Patent Owner’s ‘Clever Ploy’ Lands Favored Judge for Nvidia Suit

A patent owner suing semiconductor giant Nvidia Corp. took an unusual approach to filing its case in the Western District of Texas, ensuring it was routed to Judge Alan Albright, one of the most sought-after judges in the country for patent suits.

Xockets Inc. filed its initial complaint against Nvidia, Microsoft Corp., and RPX Corp. Sept. 5 with only antitrust claims in the single-judge Waco Division of the Western District. Albright was assigned to the case automatically, as he is for all non-patent suits there. Then, within an hour of the initial filing, Xockets submitted an amended complaint that added seven counts of patent infringement and more than doubled the document’s length from 82 to 203 pages.

That maneuver put before Albright a case that, had the patent claims been included from the start, would’ve been randomly assigned among the district’s 12 judges.

“It just looks like a very clever ploy to maintain jurisdiction in front of Judge Albright,” said Jonathan Stroud, a longtime critic of patent judge shopping and the general counsel of Unified Patents, a group whose members include some of the tech and automotive companies that are among the most frequent patent suit targets.

Nvidia is the world’s largest supplier of computer chips that power AI servers, and Xockets’ patent infringement damages could be “in the billions,” Xockets investor Robert Cote told Bloomberg Law in an interview earlier this month.

Nvidia’s “market capitalization has exploded, from $180 billion to approximately $3 trillion” after it adopted Xockets’ technology, according to the complaint, with much of that growth attributable to its dominant position in the AI chip manufacturing space.

Texas Randomization

Albright, a former patent litigator, has been one of the most popular federal judges in the country among patent owners since he joined the bench in 2018. In 2022, nearly 25% of all patent suits nationwide were brought in his Waco courtroom. That volume led to accusations of forum shopping from companies like Apple Inc. and Google LLC that are frequent targets of patent suits and academics who study the patent system, as well as several US senators and Chief Justice John Roberts.

The chief judge of the US District Court for the Western District of Texas ultimately randomized the assignment of Waco patent cases in 2022, with that order getting updated as recently as May.

But Xockets’ complaint wasn’t randomly assigned, despite its accusation that Nvidia stole the “fundamental intellectual property that transformed” it into the leading manufacturer of “the most important industrial component in the United States economy today”—language that was included in both the original and amended complaints.

Xockets’ case is clearly a patent suit, said Stroud.

The antitrust claims are “inextricably tied to the patent case, and the clear spirit of the order was to prevent this exact thing from happening,” Stroud said. “It’s an attempt to forum shop.”

Xockets offered a different explanation for the way it kicked off the suit, pointing to its allegations that Nvidia and Microsoft conspired with RPX to set an artificially low price for the use of Xockets’ patents.

“We filed an antitrust case first and coupled this with a 30-page preliminary injunction motion on the antitrust claims because this case is not just a patent infringement case,” Xockets’ attorney, Jason Sheasby of Irell & Manella, said in an email. “Defendants in cases that involve both antitrust and patent claims often attempt to gloss over the antitrust allegations by arguing ‘this case is really only about patent infringement.’”

Sheasby said he wasn’t authorized to go beyond his initial comment in response to a follow-up question about the Waco patent randomization order and Xockets’ filing strategy.

Nvidia and Microsoft’s counsel didn’t immediately respond to Bloomberg Law’s emails seeking a response. RPX declined to comment.

‘Prime Example’

Paul Gugliuzza, a Temple University law professor who has written extensively and critically about the emergence of Albright’s Waco courtroom as a patent-suit hub, said the maneuver may satisfy the letter of the randomization order.

The order applies to all “cases involving patents” but Gugliuzza noted that it defines that in terms of a “nature of suit code” that gets selected when a plaintiff first files a lawsuit. Xockets ticked the antitrust box.

The case’s code number doesn’t change, even if a plaintiff files an amended complaint or a defendant files counterclaims that fundamentally change the nature of the case, he said.

The professor said he was surprised that he hadn’t previously seen a plaintiff try to avoid the Waco randomization order by using a two-step approach and adding the patent claims in an amended complaint.

“There are all kinds of examples where parties are following the letter of the law but it’s clear they are doing so for improper reasons,” Gugliuzza said. “This seems like a prime example.”

Plaintiffs in federal court are allowed to amend their complaint once as a matter of right, without permission from the presiding judge or consultation with opposing counsel. Generally, litigators try to keep that as an option later in the case, as a backstop for fixing errors or responding to new developments.

“One reason to burn your amended complaint might be to get the judge that you want,” Gugliuzza said.

Not all lawyers were critical of the filing strategy.

Dan Ferri, a partner at DiCello Levitt, represented Cascades Computer Innovation LLC in a 2012 antitrust case against several tech companies that used the Google LLC Android operating system. Cascades accused the companies of negotiating patent licenses using RPX in an anticompetitive manner, a similar antitrust theory to that of Xockets.

Cascades’ case was in Northern California, Ferri said, which is widely considered to be a more friendly venue for tech-company defendants than Albright’s courtroom, the site of several of the largest patent infringement verdicts in US history. The antitrust suit was paused while Cascades litigated patent infringement against the defendants in a separate case in a Chicago federal court, and it was later dismissed after its patent was deemed invalid.

Ferri, who now mostly works on class actions, said Xockets may have better luck in Texas if they can keep their case before Albright.

“That’s pretty clever,” Ferri said, “Good for them.”

Xockets is also represented by Winstead PC and Ciccarelli Law Firm. DLA Piper and Hogan Lovells represent Nvidia. Winston & Strawn represents Microsoft. RPX is represented by Dacus Firm PC.

The case is Xockets, Inc. v. NVIDIA Corp., W.D. Tex., 6:24-cv-453.