Lex Machina recently released its 2013 Patent Litigation Year in Review report, and there’s lots of interesting information. I want to focus on one particular data point, because it shows why any patent reform package needs to address discovery costs in patent litigation.
One judge had the most new patent cases in 2013 by more than double the second-place judge: Judge Rodney Gilstrap of the Eastern District of Texas. 941 new patent cases were filed and assigned to him in 2013. And the Eastern District of Texas led the pack with 1,495 new patent cases in 2013.
I’ve mentioned Judge Gilstrap before, because he has a standard discovery order for patent cases that includes this provision:
3. Additional Disclosures. Without awaiting a discovery request, each party will make the following disclosures to every other party:
…
(b) produce or permit the inspection of all documents, electronically stored information, and tangible things in the possession, custody, or control of the party that are relevant to the pleaded claims or defenses involved in this action, except to the extent these disclosures are affected by the time limits set forth in the Patent Rules for the Eastern District of Texas;
Got that? Before the other side even requests documents, you’re expected to begin producing them. And you cannot delay discovery pending a motion to dismiss or transfer, because of this provision:
10. No Excuses. A party is not excused from the requirements of this Discovery Order because it has not fully completed its investigation of the case, or because it challenges the sufficiency of another party’s disclosures, or because another party has not made its disclosures. Absent court order to the contrary, a party is not excused from disclosureOne of the primary objectives of the patent system. In return for the government-granted right to exclude that is embodied in the patent, the inventor must disclose to the public through his patent the invention for which protection is sought. Inventors unwilling to disclose their invention to the public may instead opt for trade secret protection. because there are pending motions to dismiss, to remand or to change venue.
This rule starts the bills running up quickly, which puts massive pressure on defendants to settle with patent trolls. Otherwise, they’re looking at millions in discovery costs that they won’t ever get back.
Judge Gilstrap is not unique in his District. Requiring document production without waiting for a request is the general rule in the Eastern District of Texas.
Is it any wonder the Eastern District of Texas is so popular with patent trolls? Whether the juries are plaintiff-friendly or not, the discovery rules certainly favor plaintiffs with few documents to produce, like typical patent trolls. A company defending against a patent trollAn entity in the business of being infringed — by analogy to the mythological troll that exacted payments from the unwary. Cf. NPE, PAE, PME. See Reitzig and Henkel, Patent Trolls, the Sustainability of ‘Locking-in-to-Extort’ Strategies, and Implications for Innovating Firms. in the Eastern District of Texas doesn’t have much time to get out of the case cheaply, because delay could result in hundreds of thousands of dollars in discovery costs. The snowballing discovery costs are a big part of the reason so many companies settle.
This is why we need to deal with discovery in any patent reform package. The threat of huge discovery bills are a club that trolls wield. If we don’t take away that club, we won’t do much to change the balance of power, and the patent trollAn entity in the business of being infringed — by analogy to the mythological troll that exacted payments from the unwary. Cf. NPE, PAE, PME. See Reitzig and Henkel, Patent Trolls, the Sustainability of ‘Locking-in-to-Extort’ Strategies, and Implications for Innovating Firms. problem will keep growing.
Let your senators know that any patent reform package has to include strong discovery reform in order to be effective!
