Over the past eight years, the United States District Court for the Eastern District of Texas (the “Eastern District”) has become the nation’s most closely-followed patent battlefield. Since 2003, the Eastern District’s annual patent infringement filings have risen from 14 to over 300 – transforming the Eastern District into one of the nation’s most popular patent venues. Nevertheless, a confluence of recent events threatens to disrupt the status quo. In 2012, the combination of judicial turnover, increased competition from other judicial districts, and legislative and judicial action may alter the Eastern District landscape. Welcome to what may become the Eastern District of Texas, version 2.0.
1. The Eastern District’s New Patent Judges
The most anticipated changes to the Eastern District landscape relate to the district’s new panel of patent judges. Throughout the Eastern District’s rise to prominence, the composition of the bench and the predictability of case assignments have remained constant. Unlike the Northern District of California and other large districts, the Eastern District has only a handful of district judges, and no Division has more than two judges to which patent cases are assigned. Given the small number of judgeships, parties have been confident that a case filed, for example, in the Marshall Division or Tyler Division would be assigned to a judge with substantial patent experience – one of Judge Ward, Judge Davis, or Judge Folsom. Recent retirements, however, may alter that calculus.
As of March 17, 2012, two of the district’s most experienced patent judges (Judges Ward and Folsom), and one magistrate judge (Judge Everingham), will have retired from the bench. One new district judge (Judge Gilstrap), and two new magistrate judges (Judges Payne and Hawthorn), have been appointed to the judiciary.
So which judges will now hear Eastern District patent cases?
Chief Judge Leonard Davis answered this question in two recent General Orders, which set forth the prospective allocation of cases among judges in the Eastern District of Texas: General Order 12-3 (issued January 17, 2012) and General Order 12-4 (issued January 31, 2012). The chart below shows the Eastern District patent case allocation plan, effective March 17, 2012, with magistrate judges to whom patent cases will be assigned in parentheses beneath the appropriate Division. For Divisions with two magistrate judges in parentheses, the patent cases will be divided evenly between those two judges.
Table 1: Eastern District Patent Case Allocation Plan (Effective March 17, 2012)
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As of March 17, 2012, the only judges who will maintain their previous patent case assignments are Chief Judge Davis (95% of Tyler patent cases) and Judge Schell (50% of Sherman patent cases). Judge Clark has assumed 50% of the Sherman patent docket, in addition to his existing Beaumont and Lufkin patent dockets. Judge Schneider (of the Sherman Division) and recently-appointed Judge Gilstrap will succeed Judges Ward and Folsom in the Marshall and Texarkana Divisions.
This new slate of Eastern District judges includes new names and varied patent experience. The chart below illustrates the number of patent cases that have been assigned to each judge over the course of his or her career, as well as the number of Markman opinions issued by each judge.
Table 2: Patent Experience of 2012 Eastern District Patent Judges 1
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The Eastern District’s recent retirements alter the breadth and depth of patent experience on the bench. For example, excluding Chief Judge Davis, this year’s district judges have collectively issued roughly 50% of the number of Markman opinions issued by either retired district judge. And excluding Magistrate Judge Love, this year’s magistrate judges have collectively issued less than 50% of the number of Markman opinions issued by retired Magistrate Judge Everingham. In the Marshall Division, the 2012 district judges and magistrate judge have issued a combined total of 2 Markman opinions, whereas the previous Marshall judiciary issued a combined total of over 260 Markman opinions.
Of course, every judge must gain experience with patent matters over time, and the judges who will now see increased patent responsibility already have substantial federal litigation experience. Moreover, the new judges will have the additional benefit of a court staff that is experienced with the scheduling and adjudication of patent matters. Because Eastern District patent judges are different from those of years past, however, observers will be paying close attention to this year’s patent rulings in an attempt to discern whether the new judicial composition alters the strategy or expectations of parties on either side of the “v” in patent cases.
While highly anticipated, this year’s patent judges are not the only prominent features of this year’s Eastern District landscape. That is, a complete picture of the Eastern District must include an analysis of additional competitive advantages and competitive disadvantages – past, present and future.
2. The Eastern District’s New Competition
In addition to experienced patent judges, the Eastern District has historically offered patentees a number of perceived advantages - e.g., efficient local patent rules, fast time-to-trial statistics and favorable patentee win rates. However, the Eastern District’s perceived advantages are arguably not as pronounced as they once were.
For example, the Eastern District’s historically fast time-to-trial statistics have suffered as the Eastern District patent docket has become increasingly congested with patent cases. Moreover, consistent with the law of averages, patentee win rates in the Eastern District have trended toward the national norm over time. These realities have created a demand for viable alternatives and competition among other districts to become preferred patent venues.
Last fall, the Director of the Administrative Office of the U.S. Courts selected 14 districts to participate in Congress’ Patent Pilot Program – a 10-year pilot project designed to enhance expertise in patent cases among U.S. district court judges.5 To be eligible to participate, courts had to either be among the 15 districts in which the largest number of patent cases were filed in 2010, or have adopted, or certified their intention to adopt, local rules for patent cases.
The latter category – districts that were not in the top 15 for patent filings, but that have adopted (or will adopt) patent-specific local rules – may (in the near future) offer patentees speedier venue alternatives to the Eastern District, in addition to specialized patent expertise. For example, the Western District of Pennsylvania, the District of Nevada and the Western District of Tennessee were selected for the Patent Pilot Program, although none was in the top 15 districts for patent filings.
Going forward, patentees may identify additional preferred districts, and the Patent Pilot Program may help facilitate/ease this determination. Therefore, as the 14 selected districts implement the Patent Pilot Program this year, observers will evaluate whether the Eastern District continues to offer the competitive advantages that helped catalyze its rise to prominence.
3. Legislative And Judicial Venue Trends
In addition to judicial turnover and increased competition, recent legislation and United States Court of Appeals for the Federal Circuit decisions may also impact the 2012 Eastern District landscape. As a result of such developments, maintaining venue in the Eastern District will likely be more unpredictable, burdensome and time-consuming for patentees. Venue uncertainty, therefore, presents a new challenge for patentees seeking to enforce patents in the Eastern District.
Over the past three years, accused infringers have increasingly filed 28 U.S.C. § 1404 motions to transfer venue. In a motion to transfer, an accused infringer argues that an alternative district court is a “clearly more convenient” venue in which to litigate the case – typically due to the location of relevant witnesses and documents. Until 2008, an accused infringer who was sued in the Eastern District had little hope, judging from the statistics, of successfully transferring the case to another district. Nevertheless, beginning with the Federal Circuit’s decision in In re TS Tech USA Corp., 551 F.3d 1315 (Fed. Cir. 2008), the Federal Circuit has provided meaningful guidance regarding district judges’ decisions whether to transfer cases to “clearly more convenient” venues. That is, the Federal Circuit has granted numerous writs of mandamus – interlocutory orders that direct the district court to transfer a case to a different district.
Eastern District judges, as well as district court judges across the nation, have taken heed of cases such as TS Tech and have, in considerably more instances than before, granted motions to transfer.Standing alone, however, the Federal Circuit’s willingness to order cases transferred had little impact on the volume of Eastern District patent filings. For example, in 2010 – two years after the In re TS Tech USA Corp. decision – more patent infringement cases were filed in the Eastern District of Texas than in any other district in the nation.
Nevertheless, recent Congressional action bolsters the strength of accused infringers’ motions to transfer. In the past, patentees avoided transfer by suing a collection of geographically-dispersed defendants and arguing that the Eastern District was just as convenient as any alternative district. Then came the joinder provisions of the 2011 America Invents Act (“AIA”), which prevent joinder of multiple defendants based exclusively on the allegation that they infringe the same patent.6 Patentees can no longer sue a collection of unrelated defendants (that is, absent a showing that the multiple defendants are involved in the “same transaction or occurrence” giving rise to the infringement allegations) in a single “mega-suit.” Instead, patentees must now file individual lawsuits against such unrelated defendants.
In other words, patentees must now justify maintaining their cases in the Eastern District based on the convenience of the (fewer) parties involved in each individual case. They cannot rely on the geographical dispersion of the numerous unrelated defendants, but instead must explain why the Eastern District is convenient, e.g., why a case involving a plaintiff headquartered in Arizona and a defendant headquartered in Silicon Valley should be heard in the Eastern District.
The confluence of judicial turnover, the Patent Pilot Program, the AIA and 28 U.S.C. § 1404 jurisprudence will create new opportunities and new challenges for the Eastern District and other districts across the nation. In the near term, patentees will likely continue filing cases in the Eastern District, and accused infringers will likely continue testing the boundaries of 28 U.S.C. § 1404 in light of the AIA – attempting to convince Eastern District judges that they should distribute their patent cases around the country. The longer-term impact of these recent events, if any, will likely begin to come into focus later this year. In the meantime, we can begin becoming acquainted with the Eastern District of Texas, version 2.0.