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Message: Nice read from Wolfpack on PTSC board RE East Texas

Nice read from Wolfpack on PTSC board RE East Texas

posted on Oct 12, 2007 07:39AM

The October issue of IP Law & Business has a good little article by William Holstein on the Eastern District's recent trend of defense verdicts, noting that the district's win rate in jury trial and bench judgments stood at 11% for the year in August, less than half the national win rate of 24% (the LegalMetrics statistic they are reporting lumps together summary judgment and trial wins, which is why both numbers seem abnormally low for readers used to win rates at trial).  The article isn't available online to nonsubscribers - in fact I had to buy a copy by mail after getting harassed by people who saw me quoted and wondered when I'd changed firms to McKool Smith, which is where the article says I work.  Well, I haven't - still on the other side of the square with Carl Roth - but the mistake is understandable, I guess (actually there is more than one lawyer named Smith, even in Marshall.  There are even two of us working on the patent docket.  And Melissa and I aren't even related.  Weird, huh?). My comments center on that the change in verdicts doesn't reflect a change in the juries or the judges, in my opinion, but rather in the quality of cases and lawyering - speaking in general terms more relatively weak cases have been filed in recent years, and the "big city" defense lawyers (I really don't think I called them that - the accepted term is "TBL"s) are doing an increasingly better job of defending cases.  Combine that with Craig Tyler's comments that the law is changing, making obviousness a distinct threat in cases, and you have what he so poetically describes as "a bad year for patent trolls." I also agree with Craig that empirically, Eastern District juries have awarded smaller damages in cases - many (in fact most) ED verdicts in patent cases have been in the $1-4 million range, which in most cases doesn't cover the costs of bringing suit (and yet are still classified as wins for the plaintiff).  And I agree that they "think $1 million is a lot of money" - what a ridiculous thing to think! - and that can affect what they do on noneconomic damages.  But I disagree that it's just because juries think that's a lot of money so they don't award more that the awards are small.  In my experience local juries have no problem with awarding whatever economic damages you can effectively blackboard, assuming you've convinced them solidly on liability.  I think damages have been small because they arose in cases where the royalty base was just small, and three percent times not a lot is not much.  But remember that most of those cases were also pre-eBay when the amount of damages didn't represent the real value of a case - it was the value of the injunction. I recall the TI v. Hyundai case where our client Texas Instruments won a jury verdict of around $27 million, but the relevant number was the ensuing cross-license worth in excess of a billion dollars.  Even a noncompetitor such as a patent holding company was entitled to an injunction, so the stakes were perennially much higher than today.  Today a smaller (although perhaps not completely clearly defined) group of prevailing plaintiffs can obtain injunctive relief, and as Craig also correctly notes (and of course it keeps paining me to say that Craig's said anything right, but sometimes I have to) a smaller subset of those plaintiffs are going to be able to make the showing of "willful" infringement so as to get damages enhanced and fees awarded. So I think the national win rates are likely to drop in the short and midterm as cases in the pipeline with these ex post filing fleas are lost in higher rates and the end result even for those that prevail is likely to be a smaller payout.  (Again, speaking in generalities - of course my clients will all get more and pay less than the average).  But, what I think will happen after the new caselaw shakes out we'll have a reduced number of cases filed as plaintiffs consider the above and weed out cases that are no longer viable under the new standards.  What's filed will still have  EBay/KSR/Seagate issues, of course - they'll just be the more difficult.ones.  Most of the ones with an obvious obviousness bar (hey, a funny), or with anemic damages without the Just my two cents.

Posted by Michael Smith on October 11, 2007

 

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