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2007 - The "Annus Horribilis" for Plaintiffs' Patent Cases at Trial

By Michael Smith

When opening Parliament in 1992, Queen Elizabeth referred wryly to the year, which had seen one of her palaces burn, two children separate from their spouses and a third divorce and - to cap it all off - she had to start paying income taxes - as an "annus horribilis," which translates roughly from the Latin as "an incredibly crappy year."  (Artwork for this post is "Annus Horribilis" by Sean Starr coincidentally).

Patent plaintiffs in the Eastern District could feel her pain in 2007, as the trend of defense verdicts that began in late 2006 (the year's last two jury verdicts were for the defendant after an extended string of plaintiff wins) accelerated, eventually finishing with the balance decidedly in defendants' favor at six  defense wins to one for plaintiffs, with two other cases finding for the plaintiffs on one patent, but not the other.  Now with Judge Davis' resolution of the post-verdict motions in the Orion v. Hyundai case week before last we can go through and see if there are any lessons to be learned.

Defendants started out with four wins at trial outright, including three jury verdicts (one each in Marshall, Beaumont and Tyler) and one bench trial (Judge Davis).  Prevailing plaintiffs included Microsoft, Echostar, and Charter Communications (mom and pop shops all, obviously).  Added to that in March was the ClearValue v. Pearl River Polymers case in Tyler in which Judge Davis struck the plaintiff's pleadings during trial as a sanction for discovery misconduct. Next, in TGIP, Inc. v. AT&T Corp., the Beaumont jury sided with the plaintiff but shortly after the case concluded Judge Clark granted the defendant's motion for judgment as a matter of law, shifting this case to the defendant's column.

The three cases that resulted in at least a partial plaintiff win are also particularly worth scrutinizing.  In Power-One, Inc. v. Artesyn Technologies, Inc., tried before Magistrate Judge John D. Love in Marshall the jury found one patent infringed but one not, and $100 (yes, that's one hundred dollars) in damages.  In Orion v. Hyundai, the plaintiff won on infringement of one patent, but not the other, and $34 million in damages, but post-In Re Seagate the willfullness finding was essentially dropped, and no injunction was entered (or attorneys fees awarded).  In QPSX v. Nortel, the plaintiff won a Marshall jury verdict of $28 million, but Judge Ward reduced it to $11 million in the post-trial rulings.

It is notable (to me at least) that the only case where the jury's verdict was wholly for the plaintiff - across the entire Eastern District - in 2007, was in QPSX v. Nortel where, as Judge Ward noted in his order, the remaining defendant at trial had not designated an infringement expert and did not object to the charge on willfullness.  Put another way, in every case in which the defendant had an infringement expert - it won on at least part of the claims.  The only case where a patent plaintiff won at trial on all patent claims was the one where the defendant didn't have an expert.

Again, that's three plaintiff and six defense outcomes in 2007, for a win rate at trial of 33% - the two year win rate remains at 50%.  Again, the national win rate is approximately 58% overall - 67% or thereabouts for jury trials), so the district was substantially below the national average during the period and significantly under it for the past two years.  Over the long term (meaning back to around 1999 when I started keeping statistics) the local average mirrors the reported national average.

Full post as published by Eastern District of Texas Federal Court Practice on April 07, 2008 (boomark / email).