Eastern District of Texas
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The Eastern District of Texas is located in the Fifth Circuit of the United States Court of Appeals. Patent claims in this district are appealed to the United States Court of Appeals for the Federal Circuit.
Marshall, Texas, located in the Eastern District of Texas, has become "the unlikely patent litigation capital of America" (Texas Monthly) and has gained a reputation for being a "rocket docket" for patent cases. (MIT Technology Review) However, this "rocket docket" claim is no longer true, as it takes two to three years on average for a patent suit to reach trial in the Eastern District of Texas, compared to around a year in Eastern Virginia. (Ars Technica) In 2002, 32 patent lawsuits were filed in the Eastern District. (New York Times) In 2015, the Eastern District of Texas received 2,540 patent litigation cases. This constitutes 43.6% of all patent litigation cases filed in the United States, which is more than the cases of all districts outside the top three combined (41.9%). (Lex Machina) According to PricewaterhouseCoopers, the percentage of patent litigation cases in the most active districts continues to increase, leading to increased concentrations of patent litigation in certain districts of the United States. From 2012 to 2015, 4,350 patent lawsuits were filed with Judge Rodney Gilstrap, which was 3,000 more cases than were filed with the next highest judge. (Lex Machina)
Lawyers claim that the district's rules and procedures make it more difficult and more expensive to defend patent lawsuits. However, some lawyers also state that these procedures were not a result of corruption, but simply an attempt to manage the huge number of patent cases the Eastern District of Texas receives each year. Permitting plaintiffs to choose where their case is considered allows patent litigation to concentrate in an area that has a reputation of being plaintiff-friendly. (Corporate Counsel)
PricewaterhouseCoopers statistics show that the Eastern District of Texas had 55 decisions in 2015 involving non-practicing entities (NPEs) as patent holders, which was the most in the country, and 49 percent of NPEs were successful in their patent litigation cases, which is almost double the national average of 26 percent. Decisions involving NPEs made up 37% of the total decisions in the Eastern District of Texas.
The increase in patent litigation in 2015 was caused in part by the rise of high-volume plaintiffs, or patent owners that file at least 10 cases in a calendar year. (Lex Machina)
History
Although it is a federal district, the Eastern District of Texas does not have an FBI office or a U.S. Attorney's office, which lightens its criminal caseload from drug offense cases that inundate other federal courthouses. (Texas Monthly)
The Eastern District of Texas began to rise in prominence due to the patent monetization strategy that Texas Instruments used in the 1980s to save itself from bankruptcy. (Bloomberg) By the 1990s, Texas Instruments was earning more money from patent litigation than it was earning from operations. To maintain its profits, Texas Instruments had to continue using the court to extract royalties from those using their patents without permission. However, high volumes of criminal cases had begun impeding speedy trials in Dallas, where Texas Instruments is based, so the company looked toward Marshall, where criminal cases made up only 10 percent of the docket. (Texas Monthly)
Judge T. John Ward began hearing patent cases after he was sworn in on the East Texas federal bench in 1999 and developed a set of rules for the court that counteracted the traditionally slow pace of patent cases. These changes, including page limits on document and strictly timed opening and closing documents, earned Marshall the reputation of being a "rocket docket." Consequently, the Eastern District of Texas was soon inundated with patent suits filed by companies who wanted to resolve their conflicts quickly. (NYT)
Blog Post
Just four years after Congress passed the Leahy-Smith America Invents Act, patent legislation has resurfaced in the 114th Congress with the introduction of the Innovation Act (H.R. 9) in the House and the PATENT Act (S.1137) in the Senate, legislation that is intended to enact sweeping reform of the current patent system and combat abusive patent litigation. The House and Senate Judiciary Committees have been working to prevent supposed patent trolls from filing frivolous litigation and stifling innovation in the United States. The term "patent troll" is often used interchangeably with the terms "patent assertion entities" and "non-practicing entities."
Some claim that the concentration of patent litigation cases filed in the Eastern District of Texas proves that patent reform is necessary. Supposedly, patent trolls fill the courts of the Eastern District of Texas with litigation because the judges there incentivize patent trolls to file in their district. Lawyers claim that the district's rules and procedures make it more difficult and more expensive to defend patent lawsuits. However, some lawyers also state that these procedures were simply an attempt to manage the huge number of patent cases the Eastern District of Texas receives each year. Letting plaintiffs choose where their case is considered allows patent litigation to concentrate in an area that has a reputation of being plaintiff-friendly.
The Eastern District of Texas rose in prominence as a court of patent litigation due to the patent monetization strategy that Texas Instruments used in the 1980s to save itself from bankruptcy. By the 1990s, Texas Instruments was earning more money from patent litigation than it was earning from operations. To maintain its profits, Texas Instruments had to continue using the court to extract royalties from those using their patents without permission. However, high volumes of criminal cases had begun impeding speedy trials in Dallas, where Texas Instruments is based, so the company looked toward Marshall, Texas, where criminal cases made up only 10 percent of the docket. Although it is a federal district, the Eastern District of Texas does not have an FBI office or a U.S. Attorney's office, which lightens its criminal caseload from the drug offense cases that usually inundate other federal courthouses.
Judge T. John Ward began hearing patent cases after he was sworn in on the East Texas federal bench in 1999 and developed a set of rules for the court that counteracted the traditionally slow pace of patent cases. These changes, including page limits on document and strictly timed opening and closing documents, earned Marshall the reputation of being a "rocket docket." Consequently, the Eastern District of Texas was soon inundated with patent suits filed by companies who wanted to resolve their conflicts quickly. However, this "rocket docket" claim is no longer true, as it now takes two to three years on average for a patent suit to reach trial in the Eastern District of Texas, compared to around a year in Eastern Virginia, which receives far fewer patent litigation cases. In 2002, 32 patent lawsuits were filed in the Eastern District of Texas. In 2015, the district received 2,540 patent litigation cases. This constituted 43.6% of all patent litigation cases filed in the United States in 2015. According to PricewaterhouseCoopers, the percentage of patent litigation cases in the most active districts continues to increase, leading to increased concentrations of patent litigation in certain districts of the United States. From 2012 to 2015, 4,350 patent lawsuits were filed with Judge Rodney Gilstrap of the Eastern District of Texas, which was 3,000 more cases than were filed with the next highest judge.
However, this rise in the number of patent lawsuits matches the increase in numbers of patents granted by the U.S. Patent and Trademark Office. From 2009 to 2015, the number of patents applications filed increased from 460,924 to 580,327. 189,120 patents were granted in 2009, while 325,037 patents were granted in 2015. The number of patent lawsuits increased from 2,560 in 2009 to 5,378 in 2015. The patent litigation rate has remained relatively steady, with rates of 1.4 percent in 2009 and 1.7 percent in 2015. This time period saw a low of 1.1 percent in 2010 and a high of 2.0 percent in 2013.
The Eastern District of Texas had 55 decisions from 1995 to 2014 involving non-practicing entities (NPEs) as patent holders, and 49 percent of these NPEs were successful in their patent litigation cases. The Eastern District of Texas decided a total of 148 patent litigation cases from 1995 to 2014, which means that decisions involving NPEs made up 37% of the total decisions in the Eastern District of Texas during this time period.
Nationally, practicing entities had an overall success rate of 35 percent in patent litigation cases. Non-practicing entities had a lower success rate of 26 percent. Out of the types of non-practicing entities, universities and non-profits were the most successful with a 48 percent success rate. Companies and for-profit organizations were successful in 31 percent of their litigation cases, and individual and investors succeeded only 18 percent of the time.
Congress' push for patent reform creates the perception that patent trolls are constantly abusing patents and preventing innovation. However, less than 2 percent of patents in the United States are actually litigated, and there has not been a significant change in the amount of patent litigation that would warrant a complete reform of the current patent system.
