ED Texas Patent Filing Trends – It Isn’t What You’re Thinking

Originally published by Michael C. Smith.

Remember all those articles in August about how patent filings in the Eastern District of Texas had “shattered records”?

For example, in New Patent Infringement Lawsuits in East Texas Shatter Records, reporter Jeff Bounds with the Dallas Morning News noted that “there were more lawsuits alleging patent violations filed in the Tyler-based courts during the second quarter of the year than in all the other federal courts across the country combined. From April to June, lawyers shattered all records when they filed 839 patent infringement cases in the Eastern District of Texas.” (Emphasis mine).  The article correctly went on to identify the cause – what it calls the “high-volume plaintiffs” accounted for 650 patent cases in the Eastern District in the second quarter, or 77 percent of the new caseload. (“High volume” means those were only a few plaintiffs/asserted patents, but many defendants sued per patent). And even more correctly, it indicated that the trend may have been related to indications that Congress might pass additional legislation relating to patent cases.

This month’s story is going to be … wait for it … that filings for the third quarter of the year are down substantially. 

But the point that might be missed in the scramble to identify a “trend” is that as some judges are wont to observe, context matters.  The impact of indications of potential activity by Congress may not have been to cause filings so much as to push some filings that would otherwise have occurred in the third quarter up into the second, in much the same way that the passage of the AIA in 2011 front-loaded that fall’s filings into the summer.  Or the way that the Alice opinion reduced filings late last year, but then filings came back up in the first quarter of this year.  Texas practitioners certainly see the same cycle every two years when plaintiffs have to decide whether to file all their cases before the laws enacted by the most recent session of the Texas Legislature go into effect, usually on September 1.  Unlike Congressional action, Texas statutes typically take effect 90 days after the session ends, regardless of when they are passed or signed into law.  Not always, but typically, so the end of August is perennially decision time for attorneys representing potential plaintiffs in Texas when they have to decide if they are better off under the old or new law.

So for the same reason that the filings in the snapshot that is the second quarter probably didn’t really accurately reflect the overall docket activity, potentially neither will the third quarter, when plaintiffs’ cupboards were likely relatively bare as a result of the accelerated activity in the second quarter.

Interestingly, the eDekka cases that were recently dismissed by Judge Gilstrap on 101 grounds were filed during the second quarter, so if you have nothing better to talk about during coffee breaks, speculate on whether the successful resolution of the cases on 101 grounds had anything to do with that.  Keep in mind that 103 of those cases were filed in 2015, all in the second quarter, with 41 being filed in the last two weeks of the period.  So did the potentially accelerated filing decision affect the decision of whether to file?  In much the same way that, let’s say, a quarterback under pressure might make decisions that cause faces like this?   (Yeah, I know he’s our quarterback now but I’m not posting a picture in a Cowboys uniform till he wins a game.  And it’s not looking promising for a while).

And here’s another thought for tea time later in the day, for those of you that are into that sort of thing.   Maybe the downtick in filings really does indicate that there is a long term change in filing strategy by high volume plaintiffs either as a result of consideration of potential Congressional activity (people sometimes really do change their conduct when Congress begins deliberating on an issue) or as a result of a better appreciation of the effect of Alice or of courts’ rulings under Section 285 following Octane Fitness.  Hmm.  Talk among yourselves about that one around the firm.  (Try to look this fabulous when you do it, if at all possible.  True story – a couple of years ago my wife and I, who is a big-time Suits fan, sat next to Gina Torres on a long flight.  She really does look that fabulous in person.  Just killed the boot-cut jeans and tailored jacket look).

But I digress.  My final point (as my priest says, that usually means I only have three more – yeah, Father McLaughlin, I’m talking about you) is that it’s not a “trend” till you see the same thing for at least two quarters – and possibly three.  As long as the “trend” changes direction each quarter – it’s not a trend.  Come January I think we will all know a lot more about what is really happening with filing trends, and the rulings that may help shape them.

Curated by Texas Bar Today. Follow us on Twitter @texasbartoday.

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