One of the problems that could be
addressed by patent reform legislation is venue shopping. In a series
of posts we’ll look at a popular litigation destination and why lawyers
are taking up residence – or at least office space – there.
Eastern District of Texas: Non-Practicing Entity Haven?
Marshall, Texas, a town of about 25,000 residents and the
self-proclaimed Pottery Capital of the World, has another feature you
aren’t likely to read about in a Chamber of Commerce brochure. As many
of our readers know, Marshall
has long been criticized as a patent troll haven – a place where plaintiffs in patent cases often walk away with huge awards in record time.
(As of writing, it is even noted on the town’s
Wikipedia page)
Our independent research of reports compiled by the Administrative
Office of U.S. Courts supports the notion that the Eastern District of
Texas, which includes Marshall, Tyler and Texarkana, has become a haven
for patent trolls. Prior to 2007, the district was not ranked among
the top 15 in terms of the most number of intellectual property case
filings. However, by 2007 it rose to ninth, and climbed to fifth in
2008 with a total of 411 case fillings.
According
to a prominent Texas attorney, Marshall “has seen an economic boom with
a lot of out-of-town lawyers coming to stay in town or to rent office
space while a matter is pending.”
This rise is largely due to the increase in recent years in forum
shopping by patent trolls, particularly in Texas’ district courts. In
2005, 2006 and 2008, three of Texas’ four districts ranked among the
top 15, and in 2007, all four districts were included in the top 15
districts hearing intellectual property disputes. This increase has
led to a
Boston Globe article characterizing
the district court at Marshall as “a venue that specializes in patent
cases,” even though federal courts are supposed to be equally well
equipped to handled all sorts of matters.
The shift in Texas filings from 2008 supports a theory that parties are
shifting to concentrate particularly on the Eastern District of Texas.
The three other districts showed marked declines in filings, while the
filings in the Eastern District rose by nearly 21 percent over the
previous year.
The Eastern District of Texas has shown a steady and significant
increase from 2003 (61 cases) to 2008 (411 cases). No other district
has shown such an exponential increase during that period of time.
According to Dennis Crouch at Patently-O,
who studied a three-month period in 2007, 15% of new U.S. patent cases
were filed in the Eastern District of Texas, beating out each of the 88
other federal district courts by a large margin. As of early 2008, “
about a tenth of the entire nationwide patent docket” was pending in a town with a population substantially smaller than Capitol Hill.
Our next post will look at why so many patent cases end up in Marshall.
