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Patent Cases Face Hurdle Along West Texas Trail After Criticism

Oct. 5, 2020, 8:59 AM

When Uber Technologies Inc. and Quartz Auto Technologies LLC agreed this summer to move a patent lawsuit over Uber’s ride-sharing app 102 miles from Waco to Austin, Texas, U.S. District Judge Alan Albright signed off in a three-sentence order.

But Albright stayed on the case, as he’s done in dozens of other patent cases he approved for transfer within the Western District of Texas, an academic research study shows. Both parties agreed to the transfer in most cases, although Albright also approved transfers in cases where one party was opposed.

Now Albright has signaled he is pulling back on stipulated transfers. The move follows criticism that the practice encourages patent owners with no interest in litigating in Waco to file there anyway, knowing they can keep Albright on the case even as it moves to more convenient Austin.

“That is judge shopping on steroids,” said Temple University Beasley School of Law professor Paul Gugliuzza, who with American University Washington College of Law professor Jonas Anderson co-authored the research study on the district.

Attorneys say Albright has recently signaled that he will scrutinize requests to move cases to Austin more closely, and wants detailed reasons why a transfer is warranted.

“The judge wants to make a reasoned judgment on transfer to Austin by considering all” the usual transfer factors, such as the cost of attendance for witnesses, Kathi Vidal, managing partner of Winston & Strawn LLP’s Silicon Valley office, said.

It remains to be seen whether the attention to transfer justifications means fewer cases end up in Austin. Some attorneys think that’s a possibility.

Going forward, “if somebody wants to file a case in Waco, they should do that and expect to be there,” Syed Fareed, a partner in Baker Botts LLP’s Austin office, said.

New Hotspot

The Western District of Texas, which covers a U-shaped area spanning from El Paso to east of Waco, this year became the busiest district in the country for patent cases, Bloomberg Law data show. It overtook two traditional hotspots, the District of Delaware and the Eastern District of Texas, in the volume of new patent lawsuits filed, the data show.

There have been about 670 patent cases filed in the Western District this year, compared with almost 550 in Delaware and just over 300 in the Eastern District, according to Bloomberg Law data.

Patent owners who file a lawsuit in Waco have banked on a certainty: They know the judge who will handle their case. Under a district rule for assigning cases to judges, all civil cases filed in the Waco division are automatically assigned to Albright.

By contrast, the District of Delaware assigns civil cases “in essentially equal numbers” to the judges within its district, according to a court notice. The Northern District of California has a “district-wide system of assignment” for intellectual property cases, according to a general order from the district.

But when it comes to Albright, “everyone knows if they like him, they can get him,” Anderson said.

Many patent owners do like Albright. A former patent litigator at Bracewell LLP who took the bench in 2018, he has established a unique set of procedures for his court that are designed to move patent cases along quickly.

Albright’s first patent trial in the district is scheduled to start Monday.

The judge is reluctant to pause lawsuits for parallel validity reviews at the U.S. Patent and Trademark Office. But he also has yet to dismiss a case based on arguments that a patent is invalid due to ineligible subject matter under Section 101 of the Patent Act.

“I’m sure one day there will be a 101 motion that I grant,” Albright said in a recent interview with Akin Gump Strauss Hauer & Feld LLP partner Steve Maslowski. But generally, the judge said, such motions are better suited for later in a case.

Floodgates Opened

Albright’s practice of keeping cases on his docket when transferring them to Austin, a tech hub with an international airport, “opened the floodgates” to parties stipulating to such transfers, Vidal said.

Plaintiffs “would file in Waco, assured that their case would be assigned to Judge Albright,” she said. “And, then they would agree to allow the case to proceed in Austin, with confidence that Judge Albright would transfer and keep the case.”

The law professors, in their research paper, found Albright approved stiuplated or unopposed transfers in over four dozen cases over a 13-month period beginning in July 2019.

The problem, some argue, is that Albright wouldn’t be handling the cases had the complaints originally been filed in Austin. Civil cases filed there are split between U.S. District Judges Lee Yeakel and Robert Pitman, under district rules. Albright is the only district court judge who sits in Waco.

Albright’s office didn’t respond to requests for comment. But Gugliuzza said it appears the judge is “trying to give the impression that Waco-to-Austin transfers are no longer guaranteed.”

The shift means defendants like Uber, whose case against Baltimore-based Quartz continues to move ahead in Austin, likely will have to more fully describe why the case should be transferred within the district.

“I do expect parties that file such motions will likely focus more attention on explaining the facts of their cases and why they believe those cases belong in Austin rather than Waco,” said Gregory Lantier, a WilmerHale partner in Washington.

Opposite Incentive

Some in Big Tech may face little trouble in clearing that hurdle.

Albright has approved Austin transfers in at least seven cases where the plaintiff opposed and made arguments against it, including cases involving Apple Inc., Google LLC, and Dell Technologies Inc., according to the academic study. The companies, which have offices in Austin, had shown the city was “clearly more convenient,” Albright found.

Amazon.com Inc., Facebook Inc., and Intel Corp. have won similar motions. Each of the cases remained on Albright’s docket.

“The real problem is that these cases should be filed initially in Austin, but the Western District’s case assignment system creates precisely the opposite incentive,” Gugliuzza said.

West Texas’ rules, while different from those in California and Delaware, in some ways resemble a rule in the Eastern District of Texas, which also has a patent owner-friendly reputation. There, the vast majority of patent cases filed in the Marshall division are assigned to the district’s chief judge, Rodney Gilstrap.

Anderson and Gugliuzza have argued the random assignment of judges to cases should be required. Such a rule, though, would likely have to come from Congress or the Judicial Center, the policymaking body for the federal courts.

“It’s a loophole that they need to close,” Anderson said.

To contact the reporter on this story: Matthew Bultman in New York at mbultman@correspondent.bloomberglaw.com

To contact the editors responsible for this story: Melissa B. Robinson at mrobinson@bloomberglaw.com, Keith Perine at kperine@bloomberglaw.com