Discovery Border Control

// Ah, Waco. The place where it seems like everyone with a high-tech patent portfolio wants to file their infringement cases. And where every defendant that can wants to make their way on the I-10 West to Los Angeles, or ideally, from there up the I-5 to the Bay Area and Silicon Valley. For good reason, as the number of major patent verdicts coming out of the Western District of Texas continues to grow, including $150 million-plus wins by Ravgen and Voxer last month. Despite some well-covered rejiggering of case assignment procedures this past summer, plaintiffs continue to file their cases in Waco, ostensibly in the hopes of getting assigned to Judge Alan Albright, who in the past four years has become the nation’s busiest patent trial court jurist.

Earlier this year, I reiterated on these pages the importance for patent litigators and their clients to keep a close watch on decisions coming out of Albright’s chambers. Even though it can be a chore, considering the amount of decisions to wade through, keeping a close watch includes monitoring the numerous transfer decisions that Albright issues. At the same time, it is imperative to keep an eye on the Federal Circuit’s reviews of those transfer decisions, often on mandamus. In one recent Federal Circuit opinion, the panel itself couldn’t agree on whether mandamus was appropriate in a case involving four work-from-home employees in the Western District of Texas. At minimum, such results show that reasonable minds can disagree on whether transfer is appropriate under a given set of circumstances.

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Staying abreast of these decisions, much less reconciling them, can be a confusing endeavor. As Albright himself has noted, there are conflicts between the Federal Circuit’s application of Fifth Circuit law — which applies, since venue and transfer are procedural, rather than strictly patent issues — and the approach that the Fifth Circuit itself takes to the same issues in non-patent cases. Add in the increasingly fact-intensive nature of the venue/transfer inquiry with respect to some large technology companies that have a presence in both California and Texas and things can get even murkier.

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As a result of all that has happened with respect to venue and transfer issues in his court, it is not surprising to see that Albright continues to tweak his approach to handling jurisdictional disputes in patent cases before him. On the one hand, he continues to push cases as quickly as possible toward a Markman hearing, guided by the belief that early claim construction helps direct patent litigants toward making more informed decisions as to settlement or the conduct of the case going forward. On the other hand, the Federal Circuit has made plain that it expects pending jurisdictional motions decided before a Markman decision, which puts the onus on Albright to either decide any pending such motions or postpone the claim construction hearing. As things stand, his procedures give him the flexibility to make that decision after the parties are able to fully brief the jurisdictional motion — after the plaintiff is given a robust amount of time and leeway to conduct jurisdictional discovery.

It should not be a surprise, however, that parties before Albright continue to press the limits of what jurisdictional discovery around a pending transfer motion should be, at least with respect to the scope of the information that would be relevant to the court’s handling of the motion. In an interesting recent decision, Albright denied Apple’s request to turn jurisdictional discovery around a transfer motion Apple had filed into an opportunity for Apple to probe into the patent owner’s financial backing and resources. In support of its request, Apple argued that the plaintiff’s “funders and investors are not publicly known and could not have been specifically identified in Apple’s motion to transfer. Under the scheduling order, Apple could not have sought discovery on Mullen’s investors and before filing its transfer motion, because venue discovery was not available until after Apple’s motion was filed.” In addition, Apple pointed to a recent decision by Albright transferring a case against Microsoft to Seattle, at least partially based on the presence of an investor in the patent owner also having ties to the transferee locale. Still, Albright rejected Apple’s arguments, which suggests that he is not interested in expanding jurisdictional discovery into a proxy for discovery into funding and investor relationships. Implied in his decision, as well, is that he may not think the presence of litigation funding is relevant at all, not just with respect to jurisdictional discovery. But we may need to see decisions to that effect out of his court before advancing the latter supposition with more certainty.

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Ultimately, it is clear that patent defendants like Apple will continue to press Albright to transfer their cases out at every opportunity. As part of that effort, they will continue to look for any angle to show that there are relevant witnesses outside of Texas. For now, it seems like Albright does not agree that litigation funders are the types of witnesses that would have information relevant to a patent case. While his view is likely shared by the majority of jurists around the country, as indicated by the collective refusal to allow discovery into funding relationships that is the normative current approach, some cracks in the dam are starting to show. As just one example, the approach being taken by Chief Judge Connolly in Delaware toward disclosure of financial interests in patent cases seems counter to that adopted by Albright in the Apple decision discussed above. While this may prove another data point in favor of Texas as the most patentee-friendly forum, there is little doubt that defendants will continue to press for more transparency with respect to patent owners filing against them. It can therefore be expected that Albright, with his heavy transfer motion docket, will often be asked to act as a discovery border control agent in his handling of those motions.

Please feel free to send comments or questions to me at [email protected] or via Twitter: @gkroub. Any topic suggestions or thoughts are most welcome.

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Gaston Kroub lives in Brooklyn and is a founding partner of Kroub, Silbersher & Kolmykov PLLC, an intellectual property litigation boutique, and Markman Advisors LLC, a leading consultancy on patent issues for the investment community. Gaston’s practice focuses on intellectual property litigation and related counseling, with a strong focus on patent matters. You can reach him at [email protected] or follow him on Twitter: @gkroub.

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Gaston Kroub, Intellectual Property, Texas