Upper court ruling could mean slow burn for Texas 'rocket docket'

Legal News Line Feb. 24, 2009, 2:36pm

U.S. District Judge T. John Ward

Editor's note: This story is the first in a series examining the future of patent infringement litigation in the Marshall Division of the Eastern District of Texas.

It took a car headrest - that familiar object that is often overlooked until it is needed by a stiff-necked driver - to profoundly change an East Texas court.

A fight over the patent for a pivoting headrest may be powerful enough to bring the decade of the "rocket docket" in Marshall, Texas, to a slow, declining burn.

In the final days of 2008, the U.S. Court of Appeals for the Federal Circuit issued a powerful writ of mandamus against the East Texas court, overturning the decision of U.S. District Judge T. John Ward denying TS Tech's motion to transfer its patent infringement case from the Texas court to Ohio.

The ruling, according to legal experts across the country, has already changed the pace of patent case filings in the Marshall Division of the Eastern District of Texas, a small legal outpost known for its expertise in patent legislation, but also known for its allegedly plaintiff-friendly juries and courts.

"The rocket docket engine has either slowed down or shut off completely," Washington, D.C., defense attorney Peter Strand of Shook, Hardy & Bacon, said during a recent interview.

But Thomas Melsheimer, a Texas-based attorney with the country's largest plaintiffs' patent litigation firm, Fish & Richardson, said the overall impact may not result in the significant changes some are predicting.

"I think it will mean that more motions to transfer will be filed," he said of the court's ruling. "But I don't think it will result in significantly more cases being transferred out of the district."

The rise of the rocket docket

When Judge Ward arrived in Marshall in the late 1990s, around a dozen patent infringement suits were filed in the court each year.

Lawsuits alleging infringement of a patent are usually filled with technical and scientific jargon and specific guidelines for constructing claims. But Ward took an interest and became knowledgeable in patent cases.

The judge kept a tight timeline; cases were pushed quickly through the court and the so-called "rocket docket" was born.

By 2007, according to several data sources, the number of patent cases in the Marshall Division of the U.S. Court for the Eastern District of Texas had risen above 200 a year.

Soon inventors began taking on huge companies like Nintendo -- and electronics giants like Samsung and Pioneer were battling it out in the small East Texas community.

"Plaintiffs' attorneys were drawn to file their cases where they could get knowledgeable courts with patent rules that processed cases quickly," Strand said.

"And friendly juries," he added.

Strand is not alone in his assessment of the Marshall juries.

As the rocket-docket grew, the court also earned a reputation for plaintiff-friendly juries and millions of dollars in rewards for plaintiffs. Those juries, or at least the threat of them, often motivated defendants to settle a case rather than risk millions in legal fees and possible jury awards.

"It is definitely perceived as an unbalanced place to litigate," Los Angeles-based defense attorney Steven Sereboff said in a recent interview.

The pace of the courts, under strict rules by Judge Ward, created a home-field advantage for plaintiffs, who could take as long as they wanted to plan their case, leaving defense attorneys a step behind once the case was filed, Sereboff said.

"Defense attorneys start so far behind the curve," he said, "and in a case that's rushed you have to hurry your defense. It became known as the 'rocket docket' because it sped cases through so much more quickly than other courts."

But plaintiffs' attorney Melsheimer said the rules that kept cases on schedule were effective in getting cases resolved even if they had an unintended advantage for plaintiffs.

"The local rules in East Texas put the defendant on a very fast track to get their ducks in a row in terms of their non-infringement and invalidity contentions," Melsheimer said. "In that sense, they are plaintiff-friendly. But because of all the filings there, it has become more difficult to get cases resolved quickly, which in some sense favors the defendant."

The power of writ

A writ of mandamus, by all accounts, is a blunt instrument. It literally means "we command" in Latin, the language of legal tradition. Fundamentally it is issued by a superior court to correct the functions and tasks of a lower court, a judicial remedy not unlike a legal appeal, but far more rare in practice.

In essence, its purpose is to remedy injustices.

"This is why the (TS Tech) case went all the way to the federal court," Atlanta-based patent attorney Alan McDonald said. "Everybody believed that Ward refused to ever transfer any case out of his court for any reason whatsoever. Finally, someone had the wherewithal financially to take this case forward."

That someone was TS Tech, sued by Lear Corp. for allegedly infringing its patent covering a pivotable headrest. TS Tech is a Japanese-owned company that makes Honda automobiles and has a subsidiary in Ohio.

TS Tech's appeal centered on several factors, the most important of which was the company's claim that Judge Ward gave too much weight to the plaintiff's choice of venue.

The company also argued that the Marshall court was not convenient since the distance from Ohio to Texas is more than 900 miles, all the physical evidence in the case was located in Ohio and that Texas had absolutely no ties to the dispute other than a few Hondas sold in the Eastern District of Texas.

The vague claim that a company conducted at least some business in the district is one often used to keep a case in East Texas, defense lawyers say. With most of the patent cases dealing with products that are sold all across the country, virtually any court can be chosen by a plaintiff as "convenient" if the criteria are not balanced with other issues.

"They sold the headrests into Honda, and Honda sold some cars in Texas," Strand said. "It's a pretty attenuated connection."

The court's ruling in favor of TS Tech agreed. It also offered its own strident assessment of the weight of a mandamus order.

"The writ of mandamus is available in extraordinary situations to correct a clear abuse of discretion or usurpation of judicial power," the court's order of Dec. 29, states.

The decision of the federal appeals court to rule against the East Texas court reverberated around the patent legal community. One legal Web site reporting the court's decision had more than 100 comments from patent professionals debating, questioning and clarifying the importance of the order.

"As a practicing attorney, I can count on one hand the number of times I've filed, and on two hands the number of times I've seriously considered filing a writ of mandamus," Strand said. "The standards are very high. It brings to mind the old saying, 'if you shoot for the king, don't miss.' It is not something you enter into very lightly."

When contacted, Judge Ward declined an opportunity to comment on the writ, saying it wouldn't be proper to discuss litigation.

The writ's impact

With legal precedent set by the mandamus order, the impact immediately followed. In February, a significant venue challenge in a patent suit against Microsoft was filed, with the software giant citing the TS Tech ruling as grounds to have its case shifted out of East Texas to Oregon, which the company believes is a more convenient forum.

A legal Web blog tracking patent litigation stated, "It took exactly one month for the first Eastern District venue opinion in a patent case reflecting the Federal Circuit's recent opinion in TS Tech to come out."

But how many others will follow remains to be seen, according to University of Houston law professor Paul Janicke, an expert in patent litigation who tracks all such cases.

The mandamus order "will have some impact over time. Some greater numbers of transfers are apt to order. I have no feel for how many," Janicke wrote in an e-mail in February.

Melsheimer said he expects defense attorneys to become more emboldened, perhaps too much so.

"Yes, there will be more challenges and defendants will be tempted to file (venue changes) in every case where there is even a colorable argument," he said.

Straud said the fallout from the legal ruling could slow the Texas rocket docket in other ways, not the least of which will be plaintiff's attorneys thinking twice before filing in the court that tort reform expert Theodore Frank once described as "the unlikely capital of United States patent litigation."

"Plaintiffs may be more inclined to consider where they file lawsuits in the first place," Strand said.

McDonald agreed. He believes plaintiffs may opt to pick another location rather than run the risk of losing a forum challenge.

"We're hoping to see fewer cases initially filed in that district," McDonald said, "because if they get transferred, they'll get transferred where defendants want to be."

Still McDonald cautions against drawing too-strong predictions for the future of Texas' rocket docket. The writ of mandamus "does not compel Judge Ward to make changes," he said. "The court was very clear that a transfer is not automatic."

Additionally, defense attorneys know that some advantages to the East Texas court remain, even for them, according to Sereboff. The court's highly knowledgeable judges remain far more capable than many others to hear tricky patent cases.

"These are always huge, complex cases," Sereboff said of patent litigation. "A lot of courts are hampered by criminal case loads and have judges that just don't like the complexity of patent cases."

That said, the change, albeit a slow burn or a complete flame out of the rocket docket may already be under way. A recent article on Bloomberg.com found that the number of transfer motions in East Texas more than doubled since the mandamus order over the same period of time last year.

The actual number of cases filed during that same time period, according to the report, has dropped by one-third.

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