Patent Litigation Mardi Gras: Eastern District of Texas and the UPC

The AmeriKat is somewhere under these Mardi
Gras beads....

It's Mardi Gras today. Like her bayou cat cousins, had the AmeriKat been in New Orleans, she would be preparing herself for some jambalaya and beignets, adorning herself with Mardi Gras beads and avoiding any cameras associated with Kats Gone Wild (for cultural reference, see here). Instead, however, she will be attending tonight's AIPPI event which will see Mr Justice Richard "The Determinator" Arnold delivering a speech on the "Implementation of the Jackson Reports Recommendations" (watch out for a report of the event on the Kat later on). Although there is likely to be less joviality and hopefully less nudity than Mardi Gras, the AmeriKat is in no doubt that tonight's event will be full of enthusiastic litigators eager to sink their teeth into the meat that is costs reforms.

Another place where people like to sink their teeth into meat and patent litigation is Texas. Data complied by law firm Perkins Coie last month revealed that the "rocket docket" that is US District Court for the Eastern District of Texas has reclaimed the top spot for patent lawsuits filed in the US. Delaware's federal court (~1000 cases), the Central District of California (~ 500 cases) and the Northern District of California (~ 260 cases) came second, third and fourth respectively.

Why so many filings in little ol' Beaumont, Marshall and Tyler, Texas? Predictability and favorability. Patentees can generally predict which judges they are going to get and juries in the district are considered to be patentee-friendly. Credited with making the district the top choice of patentees, Judge T. John Ward (no relation) retired in 2011 and was replaced by Judge Rodney Gilstrap. The change in regime could have altered the Eastern District's fortunes, but 2012's figures were double those of 2011 with over 1200 patent cases filed accounting for approximately 23% of the total 5,500 filings in the U.S.

Interestingly, the number of defendants has decreased by 2,000 defendants which some commentators attribute to the provision in the America Invents Acts (AIA) which makes it difficult for patentees to group multiple defendants into the same action. Prior to the enactment of the AIA, patentees could sue multiple defendants in the same action as long as the defendants had infringed the same patents subject to the claim and that some of those infringing activities had occurred in the district. There was no need for there to be any connection between the defendants other than those requirements This anchoring had the benefit of decreasing costs for plaintiffs so they did not have to sue each defendant individually in multiple districts. However, the ability to sue multiple defendants had a downside as it attracted the non-practising entity (NPE) or patent-assertion entity (PAE) (whatever term for "troll" is politically correct now) who relished the possibility of suing multiple defendants in one action in order to save money, while at the same time multiplying the potential damages award or settlement. Following the AIA, Federal Rule of Civil Procedure 20(a)(2) now provides that potential defendants can only be joined into a single action if the infringement arises out of the same or series of transactions or occurrences and any question of law or fact common to all defendants will arise in the action. It is no surprise that before this provision in the AIA came into effect, 15 September 2011 saw the largest number of patent infringement cases filed - with 50 cases filed against more than 800 defendants.

The AIA provision is somewhat aligned to the position in Europe and what will be under the new Unified Patent Court and unitary patent system. Article 33(1)(b) of the Agreement (or is it still "Draft Agreement" because it is taking so long for Member States to sign it?) provides that "an action may be brought against multiple defendants only where the defendants have a commercial relationship and where the action relates to the same alleged infringement." So, at least under the new system that potential attraction for NPEs is removed. But of course where the system taketh away, it also provides by way of significant discretion to judges whose exercise of the Rules and interpretation of the Agreement may possibly create patentee-friendly local/regional courts and some potentially attractive cost-capping.

But with no news on if and how many Member States are signing and ratifying the Agreement (save for the Polish government who has, courtesy of a reported Deloitte impact assessment report, chosen not sign the Agreement in favor of first observing from a safe distance how the rest of us handle the system), the days of us in Europe having to worry about travelling to the equivalent of Marshall, Texas to battle our client's patents are at least a few years in the future.