Legal Law

Texas Holding ‘Em

Nothing says patent litigation in 2021 like a good legal battle. As I have mentioned several times on these pages, including in a December column on the Google / Sonos patent wars, “the place of jurisdiction is a critical part of patent disputes, from finding litigation funding before the lawsuit to filing filing practice “. With good reason, a patent proprietor’s chances of success – either by settlement or with a view to negotiating – can vary dramatically depending on where the case is being heard. From planning to summary rating rates to the likelihood of a transfer, it is known that different districts approach patent cases very differently. It is also found that the most attractive district to patent holders right now is the West Texas District, where the Honorable Alan Albright has taken some plaintiff-friendly action in patent cases. Perhaps more importantly, by filing cases in the Waco division of the WDTX, plaintiffs can ensure that Judge Albright will handle their case. This is a benefit not found in other jurisdictions, especially in cases where cases are randomly assigned using the electronic version of the old SDNY wheel.

One of the main advantages for patent holders in Albright’s court was their willingness to postpone ruling on transfer requests. With sophisticated patent defendants almost always attempting to move cases – particularly from Texas – to home counties, Albright’s refusal to allow such transfer requests to hamper the progress of the cases before him puts considerable pressure on the defendants. For one thing, the settlement might look more attractive if a defendant is not only facing a construction process (as is typical in WDTX cases at the beginning), but possibly also a discovery. Not that Albright invented this approach to handling transfers, as his colleagues in the Eastern District of Texas have long been known to take a similar slow approach to this matter. Add that the Texas courts are generally unwilling to transfer cases unless absolutely necessary, and it is easy to see why patent holders continue to view Texas as the preferred forum for their files.

More recently, however, Albright’s practice of not making decisions about pending transfer requests a “top priority” has been withered by the Federal Circuit. The underlying procedural facts are straightforward. Netlist, a veteran patent plaintiff, filed a lawsuit against Korean semiconductor giant SK hynix in March last year. In May, SK hynix moved to transfer the case from the WDTX to the Central District of California. Despite SK hynix’s efforts to hold the case pending resolution of its request for transfer, it quickly looked forward to a Markman hearing in March 2021. So it filed a petition for Mandamus on the Federal Circuit, which was dealt with in a February 2nd resolution. An order condemning the district court for its “tremendous delay and apparent disregard of precedent” by allowing SK hynix’s motion to “stay unnecessarily informed while the district court ordered the parties to continue doing the merits”. To make things easier, the Federal Circuit ordered that the District Court “suspend all proceedings on the factual issues in the case until it has made a decision on the transfer request that allows a meaningful review of the reasons for its decision to be made.” .

Since the district court had already scheduled a hearing on the application for transfer prior to the Federal Circuit’s decision, a decision on the merits of SK hynix’s application was not long in coming. The day after receiving the Federal Circuit order, Albright issued a 17-page decision denying SK hynix’s request for full transfer. First, the court dismissed SK hynix’s argument regarding the compulsory transfer to California (where previous cases of patents of the same family as those claimed in Texas were filed by netlist), as the patents in question were related but not identical to those previously had been claimed. In addition, the earlier California actions in question had been suspended pending IPR rulings with no Markman or trial dates set, contrary to the substantial progress in the merit decision that had already taken place under Albright’s watch. Likewise, the court refused to refer the case on practical grounds and recognized the local interest in resolving disputes and resolving it faster by keeping the case in Texas. Eventually, the court denied SK hynix’s motion to at least move the case from Waco to Austin as the Waco courthouse remains open while that of Austin is closed due to COVID-19.

Not only did Albright deny SK hynix’s transfer request, but he tightened the vise by speeding up the schedule for creating claims – and setting a trial date for July 6th. In response, we can expect SK hynix to request a Mandamus review of Albright’s decision on the transfer request, after companies like Apple won a highly competitive Mandamus transfer request of their own back in November. The lines of battle are clear. The Federal Circuit has raised concerns about the fair treatment of defendants in the WDTX, while Albright continues to urge speedy patent cases on the matter. We can assume that the defendants will continue to press for a get out of Texas at every opportunity. For now, however, Texas is holding her whenever it can.

Please send me comments or questions at [email protected] or via Twitter: @gkroub. Suggestions or thoughts on topics are very welcome.

Gaston Kroub lives in Brooklyn and is a founding partner of Kroub, Silbersher & Kolmykov PLLC, an intellectual property litigation boutique, and Markman Advisors LLC, a leading patent advisory firm to the investment community. Gaston’s practice focuses on intellectual property litigation and related advice, with an emphasis on patent issues. You can reach him at [email protected] or follow him on Twitter: @gkroub.

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