers with courtroom opportunities.
But the event is already having an impact in practice. Magistrate Judge K. Nicole Mitchell of Tyler issued an order in a pending case stating:
The Court is aware that in today’s practice of law, fewer cases go to trial and there are generally fewer speaking opportunities in court, particularly for young lawyers (i.e., lawyers practicing for less than seven years). The Court strongly encourages the parties to be mindful of opportunities for young lawyers to argue in front of the Court, particularly for motions where the young lawyer drafted or contributed significantly to the underlying motion or response.
With that in mind, the Court has currently set the Markman hearing in this case for the morning of January 12, 2016. To the extent that any party planned to submit any of the disputed terms on the papers alone, the Court will grant additional time to argue those terms, if they are argued by an attorney with seven or fewer years of experience.
(Emphasis mine). The order joins prior similar orders by, for example Judge Barbara Lynn of the Northern District of Texas encouraging similar opportunities.
It isn't quite out yet, but when it is, my Year in Review article on patent litigation in Texas in 2015 in the January 2016 Texas Bar Journal will focus on the implementation in the district courts of the Supreme Court's recent decisions in the field of patent law, with particular emphasis on motions to dismiss under 101 and motions for exceptional case finding and hence fees under 285.
For those interested in the subject of 285, in addition to Judge Gilstrap's recent order in the eDekka litigation, the Court also recently set deadlines for briefing and hearing the "exceptional case" issue following Octane Fitness in Adjustacam v. Amazon.com case on remand from from the Federal Circuit. As readers may know, that is a case where Judge Davis denied the motion for exceptional case status prior to Octane, and that issue went up on appeal, ending up with a remand to Judge Gilstrap (who inherited the case following Judge Davis' retirement) to consider the case under the new standard.
The reconsideration was a narrow one and sought only to delay the transfer until after the entry of the Court's claims construction order. Judge Gilstrap wrote that:
I am very happy to report that I have been asked to deliver the 2016 Sam B. Hall Jr. Lecture at East Texas Baptist University in Marshall on March 22, 2016. The Hall Professorship and Lecture Series was established at East Texas Baptist University in 1993 by the family, friends and Judge Hall’s colleagues in the bar, the U. S. Congress, and the federal judiciary. Dr. Jerry L. Summers was named the Hall Professor of History. Judge Hall, for whom the Marshall federal courthouse was named just a year later in 1994, delivered the first lecture in the annual lecture series, which, coincidentally, was the year I clerked for him.
I have chosen for my topic, Judicial Independence and the Rule of Law, since Judge and his dad were both judges, and am having entirely too much fun trying to fit together interesting or humorous nuggets from my clerkship files (oh, the things that I kept) from almost a quarter-century ago, historical references on the history of kingship and concepts of separation of powers and judicial independence in England following the Norman Conquest, and current scholarship on the related legal principles (because people kind of expect that as well). The thrill I get from writing "and that brings us to 1337" is just indecent. Seriously, it is a real privilege to get to deliver the lecture this spring, and I am really, really looking forward to it.
Yes, of course there will be a Power Point. Why do you ask?
As I have previously posted, in April and May of this year, plaintiff eDekka filed lawsuits against 89 defendants alleging infringement of a single patent. On September 21, 2015 Judge Gilstrap granted defendants motions to dismiss under 35 USC 101, contending that the patent was directed to unpatentable subject matter under Alice. He also required any motion seeking fees under section 285 to be filed as a single brief within two weeks. Yesterday, Judge Gilstrap granted the 285 motion, finding that the case was in fact "exceptional" both because the plaintiff's case was "objectively unreasonable" and because it had been litigated unreasonably. Submissions on fees were due within 14 days.
The Court's opinion sets forth the standards for findings of exceptionality following the Supreme Court's establishment of the current standard in Octane Fitness. "Significantly," it noted, "sanctionable conduct is not the standard for awarding fees under § 285."
With respect to the first basis for exceptionality, whether the party's case was "objectively unreasonable", the Court found that the patent was "demonstrably weak on its face." "The Court did not need the benefit of claim construction to find that the claims were directed to an abstract idea," Judge Gilstrap wrote, finding that "no reasonable litigant could have reasonably expected success on the merits when defending against the numerous section 101 motions filed in this case." In addition the Court found that rather than acknowledging the inherent weaknesses in the patent the plaintiff proffered "completely untenable arguments to the Court throughout the section 101 briefing process and at the September 10, 2015 hearing." This caused the court to question whether the plaintiff had engaged in a reasonable and thorough pre-suit investigation regarding the standard for patentability before filing a significant number of lawsuits. "In these particular and focused circumstances, the Court identifies a clear need to advance considerations of deterrence," the Court wrote concluding that the case was exceptional under the "objectively unreasonable" standard.
Litigating in an Unreasonable Manner
Judge Gilstrap then addressed eDekka's litigation history – which he noted included filing "strikingly similar" lawsuits against over 200 defendants - reflected "an aggressive strategy that avoids testing its cases on the merits and instead aims for early settlements falling at or below the cost of defense." The Court then addressed the specific facts regarding plaintiff's settlement strategy in this case:
Based upon the record of the above-captioned cases, as well as the Court’s in camera review of eDekka’s ’674 Patent settlements to date, the Court finds a pattern of defendants that agreed to settlements at relatively early points in the litigation for amounts significantly below the cost of taking a patent case to trial. Further, on September 8, 2015, just two days before the September 10, 2015 § 101 hearing, counsel for eDekka contacted numerous defendants with offers to settle their cases for three-thousand dollars each. These offers represent extraordinarily low amounts. Such offers remained open until they were withdrawn during the evening of September 9, 2015. This clearly suggests an intent to settle with the remaining defendants rather than defend the ’674 Patent claims in court.
(Emphasis mine). The Court went on find that it was reasonable to conclude that eDekka acted with the goal of “exploiting the high cost to defend complex litigation” to extract “nuisance value settlement[s]” from defendants, and that these tactics contributed significantly to the Court’s finding that this case is “exceptional.”
Judge Gilstrap's opinion concluded with considerations similar to those expressed in cases I previously posted on by Judge Yeakel and Judge Costa. "This Court does not view every plaintiff’s loss as an automatic indicator that the case is exceptional. A finding of exceptionality is something that this Court arrives at reluctantly, lest we unintentionally narrow the public’s access to the courts by chilling future decisions to seek redress for a case in which success is not guaranteed. However, the threshold of exceptionality has been crossed by eDekka in this case."
Update: was just going through some Octane materials (for some reason) and ran across the May 5, 2014 Texas Lawyer article where I said:
“In courts that have seen a lot of these [patent] cases, they will expect plaintiffs to drop cases if they become insurmountable. And if they pursue it after that, they will get hung.’’
Note to self - no $3,000 demand letters.
If that's your principal takeaway from the amendments to the Federal Rules of Civil Procedure that take effect today, you really need to get out more. The amendments make significant changes to the discovery rules in federal court, including changing for the first time in 15 years the very standard for what is discoverable. As I've posted on previously, I've been presenting papers on this topic for over a year, including at the recent Advanced Civil Trial seminars in Dallas, Austin & Houston and at the recent Page Keeton Civil Litigation Conference, also in Austin, and presented to the Advisory Committee on a cold and icy day in Dallas almost two years ago on the potential effects of the new "proportionality" language, especially in patent cases. I have also been getting ready for the effect of the new changes on my practice as we incorporate new standards and tools into the discovery side of cases in federal court. It presents both opportunities and risks to litigants, to say the least.
Now we get to see if the sky really is going to fall. Or to be more precise, how many of us will find it in our clients' interests to pull a
Katniss and bring the sky crashing down?