If you mention Marshall, Tyler, Sherman, Beaumont, or Texarkana to a skilled patent attorney since the mid-2000s, you’ll get information about these number of small Texas towns, tips on their favorite grilled or Tex-Mex restaurants, and war stories where the great patent wars became guided. The Eastern District of Texas, as well as the District of Delaware and the Northern and Central Districts of California became the major battlegrounds for large technology companies and their non-practicing distant cousins (“NPEs”) to determine the size and amount of their money Innovations.
Given the adjustment of jurisdiction requirements by the Supreme Court in TC Heartland, Waco is not where the new US patent litigation center would emerge. Deep in the heart of the Texas Bible Belt, Waco lacks the abundance of technology companies typically found in the district’s southern neighbors like Austin and San Antonio. Even with Austin’s notoriety as a high-tech hub, the Western District only had 2.5% of patent cases filed nationwide in 2018.
However, that changed dramatically with the appointment of District Judge Alan Albright to the Waco Courthouse in September 2018. As a former patent attorney, Judge Albright purposely put in place a combination of proprietor-friendly guidelines and special court rules to attract patent plaintiffs (the party with first choice at the venue) in his courtroom. As a result, Judge Albright was assigned 792 patent cases in 2020, which was by far the most judges in the country. The drop load shifted to the west, but not across the I-35 corridor.
So why the recent rush to file in Waco? To be clear, most patent lawsuits filed in Waco are filed by NPEs who are looking for a faster, more predictable way to resolve it, and not necessarily the largest possible jury prize. But as the recent ruling in the VLSI v Intel case revealed, juries in the western district have no problem handing out the over $ 1 billion awards recorded in the other major patent sites, when the right case is. For non-practicing plaintiffs, filing with Waco also has the benefit of knowing exactly who your judge will be and that the likelihood of premature invalidation of asserted patents by the court or PTAB is essentially zero.
The case assignment practice used in the western district guarantees that as long as the case is first filed in Waco, it will be assigned to Judge Albright. This also applies if the location of facilities, witnesses, and documents makes the case more convenient for another department in the district. Once assigned to Judge Albright, he will retain oversight of the matter even if the case is later referred to Austin or San Antonio at the request of the litigants.
Of particular concern to non-practicing plaintiffs, Judge Albright never made a motion to file a pleading in the absence of patentable subject matter (often referred to as “101” or “Alice” motions). The well-known legal philosophy of Judge Albright is that, given the presumption of validity of a patent, such requests are not appropriate until discovery of the construction of the claims has been completed and a Markman command has been entered.
Also, given the large number of tech companies in Austin, Judge Albright typically does not grant 28 USC §1404 (a) requests to move the venue outside of the western district to allow witnesses and evidence. After repeated criticism from the Federal Circuit for delaying its review of fully informed court motions until after the claim was created, Judge Albright entered the Rules of Procedure this week requiring all requests for the venue to be finalized prior to building the claim. This order takes effect immediately. However, it remains to be seen whether Judge Albright’s new procedure will result in more referral requests being made. Whenever he was reprimanded by the Federal Circuit for delaying review of the transfer until after the claim was made, Judge Albright flatly denied the motion.
Although Judge Albright’s recent ruling provides for a faster determination of the challenges facing the venue, there are still several factors that make Waco a preferred target for patent litigation. Judge Albright’s Rules of Procedure for Patent Cases (OGP), issued on February 26, 2020, provide very expedited negotiation time, typically within 18 months of the first case management conference. The OGP also uniquely retains all discoveries except what is required to make claims until after the Markman hearing and generally limits the number of conditions for construction to ten unless the parties can Convince the court that more is needed in this case. From the NPE’s point of view, the restrictions contained in the OGP tend to minimize the costs of discovery before the claim is built and encourage more meaningful settlement discussions as soon as the court’s constructions are known.
In view of his shortened trial time, Judge Albright is also prompted to reject requests for suspension of his proceedings pending a validity check by IPR before the PTAB. Judge Albright has publicly stated that he will not stay cases pending the outcome of an IPR without any special circumstances, believing that patent holders deserve litigation in federal courts and that he “can resolve a patent case faster than PTAB. “Without a stay and in the face of a Markman decision and a probable negotiation date before the PTAB could make a final written decision, the PTAB can increasingly rely on these facts to enforce the introduction of intellectual property rights under 35 USC §314 (b ) the western district to refuse pending cases.
When you put these characteristics together (ability to select the judge, low likelihood of early invalidation of asserted patent, low likelihood of transfer, lower cost of initial discovery, and a quick timeline for the trial) it is easy to see why the western district overwhelmingly became the plaintiffs’ favorite jurisdiction in 2020. Will it continue in 2021? Probably as long as Judge Albright is at the helm. In many ways, having a large chunk of lower-priced NPE cases consolidated in one court with expedited trials and limited discoveries is a sensible way to contain the cost of such harassment suits. At the same time, the Chief Justice in the WDTX has left to the individual discretion of each judge whether or not to hold court proceedings during the Covid pandemic. As the recent VLSI versus Intel study showed, Judge Albright believes that processes can be safe during the pandemic if the right precautions are taken.
Should other judges in the western district decide that they want more of the patent document, all that would be needed to throw the current system into chaos would be a change in the way patent cases are assigned (e.g., Rad ” Approach in the northern district of California). Suddenly the predictability and consistency of Judge Albright’s approach could fall completely apart with different judges applying their own rules and systems. However, given Judge Albright’s enthusiasm for the construction of the largest patent document in the country, significant changes to the practice of the western district are currently unlikely. Indeed, the VLSI ruling likely brightened plaintiffs’ view of the potential gold pot in Waco a little.