Eastern District Of Texas: Fair And Just Patent Outcomes For Plaintiffs And Defendants

Saturday, September 1, 2007 - 00:00
McKool Smith, P.C.

Editor: I understand that you didn't begin your career as a patent litigator. Would you tell our readers how your practice has evolved?

Baxter: I started out as a prosecutor and was a criminal district attorney before becoming a district judge. After I left the bench, I did some personal injury work and then came to work for McKool Smith. I started doing some complex commercial work and became involved in patent cases, which is what I am currently focused on.

Editor: Has your experience as a district judge helped you inside the courtroom?

Baxter: It really has. Serving as a judge taught me what not to do in court. You gain a level of experience on what arguments will work when you are before a judge and a jury. It has been a great help in trying cases since I have left the bench.

Editor: During a five-week span in the spring of 2006, you compiled a string of successful outcomes in several patent cases. In just over 30 days, you won a non-appealable arbitration ruling in favor of longtime client Medtronic Inc. in a patent battle over coronary stents; a $3.6 million award for California-based Visto Corp. in a patent lawsuit over technology used to download e-mail to mobile phones; and a $74 million patent infringement verdict for Tivo Inc. in a dispute over technology used to record one television program while watching another. How did you do it?

Baxter: I had lots of help from the good partners and associates at the firm. That was an interesting time and experience for us. We achieved great results for our clients and the cases were a lot of fun.

Editor: Were these cases heard in the Eastern District of Texas?

Baxter: Not all of them. The Medtronic case was heard in New York City and the others were in the Eastern District of Texas.

Editor: How would you compare the two jurisdictions?

Baxter: The Medtronic case was an arbitration, so the rules were different. Unlike the Eastern District of Texas where there are specific rules of evidence, with an arbitration it is possible to have all the evidence come in and we had to address a substantial amount of evidence in Medtronic. We also worked with three highly experienced arbitrators but needed to make a slightly different argument than we would have made in the Eastern District of Texas because the arbitration panel didn't need as much base technology explanation as a jury might have needed. It is a different type of case and a different type of trial. Regardless of the venue, these cases are challenging and the goal is always to make things as simple and direct so that you can achieve the best results for your clients.

Editor: The Eastern District of Texas may well lead all federal court districts this year in patent lawsuits. From your perspective, why does the Eastern District of Texas continue to remain a preferred venue for patent litigation?

Baxter: There are three basic reasons. The first is that we have really good judges that do not mind hearing patent cases. They often come to the right conclusions and work with well-designed court rules that are strictly enforced. They expect the lawyers to be professional and to act that way, which results in cases moving at a pretty good pace. The second reason is that you get very smart juries regardless of whether you are a plaintiff or defendant because jurors tend to take a common sense approach to deciding cases. Juries are able to make fair decisions about complex matters. Finally, the fast pace at which the court reaches decisions is another high point for both plaintiffs and defendants.

Editor: Does a "rocket docket" favor plaintiffs or defendants?

Baxter: It really does not matter whether you are the plaintiff or the defendant. Both sides will want a quick resolution since their business future often depends on the outcome. Achieving a faster result benefits both sides.

Editor: What impact does the Eastern District's "rocket docket" have on legal fees?

Baxter: Obviously if you can significantly reduce the time to litigate a case, then legal fees will be significantly lower. Legal fees mushroom in jurisdictions where there are four-to-five-year delays in resolving a matter. By cutting down the time to trial, there will be less time for billing clients so legal fees will be lower. It is much cheaper in the Eastern District to file or defend a patent case than it is in some other jurisdictions around the country.

Editor: In late 2004, commentators began to predict that the Eastern District's "rocket docket" would begin to slow down. Has this in fact taken place?

Baxter: The enormous volume of cases that are filed in the court have slowed it down somewhat. However, it has helped that Judge (Charles) Everingham came on board as a magistrate judge and has taken a large percentage of the cases. However, given the number of complex cases that are being filed, the docket has slowed down a bit.

Editor: Has the court done anything to speed it back up to the levels that it was at before?

Baxter: The judges have. They have started allowing some limited discovery before there is a scheduling conference to help keep the cases moving. They are also considering rule changes in order to speed the docket back up.

Editor: How important is the quality of jurors in a patent dispute?

Baxter: The complexity of these cases requires jurors who will pay close attention and put a lot of effort to try to get to the right resolution. In the Eastern District of Texas, you find really good jurors who care about their responsibilities. They pay attention and they are really dedicated to get that right. The fact that you get dedicated jurors who want to get it right makes a big difference in the outcomes.

Editor: How important is it that the judges actually like hearing patent cases?

Baxter: It is really important because some judges who do not like patent cases tend to put those cases at the back of the line, which results in longer delays. Judges who appreciate patent cases will get the law right, reducing the need to appeal a decision.

I should note that the judges in the Eastern District of Texas did not have patent experience before joining the court. Judge (T. John) Ward tried one patent case, but the other judges had not worked on any of these cases. Patent cases are complex and take a lot more work than a criminal case or a personal injury matter. Their hard work and willingness to learn the subject matter is evident in the cases that they decide.

Editor: What percentage of patent cases in the Eastern District actually make it to trial?

Baxter: The size of the court's docket and the recent slow down in the court's decision making process suggest that the percentage of cases going to trial is much higher here than in other jurisdictions.

Editor: The Eastern District has developed a reputation as a pro-plaintiff jurisdiction where plaintiffs were prevailing at a rate near 80%. However, in recent cases, it's reported that defendants are prevailing at a rate of more than 40%. Is there any explanation for this?

Baxter: Juries are deciding cases exactly the way they see them. Recent cases have involved matters where defendants have had the best evidence, resulting in a higher percentage of victories for them. The court does not have a bias to favor plaintiffs or defendants. Judges and jurors are focused on ensuring that results are fair and just. Outcomes ultimately come down to the quality of the cases being filed and the quality of the lawyers arguing before the court.

Editor: Many of the cases being filed in the Eastern District of Texas did not originate from Texas.

Baxter: That is correct. Big companies like coming to the Eastern District because they can get good judges and good juries and receive decisions a lot faster. When a large corporation believes that another company is infringing on its patent, then it wants to move quickly with good judges and jurors hearing the case. They decide on the Eastern District of Texas because they can accomplish both goals.

Editor: Congress has proposed legislation that would make it more difficult for companies headquartered in other states to file cases in the Eastern District of Texas. What impact will this proposal have?

Baxter: That legislation would reduce the number of cases being heard throughout the country and concentrate almost all of them in the Northern District of California, Delaware and New York. That is bad from a public policy standpoint and will lead to substantially longer delays in getting to trial. It would be an eight-year drag before a case was decided. That should not be acceptable to anyone.

Passage of that legislation also would have a devastating effect on the local economies that have grown from the increased patent litigation in these forums. Marshall, Texas, 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. That can happen to other places around the country. Whether it is Mississippi, Alabama, South Carolina or Wisconsin, these local economies will suffer because the courts would no longer hear the same number of cases.

Editor: You seem equally comfortable representing both defendants and plaintiffs. What is your advice to an in-house counsel who is considering bringing a lawsuit in the Eastern District?

Baxter: You want to have your case ready to go. You want to have all your documents lined up and obviously you want to go fast and so the quicker that you can move then the quicker the outcome. Once the documents and facts are lined up, you should be ready to file the case.

Editor: What about defendants? Is the advice any different for the in-house corporate defendant?

Baxter: You want to collect all your documents so that you don't end up in some discovery fight where it turns out that you do not have the right documents. Defendants should select their best defense and present it as best they can to the jury.

Editor: How have "patent trolls" affected the speed at which cases are decided in the Eastern District of Texas?

Baxter: The so-called "patent trolls" really are people who own intellectual property and have a right to enforce it just like any one else. The term is a misnomer. People either develop their own technology or they bought the technology so they have a right to enforce it. It seems to me that they ought to have their day in court just as everybody else. They still have to have a good case. Just filing a lawsuit will not result in an immediate victory.

Editor: How much has the eBay decision changed the dynamic in patent litigation?

Baxter: It has had a pretty big impact because judges have established the rule that those who are not in direct competition with the plaintiff will most likely not get an injunction. Prior to eBay , plaintiffs were more confident in the likelihood of getting an injunction as part of a successful verdict. This has affected the ability of plaintiffs to seek a settlement. If a party knows that there is less chance of being enjoined from using a patent, there is less incentive to settle a case.

Please email the interviewee at sbaxter@mckoolsmith.com with questions about this interview.