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Texas order could increase patent litigation in Calif. District

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Jeremy Elman

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Silicon Valley

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Chitrajit Chandrashekar

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03 August 2022

A July 25 order from Chief U.S. District Judge Orlando Garcia of the U.S. District Court for the Western District of Texas shocked the patent litigation world.

Judge Garcia's order stops patent plaintiffs filing in Waco, Texas, from automatic case assignment to U.S. District Judge Alan Albright, who presently handles 25% of all patent cases nationwide in his courtroom.

The change is already being felt, as 46 lawsuits were filed in July in front of Judge Albright before the order, but only four subsequently, with only one being randomly assigned to Judge Albright.

Analysts appear split on what will happen to the largest patent docket in the country: The case load could continue in Waco; move back to the U.S. District Court for the Eastern District of Texas, which at one time handled 50% of all patent cases; find a new hotspot; or head in some other direction.

Few appear to be seeing the obvious conclusion, but just consider the pressure from Sens. Patrick Leahy, D-Vt., and Thom Tillis, R-N.C., and the priorities announced by Chief Justice John Roberts, as well as the U.S. Supreme Court's attempt to limit patent forum shopping throughout the country in the 2017 TC Heartland LLC v. Kraft Foods Group Brands LLC decision.

Based on these developments, the U.S. District Court for the Northern District of California and the U.S. District Court for the District of Delaware, already two of the top four most popular venues in 2022, are the likeliest courts to see an increase in patent cases.

Of these two, Delaware appears to be so overwhelmed with patent cases that the Northern District of California is likely to see the most significant bump. Here's a rundown of the possible courts where these cases will land.

Delaware

Delaware presently leads in the number of patent filings in 2022 with 1,411, per Lex Machina.

Delaware is telling the world it is drowning in patent cases and likely cannot handle many more because of its small judiciary. In the immediate aftermath of the TC Heartland ruling, Delaware patent cases took off, reaching 45% of all cases in 2019, but are going down every year, to 32% this year. Delaware's recent annual report on the federal courts emphasized that its docket tripled since its last new judgeship was authorized in 1985.

It is struggling to handle all of its cases, as it is the third-busiest federal district behind the U.S. District Court for the District New Jersey and the U.S. District Court for the Northern District of Florida. It is already the busiest patent court in the country this year, and is unlikely to be able to handle Judge Albright's docket in addition, i.e., an unimaginable 60% of all cases.

Texas

Texas' Western District is second, and its Eastern District is third in 2022 patent filings, at 1,405 and 749, respectively, per Lex Machina.

Congress and the judicial branch engaged in efforts recently to limit forum shopping, directly affecting Texas.

In 2017, the Supreme Court tried to cripple the ability of patent holders to engage in forum shopping in the TC Heartland case by providing a rigid test, i.e., patent cases may now be filed against U.S. corporate defendants only (1) in the district where the corporation resides — defined to only mean its state of incorporation, or (2) where the corporate defendant allegedly committed acts of infringement and maintains a regular and established place of business.

The Eastern District of Texas was the leading district until TC Heartland, dropping from half of all patent cases nationwide to less than 20% presently. Few defendants in the Eastern District of Texas satisfy the post-TC Heartland criteria since they neither reside nor have a place of business there, except for foreign companies that do not reside in any other judicial district.

The influx of patent cases in the Western District of Texas only occurred after Judge Albright was appointed; there was no reason for patent cases to be filed in that district before. Now that he will only randomly get patent cases, a return to the few cases in that district before his appointment is likely.

Northern District of California

The stars appear aligned for a return to the intention in the 1990s that the Northern District of California — currently ranked fourth in 2022 patent filings, at 355 — led in patent litigation for a number of reasons.

Historically, the Northern District of California led in patent litigation expertise because of its proximity to technology companies, being the first court to implement patent-specific rules in 2000. It is the logical destination for these cases as shown by the number of transfers to the district and a bench that regularly deals with technology disputes. The Western and Eastern Districts of Texas have transferred approximately 100 patent cases to the Northern District of California since TC Heartland.

The Northern District of California is well-equipped to handle these cases. The district's expertise in patent litigation guides virtually all U.S. patent cases today, including its rules requiring early infringement contentions and coordination on special Markman hearings before experienced patent judges to construe the patent terms.

The Northern District of California is a leader in resolving complex business disputes, pioneering now-standard practices such as its use of alternative dispute resolution and early neutral evaluation program in the 1970s and 1980s.

Plaintiffs should feel comfortable getting a speedy result versus other courts. The Northern District of California's average time to trial in a patent case in the five years since TC Heartland is 802 days, which is shorter than the District of Delaware's average time of 872 days, so a patent plaintiff may be mired in Delaware longer than California, especially due to the number of judges available.

In the five years since TC Heartland, the Northern District of California's average time to termination of a matter is 237 days, which compares favorably to the Eastern District of Texas at 259 days and similar to Delaware at 203 days.

Other Jurisdictions

Only six different courts even have 100 filings in 2022. There are no other hotspots on the horizon. In 2011, Congress tried to expand the number of experienced judges through a 10-year patent pilot program. A recent report from the Administrative Office of the U.S. Courts indicated that Congress' 10-year patent pilot program had little impact on the venue or the affirmance rate.

Many other districts transfer patent cases regularly, as they are typically randomly assigned to judges with no predisposition for patent cases. Plaintiffs tried over the years to file in typically speedy jurisdictions such as the U.S. District Court for the Eastern District of Virginia (No. 16 in 2022) or the U.S. District Court for the Southern District of Florida (which dropped out of the pilot program and is at No. 13 in 2022), but never gained significant traction.

Based on the various failed efforts, it is hard to picture which other jurisdiction will suddenly appear.

Whether patent plaintiffs like it or not, the Northern District of California appears poised to be the largest beneficiary of Judge Albright's docket, initially or by transfer, at least until Delaware gets substantially more judges, if ever. After TC Heartland, it is difficult to imagine patent plaintiffs continuing to fight a losing battle against California and Delaware.

Originally published on Law360.

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