If you read about, get involved in, or otherwise pay attention to patent litigation, then you’ve heard of Marshall, Texas. For instance, Marshall is on the radar screen of judges in Washington, DC, as evidenced by the recent decision in In re Microsoft (one of several in the past couple of years) forcing the District Court to transfer a case to a new locale. According to Craig Tyler, even his “Pacific Rim” clients know about the small town of 20,000 or so residents sitting on the Louisiana border. As a guy who grew up in another small town of about 20,000 on the Louisiana border (El Dorado, Arkansas), Marshall reminds me of home. Tyler’s clients, however, do not share my affinity. Tyler explains:
“When you say ‘Marshall, Texas’ to your Pacific Rim clients…they know what you’re talking about.” And their response is rarely a happy one, he adds.
Their response isn’t happy because they were more than likely sued in Marshall, and either lost an infringement trial or ended up paying a settlement to avoid one. Indeed, Marshall quickly garnered a reputation for being friendly to patent owners, and that reputation was not lost on court followers. A 2006 Technology Review article called it “a haven” saying:
[P]laintiffs have such an easy time winning patent-infringement lawsuits against big-tech companies that defendants often choose to settle rather than fight.
That same year, the New York Times wrote “What’s behind the rush to file patent lawsuits here? A combination of quick trials and plaintiff-friendly juries, many lawyers say.”
However, before the ink was dry on these articles, the tides had already started to change. According to a study published in 2007 by Price Waterhouse Coopers, the cumulative win rate “after summary judgment” (presumably meaning at trial) from 1995-2006 was a whopping 83%, and the overall success rate was pegged at 60%. (PWC 2007 Study pg 20). However, just a year later, according to the 2008 study, the win rate for decisions from 1995-2007 (incorporating just one additional year of decisions) had fallen to about 72% at trial, with the overall success rate falling to just shy of 55%. (PWC 2008 Study pg 17). The most recent figures show decisions from 1995-2009 with a 67% win rate at trial, and a 55% win rate overall. (PWC 2010 Study pg. 22). Thus, the trial win rate between 2006-09 has been dramatically lower than the years from 1995-2006, and the overall win rate has held more or less steady the past three years.
Nevertheless, the plaintiff-friendly perception of the Eastern District of Texas persists, both in mainstream (such as the Dallas Morning News in 2010 calling it “extremely plaintiff-friendly“) and technical media (such as Ars Technica in 2009 referring to the “patent-troll-friendly Eastern District of Texas“).
This perception also still permeates conventional knowledge, as casual observers (such as Tim Berry) use phrases like “drastically slanted playing field” to describe the district. I don’t fault Berry for having this perception, and he did post links to the reports that I mentioned above so that his readers can make their own conclusions.
It all sounds good to me. Except then he went and set up an office in East Texas, pretty damn far from Yale, to sue in East Texas patent troll heaven.
In a moment of understanding, Berry adds:
But wait — is he wrong to do what optimizes his chances to win?
In that rhetorical question, Berry highlights the purpose of exploiting a perceived advantage: to increase your chance of success against a more formidable opponent. Criticizing particularly small companies for the mere fact that they bring their lawsuits in East Texas is a bit like criticizing David for daring to use more advanced weaponry (small, high speed projectiles) against Goliath, reportedly armed only with more conventional weapons like a spear and a sword.
Berry queried later in the day, asking if I thought “east Texas courts are no longer biased towards plaintiff?” Of course, this assumes I believed the courts to be biased in the first place. The truth is, whether a court is biased or not is not something you can glean from jury trial win rates. Winning a jury trial is more about communicating with the jurors than anything else. Plaintiffs who expressly chose to file in East Texas can be presumed to be have planned accordingly, defendants tend to be more reactive. As the statistics show, they’re catching up.
Nevertheless, even during the more imbalanced period prior to 2007, strategically filing in the Eastern District wasn’t less about tilting the playing field in your favor, and more about exploiting one advantage to neutralize advantages of larger, wealthier opponents. Today, despite the falling win rate, the Eastern District still prevails as one of the forums of choice because of the efficiencies it promotes, such as an organized, structured time table for discovery, and fixed trial dates.
You might expect all courts would provide these things, but you’d be wrong.