Surprises in East Texas

Most people seem to think Texas is an arid desert wasteland with tumbleweeds blowing in the dust amidst chirping crickets.  That’s why many are pleasantly surprised when they drive through the intensely forested and green rolling hills of East Texas. 

But that is not the only surprising thing in East Texas.

Since becoming a patent litigator, I have become quite familiar with East Texas for another reason entirely: it is one of the hottest spots for patent litigation in the entire country; a fact, which while well known to patent litigators, is only now becoming known to the general public.  In fact, just earlier this week the New York Times (registration required) (also can be read here) ran a major article highlighting the East Texas Patent "Rocket Docket."  Here are a few highlights:

ON a crisp Monday morning earlier this month, about 20 lawyers from some of the country’s top law firms shuffled their way into a brightly lit, wood-paneled federal courtroom in this small city in eastern Texas.

Wearing white shirts and dark suits, the lawyers congregated in small groups, leaning into one another with their arms crossed and speaking in hushed tones.

At precisely 8:30 a.m., a series of knocks on the right side of the courtroom signaled the entrance of Judge T. John Ward, a blur of black robe and white hair, who quickly took his seat and, with little preamble, began the proceedings.

Over the next few minutes, a 10-person jury listened raptly as lawyers for both sides laid out the case. Hyperion Solutions, a software company based in Santa Clara, Calif., accused the OutlookSoft Corporation of Stamford, Conn., of infringing two of its patents, causing $50 million in damages. A lawyer for OutlookSoft said the company did not steal any patented technology, adding that Hyperion’s patents were not even valid.

What was remarkable about the trial was not the issue being tried or the arguments proffered by each side, but that these big companies — like dozens more from the East and West Coasts — wound up in the Federal District Court here in Marshall, the self-proclaimed Pottery Capital of the World and home to the annual Fire Ant Festival (sponsored by Terminix, the pest-control company).

More patent lawsuits will be filed here this year than in federal district courts in San Francisco, Chicago, New York and Washington. Only the Central District of California, in Los Angeles, will handle more patent infringement cases.

[. . .]

What’s behind the rush to file patent lawsuits here? A combination of quick trials and plaintiff-friendly juries, many lawyers say. Patent cases are heard faster in Marshall than in many other courts. And while only a small number of cases make it to trial — roughly 5 percent — patent holders win 78 percent of the time, compared with an average of 59 percent nationwide, according to LegalMetric, a company that tracks patent litigation.

The article goes on to attribute some of the growth in patent litigation to a large number of personal injury attorneys in East Texas.  East Texas was historically well-known for juries who hate big corporations and like to render very high verdicts.  However, since the late 1990s when Texas passed sweeping tort reform legislation (which, among other things, limits "non-economic damages" to $750,000!), the theory is that these personal injury attorneys have been looking for new sources of revenue.  The article quotes a joke:  "In Marshall, an oft-told joke is that the passage of tort reform was when many local lawyers made the trip from P.I. to I.P. — that is, they moved out of personal injury and into intellectual property."

There probably is some truth to that, but I think the more likely reason is the fact, also mentioned by the article, that the Federal District Court for the Eastern District of Texas recently adopted new patent rules.  The rules streamline the complex affair of patent litigation and put it on a fast timetable from filing to trial, with measurable deadlines in between.  In short, given the oft-cited maxim that "justice delayed is justice denied," patent-holding plaintiffs file there to get quick resolution.  Even the defendants accused of patent infringement generally don’t mind resolving the disputes there because the rules make for a dependable schedule that can be relied on, and the judges are fair.

I wonder if the judges were thinking of the local economy when they adopted the rules. It sure does seem to be bringing money out to East Texas.  The local firms are always hired as local counsel, bringing in lots of dollars. And the hotels and restaurants are always packed with well bankrolled attorneys.

I think the patent rules are a good thing, both for justice and for the East Texas economy.  Still, most people are just as surprised by the thriving patent litigation dockets in East Texas as they are by the lush vegetation.

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8 Responses to Surprises in East Texas

  1. Edje says:

    In Jefferson County (further south in East Texas) extra-jurisdictional personal injury suits remain quite the rage, but there don’t seem to be any positives. The cited report focuses on recent trends; I remember my parents discussing the issue in the late 80s.

    The other surprise: Before my mission a cousin told me to take landscape pictures of home (in Jefferson County) to show my companions–otherwise they wouldn’t believe it was a semi-tropical rainforest/swamp.

  2. john f. says:

    Thanks for the background info Jordan. I’m not sure what to make of the development of special courts. It works fine for civil law countries, but the basis for the specialized courts in those countries is statutory. I find it a bit confusing that a particular court can create a niche industry by revising its own local rules.

  3. Jordan F. says:

    John:

    That is an interesting concept- “specialized court”- and it does seem that special patent rules might be moving certain courts in that direction. However, while the Eastern District of Texas may be a more informed court regarding patent issues simply by virtue of the fact that its local rules (and alleged favorable plaintiff climate) attract more patent disputes, I don’t think it can be considered a “specialized court” quite yet.

    There has been some debate in the IP community about legislation to create such specialized courts for patent disputes, however, much like the Federal Circuit Court of Appeals being designated as the court to hear all patent-related appeals. There is a lot of opposition to this proposal for many reasons. (There is still a lot of opposition to having a “Federal Circuit Court of Appeals” for that matter.)

  4. Jordan F. says:

    Yes, the landscape in East Texas is surprisingly diverse, both in geographical and legal terms. Southeast Texas is quite swampy, which does tend to surprise a lot of people.

    I think part of the issue is that people just forget how BIG (!) Texas is.

  5. john f. says:

    I like the idea of statutorily creating specialized patent courts. The area of law is so technical and complicated, with its own body of federal law that has developed, that such a court would contribute to the cause of justice in these matters, in my opinion.

  6. I enjoyed your comments about Marshall. We enjoy showing off our downtown to visitors. The next time you’re in town, give me a call and let’s have a drink (coffee; yes, we actually have a Starbucks…or iced tea…or whatever. You can find me at http://www.TaylorOffices.com

  7. john f. says:

    Do they have coke there?

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