‘Patent trolls’ see lawsuits dwindle in Texas district

The nation’s capital of patent lawsuits — also known as the U.S. District Court of Eastern Texas — is witnessing a dramatic decline in the number of new patent infringement cases after hitting record highs in 2015.

Complaints filed in the court alleging patent violations fell 45 percent during the first six months of 2016 compared to the same time period in 2015, according to Lex Machina, a legal analytics firm. Legal experts say the plunge is the result of court and regulatory decisions that have curbed lawsuits by so-called “patent trolls,” companies that acquire patents primarily for the chance to sue — or threaten to sue — other firms to gain lucrative settlements.

Despite this year’s decline, East Texas is still by far the most popular federal jurisdiction for patent lawsuits in the country. Lex Machina reports that businesses and individu-

als filed 767 patent cases in East Texas federal courts during the first half of this year — a 44.7 percent drop from the record 1,389 complaints filed during the same period in 2015.

But it was still more than triple the filings in the U.S. District Court of Delaware, the second busiest for patent disputes.

Judges’ attention

The Eastern District of Texas, headquartered in Tyler and ranging from Texarkana to Plano to Beaumont, has become a favorite of patent attorneys because of the judges, who are known for devoting their time, attention, and expertise to moving the complex cases through the judicial system.

“That’s a strong incentive for plaintiffs to continue filing there,” said Eric Pinker, a partner at Lynn Pinker Cox & Hurst.

The Eastern District set a record in 2015 with 2,540 new patent complaints, which was 70 percent higher than the previous record set in 2013, also in the district.

The surge in filings last year was likely the result of patent owners rushing to the federal courthouse to avoid heightened pleading standards that went into effect Dec. 1, and concerns that Congress was considering possible patent reform, legal specialists said.

Other courts also have experienced significant declines in patent cases this year.

In the Northern District of Texas, patent cases fell by half in the first six months half of the year, to 31 from 63 during the same period of 2015. In West Texas, patent suits went from 48 in the first half of 2015 to only 13 so far in 2016, Lex Machina reports.

Very few patent cases are filed in the Houstonbased Southern District. There were only 18 such cases filed in Houston during the first half of 2016 — down from 20 in 2015.

More than a glitch?

“The drop in filings in the first and second quarters of this year suggests that we may be looking at more than just a glitch and we may see a continued decline in patent litigation filings the rest of this year,” said Dustin Edwards, a partner in the Houston office of Winston & Strawn.

The question is whether the patent bar may have already witnessed a peak in the “troll” phenomenon that drove East Texas’ infringement docket to record highs in recent years. Some legal experts believe that the number of new patent cases will continue to decline because courts and regulators have given corporate defendants new weapons in their arsenals to squash lawsuits.

Frivolous lawsuits

Federal judges recently demonstrated that they will slap plaintiffs who file frivolous lawsuits with sixdigit fines.

The U.S. Patent and Trademark Office created the Patent Trial and Appeal Board, which provides another venue for hearing patent challenges.

The board’s reputation for invalidating weak patents has likely discouraged patent trolls, who often hold marginal patents vulnerable to court challenges, legal experts said.

A 2014 U.S. Supreme Court decision also made it harder to press some patent claims. The court declared patents invalid if they cover the implementation of an “abstract idea” on a “general purpose computer.”