Special Report: The Rocket Docket - Patent law in East Texas

Published: Apr. 24, 2015 at 1:11 AM CDT|Updated: Jul. 19, 2016 at 2:01 AM CDT
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EAST TEXAS (KLTV) - In the early 1990's, Texas Instruments needed to file a lawsuit to protect some of its patents. but the federal dockets in Dallas were filled with criminal cases.

The company needed a court to file suit in, and settled on the one in Marshall. Today, the Eastern District of Texas, which includes that Marshall court, is the busiest district in the nation when it comes to patent litigation. But why has the Eastern District maintained its spot as patent "ground zero," and what do the rulings say about the East Texans who are making them?

Judge Leonard Davis has handled more than 1700 patent cases during his time as judge in Tyler's division of the Eastern District. He says that every day, when he looks at his cell phone, he notices technology that's been argued over in his courtroom.

"Technical aspects can be learned," Davis said. "You just can't let them intimidate you."

"Technical aspects" doesn't do justice to the cases Davis has seen. In April of 2015 alone, lawsuits against companies like Verizon, Microsoft, Nokia, Motorola, and DirecTV have been filed in the Eastern District. And the list doesn't stop there.

Davis is a pro at handling these lawsuits. But the decisions themselves are being made by East Texans, who don't spend all day in the courtroom.

"I often tell my jurors on the first day of jury selection, 'Y'all look like a deer in the headlights,'" Davis said. "Because they're a little overwhelmed that they're going to be deciding this case between these two giant tech companies."

And East Texans have a bigger voice in patent law than people in any other part of the country. In 2013, there were more patent cases filed in the Eastern District than there were in Los Angeles, Miami, New York, Chicago, and Boston combined.

The Texas Instruments case in the '90s was filed for convenience. But why have the cases stayed here?

Attorney Michael Smith of Marshall has been on the plaintiff, defendant, winning, and losing side of patent cases in the Marshall court.

"It's a normal thing in East Texas to resolve a case by having a trial," Smith said. "That's not normal in other parts of the country, and that's something I'm very proud of."

Smith says the big reason the cases keep coming to East Texas is the speed at which they're handled. Lawyers in the Eastern District call it "the rocket docket."

"The courts are trying to find a way to get these cases prepared and tried, inexpensively enough, that the resolution can be based not on the cost of litigation, but on the merits of the patents at issue," Smith said.

But critics of the Eastern District say it's a haven for patent law, because the juries are plaintiff-friendly.

In February of this year, in a Tyler courtroom, a jury awarded more than a half billion dollars to a Tyler-based company called Smartflash, who was suing Apple for patent violations.

The jury saw a commercial from several years ago, featuring Britney Spears, as evidence of Smartflash's efforts to commercialize their idea. Thanks to Apple's involvement, and the large sum, the ruling made national news.

But last month, a different company filed a $100 million suit in Tyler, also against Apple, and Apple won the case. Judge Davis says years ago, plaintiffs may have won more often, but says the two Apple cases are prime examples of that trend changing.

"In 2013, I think there were 15 patent cases that went to trial in the Eastern District, and 11 of those were defense verdicts," Davis said. "So that's a long way from plaintiff-friendly."

Smith agreed, and added that it's more common now for plaintiffs and defendants to listen to East Texas lawyers on patent law cases.

"We're over there all the time," Smith said. "And we know what the judges do, and what the juries respond to."

There's an ugly term associated with patent law in East Texas though: "patent troll."

The most common definition is companies that aren't actually making a product, but own multiple patents, and sue other companies for violating their patent.

At one point, the Baxter building, right next door to the courthouse in downtown Marshall, was a patent troll cave. Some patent-holding companies kept office space here, just to improve their standing with East Texas juries.

Smith, whose office is in a renovated shoe store across the square, says that trend has since changed in Marshall, largely because it's a bad idea.

"If the jury finds out you've got an empty office in Marshall, and you're trying to claim you're local, they're going to fry you," Smith said.

But we found another renovated old building in Marshall. It's being used because of patent law, but it's not a "patent troll" company.

Alan Loudermilk is a patent attorney. He owns the old Coca-Cola building in Marshall, and runs three business out of it. They manufacture products here; most recently, a device to measure skin color for a make-up company.

He's not from East Texas. He came here six years ago because of a patent lawsuit, because he'd heard the court handled cases quickly. He learned there's more to the Eastern District than speed.

"The judges and the clerks really work hard, and there's as knowledgeable about patent law as anywhere," Loudermilk said.

His experience with that case showed him that it would be worth it to have an office space in Marshall, not just the tiny office space that other companies were renting.

Now, he spends about a third of the year living and working in this old building. In addition to making products, he helps entrepreneurs determine if their patents are being infringed.

Loudermilk is very familiar with the term "patent troll," and says he's heard it used to describe a wide range of people and companies. But he says it's a term that shouldn't be used, especially to attack someone who had an idea.

"I think we've got to look beyond the label to see what that person did," Loudermilk said. "And if it's a quality idea, I believe that they ought to have their day in court, without being called names."

Even as Apple is appealing the original decision, Smartflash has filed a new suit against Apple in the Eastern District, covering all the devices that weren't in the original suit.

And the Eastern District isn't slowing down. Smith told us that many of the cases aren't of the quality they were a few years ago, but they're still coming to East Texas. That, along with the efficiency rules the judges have in place, means that the district has basically staked its claim to patent litigation.

But Judge Davis says that because all patent law starts with an idea, you never know what kind of suit might be coming next.

"We may see a resurgence in oil and gas litigation," Davis said. "Or some other field we haven't even thought about yet, I think the Eastern District has a long history, and will continue to have a rich history of being able to handle those cases, and be a good place for people to get their disputes resolved."

KLTV 7 reached out to Apple for a comment, but the company declined. Judge Davis is retiring next month, and until a new judge is appointed, other judges from the Eastern District will cover the cases filed in Tyler, which could affect the pace of the cases decided. Davis told us that the patent office is doing a better job now than it did at the turn of the century in approving patents. He said many of the lawsuits in the Eastern District now are a result of some of those lower-quality patents issued years ago.  

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