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Mike McKool, founder of McKool Smith in Dallas

Texas Lawyer

Mike McKool, founder of McKool Smith in Dallas, discusses how changes in the Eastern District of Texas may affect patent litigation. [See "Should Firms Take Ownership in Patents?"]

So you want to try a patent infringement suit in the Eastern District of Texas, but you don't know the ins and outs of its six divisions? Well, look no further.

After interviews with a dozen experienced patent litigators, Texas Lawyer has uncovered some notable differences among the divisions that may surprise unsuspecting lawyers.

The Eastern District — particularly the Marshall, Texarkana and Tyler divisions — is popular with patent litigants because local rules give them firm trial settings, complicated infringement civil cases don't have to compete with a heavy criminal docket, and juries sometimes are more inclined to return multimillion-dollar verdicts. As a result, the district often leads the nation in the number of infringement suits filed.

Eight U.S. district judges and eight U.S. magistrate judges sit in the district, which runs from northern suburban Plano to southern industrial Beaumont. Currently two U.S. district judge benches are vacant. Three divisions have only one district judge, so litigants know exactly who will preside over their cases — another reason plaintiffs like to file suits in the Eastern District.

Here's a division-by-division look at what it's like to practice in each division.

The Beaumont and Lufkin Divisions

While the Beaumont Division has two U.S. district judges, one senior judge and a busy docket, a limited number of patent suits have been filed there over the past decade, because some lawyers were concerned U.S. District Judge Marcia Crone would preside over their clients' infringement suits. The perception, three lawyers say, was she did not like patent suits.

But Crone explains she just doesn't have the time. She travels regularly to the Sherman Division, where she is responsible for half of its criminal docket. She also presides over all of the murder and capital murder cases in the Beaumont and Lufkin divisions. A full-time judge does not sit in Lufkin.

"I have a lot of other cases that are very time-consuming, and I do the Sherman criminal docket," Crone says. "Patent cases are time-consuming and challenging."

But now that the Eastern District is participating in a new pilot program, more patent infringement suits will be funneled from Crone's docket to U.S. District Judge Ron Clark. A district that is part of the pilot program can designate a specific judge within a division to hear patent cases.

Clark, who handles the Lufkin Division docket in addition to his Beaumont duties, has a certain way of handling Markman hearings in infringement suits. (At a Markman hearing, a judge, as a matter of law, interprets the patent claim, which is the portion of the patent document that defines the scope of a patentee's rights for the jury.) He sometimes draws up proposed claim-construction issues before the parties have a chance to, says Carl Roth, a Marshall patent attorney.

"I call it Markman mediation," Roth says. Clark and his law clerk will prepare what they think is the proper claim construction for the jury based on the lawyers' briefing, Roth says. Then Clark shows the lawyers a slide show that explains what he thinks the terms in the claim should mean. "And what he winds up doing by the end of the day is he makes the parties agree to a construction," Roth says. "And he'll ask, 'What do I need to change to make it right?' "

Clark says that while he tends to hold Markman hearings early in a case — just like the rest of his colleagues in the Eastern District — each of those hearings can be different. He may get more involved in the hearing, depending on how complex it is. "If there are issues, there are lots of questions," Clark says.

Beaumont and Lufkin have a reputation for jury pools comprised of working class people, Clark says, but lawyers should not assume they will not understand the complexities of a patent suit. The judge says after a trial, he and the lawyers talk to jurors.

"I ask them, 'What would you tell this young lawyer what to do in trial?' The first response is, 'Don't keep asking the same question over and over again,' " which is a different way of saying, '[Lawyers] think we are stupid.' But that's in every jury," Clark says.

The Sherman Division

The Sherman Division is one of the most unusual federal jurisdictions in Texas.

It is home to the Eastern District's busiest docket overall, yet for years the U.S. Courthouse in Sherman has not had a federal judge sitting there: U.S. District Judge Paul Brown retired in 2006, and in 2008, U.S. District Judge Richard Schell moved to the division's newest courthouse in Plano.

Schell works on the Sherman Division's docket with the assistance of Crone, who handles half of its criminal docket, and U.S. District Judge Michael Schneider of Tyler, who handles half of the Sherman Division's civil cases. Schneider could not be reached for comment.

Schell and Schneider are part of the new pilot program, and litigants who file a patent infringement suit in the Sherman Division know it will be assigned to one of those judges.

Schell and Schneider are experienced trial judges, and are well-regarded by patent litigators, yet neither has as much experience trying patent cases as other judges in the Eastern District, because not many infringement suits are filed there. And there's a reason for that, says Dick Sayles, a partner in Dallas' Sayles Werbner.

"People don't want to go to Sherman, because panels in Sherman are far more conservative than the rest of the Eastern District," says Sayles, noting that Sherman juries are less likely to approve large damage awards.

The same goes for the Plano Courthouse, Sayles says. "It's in the same division. That's where most of the jurors come from in juror pools. Don't be confused. There's a courthouse in Plano, but it's in the Sherman Division."

Otis Carroll, a partner in Tyler's Ireland, Carroll & Kelley, agrees with Sayles. Some jurors in Plano can make lawyers uncomfortable, especially those who work in the area's high-tech industry, he says.

"The unknown in Plano for most lawyers is the jury panel. If you've got a patent case, do you want a bunch of electrical engineers from Plano on your jury?" Carroll asks. "Maybe you do, and maybe you don't."

Schell says he has not heard many patent cases in the past, because he has a fairly heavy criminal docket, and he must contend with complicated commercial civil cases. That's why it takes a while for Schell to issue scheduling orders in infringement suits that land on his plate, he says.

Schell says he likes to rule on claim-construction issues as quickly as possible "to speed up patent cases. . . . If there are disputed construction claims that I can hear both sides and make a ruling, I will do so," Schell says. "If they require further briefing, then obviously I can't do it that way."

Last week in Marshall, Schneider was presiding over his very first patent jury trial as a visiting judge, says Michael C. Smith, who represents a party in that case. "He's very courteous to the parties, and he rules on objections during testimony quickly from the bench, says Smith, a partner in the Marshall office of Siebman, Burg, Phillips & Smith.

And Schneider efficiently uses trial time, Smith says. "Normally we expect to get about six hours of evidence in, and with him we're getting a fair amount more than that."

The Marshall Division

Welcome to the house that Judge T. John Ward built — a house with no judge at the moment.

Ward adopted streamlined rules 11 years ago for handling complicated infringement suits in the Marshall Division. Those rules later were adopted by the entire Eastern District, which became a popular venue for filing patent suits as a result. Ward left the bench last month to join his son Johnny's firm, Ward & Smith, in Longview. [See "Father and Son Reunion." ]

President Barack Obama nominated Rodney Gilstrap, a partner in Marshall's Smith & Gilstrap, to fill Ward's bench. The Senate Judiciary Committee has approved Gilstrap, and he awaits confirmation by the full Senate.

For now, Folsom of Texarkana is handling the majority of Ward's docket with the help of visiting judges.

But once Gilstrap is seated, he will have to help with the Texarkana Division's docket, since the Marshall judge shares part of that docket.

Ward's way of handling his court differed from other Eastern District judges — especially when it came to selecting juries — and if Gilstrap adopts it, he'll stand out, Sayles says.

Typically, Ward seated 10 jurors, Sayles says, but other judges seat only eight. "The common wisdom among those that have the burden of proof is it's easier to persuade fewer people."

Marshall jurors have a reputation for being plaintiff-friendly and returning multimillion-dollar patent verdicts, but that shouldn't fool lawyers into thinking they automatically will side with plaintiffs when it comes to damages, says Marshall patent attorney Carl Roth.

"I have tried more cases in Marshall than anybody that's still active here. The jurors are fair, but they are not what we will call liberal in damages," Roth says. They are not liberal when it comes to awarding punitive damages to plaintiffs in a civil tort action who suffer a loss, Roth says. However, jurors believe plaintiffs deserve to be compensated for economic losses on "anything that they can sink their teeth into, like loss of profits or loss or royalties" in patent infringement suits, Roth says.

Tom Melsheimer, managing partner of the Dallas office of Fish & Richardson, says Ward tended to run a formal court, and juries in the Marshall Division are formal as well. "The thing that everybody needs to know about Marshall is everybody takes jury service as serious as going to church. It's formal. The jurors wear coats and ties," Melsheimer says. "And there are coats provided for them if they don't have a coat."

The Texarkana Division

Eastern District Chief Judge David Folsom is the lone judge in the Texarkana Division, but not for long.

Folsom will retire from the bench on March 17, 2012, and because he's leaving in a presidential election year, it is unlikely that the judicial nominee of President Barack Obama, should he make one, will be seated next year. Traditionally, Congress does not approve many nominations during the last year of a president's term.

Folsom says he will work hard, right up through his last day. "I want to leave my docket in as good a condition as possible," he says.

Like Ward, Folsom runs a streamlined patent docket, and he is experienced in readying infringement cases for trial, three patent lawyers say. His Markman hearings are structured like an appellate argument, they say, with each side's lawyers making their points uninterrupted.

Folsom says he does not limit the number of patent claim terms the parties consider in a Markman hearing. Occasionally, if he senses the parties are willing to compromise on the meaning of a term, he'll propose to the lawyers how he thinks the words should be interpreted for a jury. "And I'll let the lawyers look at the construction, and I'll tell the lawyers I'm open to changing my mind on this," Folsom says. "And that really refines the issue. If they don't agree with my construction, it gives them a chance to tell me I'm wrong."

Attorneys are fond of Folsom, because he's laid back and doesn't jump down their throats when they make mistakes. "Lawyers that go into the courtroom in Texarkana with the proper demeanor and the proper respect for the court" won't have a problem, says Nick Patton, a patent attorney and partner in Texarkana's Patton Tidwell & Schroeder. "Judge Folsom has a kinder hand. Judge Ward would call your hand immediately."

Patton says, as in Marshall, Texarkana juries are willing to clobber patent defendants when they have it coming.

Notes Patton, "The Texarkana juries are people who pay their bills and honor their contracts. And if somebody has committed unfair business conduct or someone has been liberal about borrowing someone's patent, they'll bust you. And they should."

The Tyler Division

The main reason litigators like filing patent infringement cases in the Tyler Division is because of U.S. District Judge Leonard Davis.

After Ward's retirement from the bench last month, Davis became the judge with the most patent experience in the Eastern District. His docket is second only to Marshall's when it comes to the number of infringement suits filed.

Davis shares a small portion of the Tyler patent docket with Schneider, but he hears the majority of infringement cases filed there. Another reason lawyers like trying cases in front of Davis is because they rarely have to get him up to speed on technical issues.

"He's more than a judge who is applying the law. He has actual firsthand experience with some of those technologies, and that's a very valuable asset to have," says Steven Geiszler, a patent attorney with the Dallas office of SNR Denton.

Davis earned an undergraduate degree in mathematics and a master's degree in management science, and he worked as computer programmer and systems analyst before attending law school, he says.

That experience means he doesn't rely on technical advisers in patent cases as much as other federal trial judges, Geiszler says.

When it comes to Markman hearings, Davis uses what he calls a "pingpong approach" for claim-construction issues. "I like for one side to make a point, and then I like the other side to make a point. And then I like to jump in and ask questions," Davis says. "I like to be very engaged."

While Tyler jurors are conservative, they are "very concerned about property rights," says Johnny Ward, a partner in Longview's Ward & Smith. "It's an under-appreciated venue."

Davis cautions that lawyers should not underestimate Tyler juries. "They work very, very hard to be fair, and they work very hard to understand the issues. And 95 percent of the time they understand the issues and give a fair result," Davis says. "[T]he juries do a good job of determining those issues."

Ward says Davis doesn't like to get involved with lawyers' petty discovery disputes in patent cases, but he will. "If you're playing games, he'll figure it out quickly."

Davis concurs: "I once heard my predecessor say, 'There are two ways to lose a case in the Eastern District. One is by a jury, and the other is by abusing discovery. . . . I really don't have that many discovery disputes. They know it won't be tolerated."

Eastern District Patent Filings By Division
  2001 2002 2003 2004 2005 2006 2007 2008 2009 2010*
Beaumont 1 0 4 3 2 1 0 8 2 11
Lufkin 0 3 3 2 1 44 30 10 11 7
Marshall 13 19 31 69 103 134 232 184 131 344
Sherman 15 9 12 13 11 10 7 8 13 28
Texarkana 5 3 4 5 8 23 23 20 9 63
Tyler 0 0 2 18 36 53 79 87 91 212
Note: Numbers are for each calendar year.
 * 2010's numbers include 337 false-marking cases. Under 35 U.S.C. §292, "any person" may sue anyone for up to $500 per offense who falsely marks an unpatented article as patented. The number of false-marking suits increased after the U.S. Court of Appeals for the Federal Circuit held in 2009 that the $500 penalty applies to each falsely marked product. However, the patent reform law that went into effect on Sept. 16 now requires a plaintiff in a false-marking case to have suffered "competitive injury" and states that marking a product with an expired patent is not a violation of §292.
Source: Eastern District of Texas clerk's office.
 

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