December 2020: Patent Practice in Western District of Texas

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This year, the Western District of Texas has become the most popular jurisdiction in the U.S. for patent cases.  According to Docket Navigator, as of mid-December 2020, more than 800 cases have been filed in the Western District of Texas.  This is significantly more than were filed last year, and over eight times the number of cases filed in the Western District of Texas in all of 2018.  See https://search.docketnavigator.com/patent/court/225/0 (90 cases filed in the Western District of Texas in 2018 compared to 808 in 2020 as of December 15, 2020).  In comparison, just under 700 cases have been filed in the district of Delaware, and 400 cases have been filed in the Eastern District of Texas.  See https://search.docketnavigator.com/patent/court/13/0 (District of Delaware); https://search.docketnavigator.com/patent/court/222/0 (Eastern District of Texas).  

The rise in the case count in the Western District of Texas coincides with Judge Albright’s appointment to the bench on September 18, 2018.  Judge Albright has set out to establish the Western District of Texas as a “serious venue for sophisticated patent litigation,” publicly stating:  “There is nothing I enjoy more than working on patent cases. I think, by and large, the lawyers are exceptional and the issues before me are always intellectually challenging. I couldn’t imagine a better docket than what I’ve got. I feel unbelievably lucky.”  Timothy Witherspoon, Waco Becoming Hotbed for Intellectual Property Cases with New Federal Judge, Waco Tribune (Jan. 18, 2020), https://wacotrib.com/news/local/waco-becoming-hotbed-for-intellectual-property-cases-with-new-federal-judge/article_0bcd75b0-07c5-5e70-b371-b20e059a3717.html.

Given the current landscape, it is important for both patent plaintiffs and defendants alike to consider how to navigate cases in the Western District of Texas.  As explained below, there are several strategic issues to consider.

Venue Considerations 

Judge Albright is the only Judge assigned to the Waco Division in the Western District of Texas, and, therefore, plaintiffs can effectively choose Judge Albright by filing their cases in the Waco Division.  Whether venue is proper is governed by the Supreme Court’s 2014 decision in TC Heartland, LLC v. Kraft Foods Group Brands LLC, which held that venue in patent cases is governed by 28 U.S.C. § 1400(b) and not the general personal jurisdiction statute 28 U.S.C. § 1391.  137 S.Ct. 1514, 1521 (2017).  Under the patent venue statute,“[a]ny civil action for patent infringement may be brought in the judicial district where the defendant resides, or where the defendant has committed acts of infringement and has a regular and established place of business.”  28 U.S.C. § 1400(b).  Part of the reason that the Western District of Texas has likely gained in popularity is that many companies have at least some connection to the Western District of Texas (for example, as compared to Marshall, Texas in the Eastern District of Texas, which remain another popular venue for patent plaintiffs).  Indeed, some have dubbed the Austin metropolitan area “Silicon Hills” after large high-tech companies like Amazon, Apple, Oracle, and many others have established offices in or near Austin.  

However, even if venue is proper in the Western District of Texas, defendants may wish to attempt to move the case out of Waco pursuant to 28 U.S.C. § 1404(a).  Prior to July 2020, Judge Albright had not granted any motion to transfer a case out of the Western District of Texas, but he had granted several motions for intradistrict transfer from the Waco Division to the Austin Division while retaining the cases on his docket.  See, e.g., Voxer, Inc. v. Facebook, Inc., No. 6:20-CV-00011-ADA, 2020 WL 3416012, at *1 (W.D. Tex. June 22, 2020); STC.UNM v. Apple Inc., No. 6:19-CV-00428-ADA, 2020 WL 4559706, at *9 (W.D. Tex. Apr. 1, 2020); VLSI Tech. LLC v. Intel Corp., No. 6:19-CV-00254-ADA, 2019 WL 8013949, at *5 (W.D. Tex. Oct. 7, 2019); Datascape, Ltd. V. Dell Techs., Inc., No. 6:19-CV-00129-ADA, 2019 WL 4254069, at *3 (W.D. Tex. June 7, 2019).  In granting intradistrict transfer, Judge Albright has focused on sources of proof being located in Austin as opposed to Waco.  See, e.g., Voxer, Inc., 2020 WL 3416012, at *7 (“[T]he Austin Division is clearly more convenient, by its offices, employees, and sources of proof that is readily available in Austin, and none of those factors favor the Waco Division.”).  

Additionally, with respect to transfer to outside the Western District of Texas, the Federal Circuit has recently granted mandamus in two separate cases—both involving large technology companies with offices in the Western District of Texas.  In In re Adobe Inc., the Federal Circuit found that Judge Albright had abused his discretion in denying Adobe’s motion to transfer the case to the Northern District of California.  823 F. App’x 929, 931 (Fed. Cir. 2020).  In so holding, the Federal Circuit applied Fifth Circuit law and relied on earlier cases ordering judges in the Eastern District of Texas to transfer cases to more convenient jurisdictions.  Id. (citing In re Genentech, Inc., 566 F.3d 1338, 1348 (Fed. Cir. 2009); In re TS Tech USA Corp., 551 F.3d 1315, 1318–19 (Fed. Cir. 2008)).  Ultimately, the Federal Circuit held that the district court’s denial of transfer was a clear abuse of discretion, finding that the convenience of the witnesses favored transfer and that Judge Albright had given too much weight to his ability to more quickly schedule a trial.  Id. At 931-32.  

Similarly, in In re Apple, the Federal Circuit found that Judge Albright placed too much emphasis on the location of the New York-based inventors when he found that the Western District of Texas would be more convenient for them because the inventors would have to travel a significant distance no matter whether they testify in Texas or California.  979 F.3d 1332, 1341 (Fed. Cir. 2020).  The Federal Circuit also discounted the “significant activities,” including claim construction proceedings, that had occurred in the case because “a district court’s decision to give undue priority to the merits of a case over a party’s transfer motion should not be counted against that party in the venue transfer analysis.”  Id. at 1343.  The Federal Circuit also emphasized that Judge Albright erred by focusing on Apple’s connections with the forum generally because the transfer factors require a connection between the venue and the events that gave rise to the lawsuit.  Id. at 1345.

Adobe and Apple, therefore, provide guidance regarding transfer.  First, witness location should be afforded significant weight, and the locations of all likely witnesses are important, including third-party witnesses.  Further, court issues, such as court congestion should be considered, including whether a case is likely to be resolved more quickly in another court because of a less crowded docket.  Finally, a general contacts with the forum may be insufficient where events giving rise to the lawsuit happened elsewhere.

Petitions for Inter Partes Review and Stays

Another important consideration for patent defendants is that Judge Albright tends to set a fast schedule, with a trial date less than two years from filing of the Complaint, and in many cases within 15 to 18 months from filing.  This timeline may impact a defendant’s ability to get a petition for inter partes review instituted, particularly in light of the Patent Trial and Appeal Board’s (“PTAB”) recent guidance in its precedential decision, Apple Inc. v. Fintiv, Inc., Case IPR2020-00019, 2020 WL 2126495 (Mar. 20, 2020).

In Fintiv, the Patent Trial and Appeal Board included a list of factors that it would consider to determine whether in its discretion it would deny institution under 35 U.S.C. § 314(a):

  1. whether the court granted a stay or evidence exists that one may be granted if a proceeding is instituted;
  2. proximity of the court’s trial date to the Board’s projected statutory deadline for a final written decision;
  3. investment in the parallel proceeding by the court and the parties;
  4. overlap between issues raised in the petition and in the parallel proceeding;
  5. whether the petitioner and the defendant in the parallel proceeding are the same party; and
  6. other circumstances that impact the Board’s exercise of discretion, including the merits.

Fintiv, 2020 WL 2126495, at *2.

The PTAB has applied the Fintiv factors in two decisions that it recently designated as informative.  First, in Apple Inc. v. Fintiv, Inc., Case IPR2020-00019, Paper 15 (May 13, 2020), after requesting further briefing from the parties, the PTAB denied institution in part because the Western District of Texas had already invested significant resources in the case and trial was “scheduled to begin two months before we would reach a final decision in [the IPR] proceeding.”  Id. at 12-13.  On the other hand, in Sand Revolution II v. Continental Intermodal Group – Trucking LLC, IPR2019-01393, Paper 24 (PTAB June 16, 2020), the PTAB reconsidered whether Sand Revolution II’s petition should be granted.  The PTAB granted institution, relying in part on the fact that the trial date had been moved several times and noting that, “barring exceptional circumstances, the Board adheres to a one-year statutory deadline prescribed by 35 U.S.C. § 316(a)(11) for entry of final decisions in instituted inter partes reviews.”  Id. at 9.  It further noted that, even during the COVID-19 pandemic, “[t]he Board’s judges and staff continue to operate on their normal schedules, albeit remotely, and Board oral hearings continue to be conducted on schedule.”  Id.

Notably, Judge Albright has also indicated that he is not inclined to stay cases because parties have a Constitutional right to assert their patent and he believes that parties ought to have a jury trial.  To date, he has not granted an opposed motion to stay pending resolution of an inter partes review.  As such, defendants in Judge Albright’s court generally must prepare to file a petition for inter partes review early in the case to have the best chance of avoiding a discretionary denial under 35 U.S.C. § 314(a).  Indeed, if defendants wait until after preliminary invalidity contentions are due in the litigation,  it is very likely that the case will have advanced to the point that a potential final written decision would come after the trial date, which is a significant factor under Fintiv.

Section 101 Motions

In 2014, the Supreme Court issued its opinion in Alice Corporation v. CLS Bank International, 573 U.S. 208, 217-18 (2014), reciting a two-part test for determining whether claims are patent-eligible under Section 101.  Post-Alice, the number of Section 101 invalidity motions  and patent ineligibility findings have increased significantly.  See, e.g., Robert Sachs, Alice: Benevolent Despot or Tyrant? Analyzing Five Years of Case Law Since Alice v. CLS Bank: Part I, IP Watchdog (August 29, 2019), https://www.ipwatchdog.com/2019/08/29/alice-benevolent-despot-or-tyrant-analyzing-five-years-of-case-law-since-alice-v-cls-bank-part-i/id=112722/.  Given the rise of invalidity findings under Section 101, it has become common for defendants to file motions to dismiss for patent ineligibility.  Id.  However, Judge Albright has indicated that in a typical case he will not consider subject-matter eligibility under Section 101 until after the Markman hearing.  

True to his word, as of August 2020, Judge Albright has denied all motions to dismiss under Section 101.  For example, Judge Albright denied the defendants’ motion to dismiss in Aeritas LLC v. Sonic Corporation, issuing a text order holding that “the Court does not believe this is one of the rare cases where it is appropriate to resolve the Section 101 eligibility of the patents-in-suit as a Rule 12(b) motion to dismiss. It is therefore ORDERED that Defendants’ motion is dismissed WITHOUT PREJUDICE. Defendants may refile their motion after the opening of fact discovery. Should Defendants elect to refile their motion at that time, the Court orders Defendants to brief the patent ineligibility of each asserted claim, i.e. , not just representative claims.”  6:20-CV-00103-ADA (W.D. Tex. Mar. 14, 2020).  

In an earlier case, Judge Albright denied a motion to dismiss under Section 101 noting “because a patent is presumed valid and requires clear and convincing evidence to prove its invalidity, a Rule 12(b) motion to dismiss is a procedurally awkward place for a court resolve a patent’s § 101 eligibility.”  Slyce Acquisition Inc. v. Syte-Visual Conception Ltd., No. 6:19-cv-257-ADA, 2020 WL 278481, at *5 (W.D. Tex. Jan. 10, 2020).  Further, Judge Albright explained, “because claim construction can affect—and perhaps, in most cases, will affect—a court’s § 101 eligibility analysis, the Court believes that it is generally wiser—and more efficient—to wait to determine a patent’s § 101 eligibility until after issuing its claim construction order.”  Id.  He also stated, “because resolving § 101 eligibility of all asserted claims almost certainly requires fact discovery and because fact discovery does not begin until after claim construction under the Court’s default Order Governing Proceedings, the Court believes it is wiser and more efficient to wait to determine a patent’s § 101 eligibility until after fact discovery has opened.”  Id. at *6.  Finally, Judge Albright also held that the difficulty in applying Alice favored waiting until later in the case to make decisions under Section 101: “a court stands a better chance of making the correct § 101 eligibility decision by delaying that decision in order to spend more time understanding the patents and its nuances, as well as technology in general, and what was ‘well-understood, routine, and conventional activities previously known to the industry.’”  Id. at *7 (citations omitted).

Judge Albright has yet to consider a motion for summary judgment under Section 101 post-Markman, but patent plaintiffs and defendants will be  interested to see how Judge Albright handles such motions.

Procedures and Trials in Judge Albright’s Court

In order to manage the influx of patent cases that have been filed in the Western District of Texas, Judge Albright has issued a number of standing orders.  In the last several months, Judge Albright has revised his “Sample Order Governing Proceedings,” several times with the most recent order issuing on November 5, 2020.  See OGP Version 3 (Albright, J.), https://www.txwd.uscourts.gov/wp-content/uploads/Standing%20Orders/Waco/Albright/Sample%20Order%20Governing%20Proceedings%20-%20Patent%20Cases%20110520.pdf.  Judge Albright has changed some of his earlier procedures; for example, he added “presumed limits on the number of claim terms to be construed.” Id. at 4.  Judge Albright requires parties to contact the Court to arrange a teleconference with the Court before filing a Motion to Compel discovery.  Id. at 3.  Perhaps most interesting, Judge Albright continues to limit discovery before the Markman hearing with the stated goal of limiting costs while the parties await their claim constructions.  See, e.g., Waco Federal Judge Alan Albright, Dunham & Danham Law, https://dunnamlaw.com/alan-albright-united-states-judge-for-the-waco-division-in-the-western-district-of-texas/.  

After several patent trials had been held in other jurisdictions, including the Eastern District of Texas—in August, Judge Gilstrap presided over a jury trial in Optis Wireless Technology v. Apple Inc., Case No. 6:19-cv-00066 (E.D. Tex.), where the jury awarded the plaintiff over $500 million—Judge Albright announced that he was prepared to go forward with trials starting in September.  See Daniel Siegal, WDTX Judge Says Virus Case Drop Means Trials Start Soon, Law360 (Aug. 19, 2020), https://www.law360.com/texas/articles/1302606.  Judge Albright has indicated that trials can be conducted safely despite the pandemic given the Court’s large courtroom and jury box.    

In mid-October 2020, Judge Albright conducted his first patent jury trial since taking the bench, in a case that had been scheduled and delayed several times due to the pandemic.  MV3 Partners v. Roku, No. 6:18-cv-00308-ADA.  The jury returned a verdict for the defense, finding that plaintiff had failed to prove by a preponderance of the evidence that defendant infringed the patents at issue.  Id. at Dkt. No. 387.  Plaintiff  filed a motion for a new trial on October 26, 2020.  Id. at Dkt. No. 395.  

Conclusion

The Western District of Texas is likely to remain a popular venue for patent cases.  As Judge Albright’s case load continues to increase, it will be interesting to follow whether Judge Albright can fast-track case schedules.  Further, as more cases advance to summary judgment and trial, parties will be watching closely to see whether Judge Albright is inclined to grant motions for summary judgment and whether juries in Waco or Austin will award large verdicts.  In the meantime, plaintiffs will likely continue to file cases in Waco.  Defendants may decide to seek transfer, but must also make early strategic decisions, such as whether to file a petition for inter partes review. 

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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