EDTX Closely Scrutinizes Nuisance Value Settlement Strategy

The following article discussing the increased scrutiny serial patent litigation against large numbers of defendants is receiving in the Eastern District of Texas comes courtesy of our friends at DLA PiperJohn Guaragna and Brian Erickson.

A trend is emerging in multi-defendant patent cases in the patent-heavy docket of the Eastern District of Texas – at least in the numerous cases assigned to Judge Leonard Davis in Tyler. Over the past several months, Judge Davis has repeatedly expressed concerns surrounding plaintiffs who assert questionable patents to extract “nuisance value” settlements. In a recent patent case brought by Raylon LLC, Judge Davis summarized his views:

[T]his Court has some concerns about plaintiffs who file cases with extremely weak infringement positions in order to settle for less than the cost of defense and have no intention of taking the case to trial. Such a practice is an abuse of the judicial system and threatens the integrity of and respect for the courts. Often in such cases, a plaintiff asserts an overly inflated damages model, seeking hundreds of millions of dollars, and settles for pennies on the dollar, which is far less than the cost of defense. Where it is clear that a case lacks any credible infringement theory and has been brought only to coerce a nuisance value settlement, Rule 11 sanctions are warranted. (more…)

Federal Circuit Issues Writ of Mandamus to Transfer Patent Suit

Michael J. Sacksteder, Partner at Fenwick & West, sent along this alert he wrote with colleagues Ryan J.  Marton and Guinevere Jobson.

The Federal Circuit has taken away another tool used by patent plaintiffs to keep lawsuits in the Eastern District of Texas in spite of motions to transfer by defendants. “Non-practicing entities” (known as NPEs or sometimes by a more disparaging term) often attempt to make their lawsuits “stick” in the Eastern District by incorporating in Texas and/or by establishing a “headquarters” in that district. (One of the authors has considered performing an empirical study of how many NPEs list their address as 104 E. Houston Street in Marshall, Texas. 104 E. Houston Street is located next door to the Federal courthouse in Marshall). When considering venue transfer motions, Eastern District judges had previously declined to examine whether such tactics were motivated by litigation strategy or by other considerations. A recent Federal Circuit ruling changes that.

On November 8, 2010, the Federal Circuit in In re Microsoft Corp., No. 944 (Fed. Cir. Nov. 8, 2010) granted Microsoft’s petition for a writ of mandamus finding the District Court’s denial of Microsoft’s motion to transfer pursuant to 28 U.S.C. §1404(a). The Federal Circuit determined that the denial was a clear abuse of discretion and ordered the case to be transferred to the Western District of Washington as the more convenient forum. (more…)

US Supreme Court Accepts Microsoft Appeal in i4i Case

The following was sent in by Gene Quinn, of IPWatchdog and Practice Center Contributor.

Yesterday, the United States Supreme Court granted certiorari in Microsoft Corporation v. i4i Limited Partnership, with Chief Justice John Roberts taking no part in the decision or petition. The Supreme Court did not request the views of the Solicitor General, choosing rather to accept the matter with no input from the United States government.  The decision to grant cert. comes only days after the United States Patent and Trademark Office refused to grant reexamination of the patent in question.

Microsoft had filed an ex parte reexamination request on the patent in question, US Patent No. 5,787,449. The ‘449 patent exited reexamination unchanged. Microsoft then filed a second ex parte reexamination request, and it is this second request that was denied by the Patent Office on Wednesday, November 24, 2010. The denial of this second request means that the Patent Office did not believe there to be a substantial new question of patentability. (more…)