Yes, patent lawyers across the nation are brushing up on their "rifle shot" skills following Judge Davis' Parallel Networks opinion last month. As local practitioners are aware, (as well as readers of IP Law 360

Judge Love, who sits downstairs from his former boss Judge Davis at the Steger courthouse in Tyler earlier this month decided to adopt the same "rifle shot" Markman procedure in the Whetstone case at the recent conference with the parties. "During the status conference," he wrote, " Defendants requested an early Markman on three “case dispositive” terms, suggesting that early construction of these terms will allow each party to better evaluate its case moving forward. Plaintiff did not agree that an early Markman was necessary, but did suggest limiting discovery before the currently scheduled October 2011 Markman hearing. After considering the parties’ proposals, the Court finds that an early Markman hearing on the three terms discussed during the status conference is warranted and will prove beneficial." Judge Love ordered the defendants to submit their three claim terms to the Court within four days, and set a Markman hearing on the identified three terms for July 13, 2011. The parties had discussed June but Judge Love agreed to move the hearing back to July since plaintiff's counsel had a trial setting in June. The parties were ordered to meet and confer and propose a briefing schedule and submit any Agreed or Proposed Technical Advisors to the Court by April 25. Pending a claim construction ruling on the three identified terms, discovery was limited to production of user and service manuals of the accused products as discussed during the status conference, as well as the deposition of one representative from each Defendant regarding the accused products and related manuals. After the Court issues its claim construction of the three terms, discovery as to all issues in the case will resume.

PACid v. Cisco, et al., 6:09cv324

Judge: Leonard Davis

Holdings: Actions consolidated; motion to sever and transfer denied as moot; plaintiff's motion to bifurcate liability and damages (no that's not a typo) denied; no more extensions of time absent good cause; "rifle shot" Markman hearing on defendants' three claimed case dispositive terms ordered.

No, this isn't a picture of Judge Davis. Although ... no, never mind. The gentleman on the left is a seventeenth century Englishman named http://mcsmith.blogs.com/.a/6a00d83451ccc469e20147e34b7800970b-pi"> />in an unsuccessful attempt to block the entrance of Santiago Harbor in 1898. Notwithstanding flowery sentiments about the choice to be brave in newspaper accounts at the time, there wasn't a choice involved (the ship sank due entirely to events beyond Hobson's control, namely Spanish artillery), and in any event the term "Hobson's Choice" had already been used in English literary references for almost three centuries when Lieutenant Hobson discovered he could not sink his ship in the right place, and that a career in Congress might be a better place for his talents. But if you're a bridge player, this is where the Merrimac coup, or Hobson's coup, also referred to as the Hobson's "choice", comes from - it is the deliberate sacrifice of a high card to eliminate a vital card from an opponent's hand. Of course a collier (an obsolete coal carrying vessel) is by no means a high card and Hobson's actions didn't cost the Spanish a thing but the shells to sink it, but it's the thought that counts, I suppose).

The meaning of "a choice between two or more undesirable choices" is certainly what U.S. District Judge Leonard Davis of Tyler had in mind this week when he observed in the Parallel Networks case that the plaintiff's expressed strategy in that case involving over 100 defendants - "the goal of early resolution of the disputes through settlement in a range that essentially amounts to litigation costs" when combined with the requirements of the Patent Rules presents defendants with a Hobson's choice - to "spend more than the settlement range on discovery, or settle for what amounts to cost of defense, regardless of whether a Defendant believes it has a legitimate defense." Because Judge Davis believed that the Patent Rules and his standard docket control order did not achieve their intended result when presented with this situation - which he observed was "unlike the typical patent case" he essentially threw out the normal rulebook and took the parties off-road, setting extra status conferences and soliciting input from the parties as to how to manage this litigation, which involved multiple cases and over a hundred defendants.

But I should take a step back here and explain why I call this a trilogy. I recently posted on Judge Davis' comments regarding when Rule 11 sanctions are proper in a multidefendant patent case following the granting of summary judgment in Raylon v. Complus Data Innovations, et al., 6:09cv355-357 (March 9, 2011). In that opinion, Judge Davis observed that while not appropriate in that case, Rule 11 sanctions would be appropriate where, for example, "a case lacks any credible infringement theory and has been brought only to coerce a nuisance value settlement" or where "the cost of the litigation is more of a driving force than the merits of the patent-in suit". This week Judge Davis issued two more opinions, one in Parallel Networks and another in the PACid litigation which address the same issues from the perspective of case management, and which, taken together, provide practitioners with a trilogy of opinions that serve notice that henceforth in Judge Davis' court patent infringement cases involving large numbers of defendants will be analyzed differently than they have been in the past, and at least in the Parallel Networks case, handled radically differently. The opinions also identify the specific characteristics that Judge Davis concluded required this treatment.

(Another ed. note: Calling it a trilogy also brings back fond memories of the original Eastern District patent litigation trilogy, the famous, or infamous depending on your perspective "Jello trilogy" by Judge Thad Heartfield (which actually eventually consisted of five opinions) in the Texas Instruments v. Hyundai litigation in 1999 where Judge Heartfield, faced with two trial teams of monstrous talents (and proportions), no patent rules anywhere in sight, and armed only with a barely housebroken law clerk named Mark Sparks (who, it must be said, kicked as well as he shot at times, and to this day takes pride in deliberately picking disastrously ugly neckwear) issued order after order after order keeping the parties in line and shepherding the case through a jury trial (the first in a patent case in Marshall), a bench trial, and finally a settlement. Want to know why it's called the "Jello trilogy'? Do a word search for Jello w/s nailed and see what you come up with).

It would take a lengthy opinion - far too lengthy to justify the time this week while I am on vacation with my family - to discuss all of the meaty language in Parallel Networks, so I'll just hit the highlights.

First of all, Judge Davis consolidated the several PN cases into one case, and denied a pending motion to sever and transfer by one defendant. He inquired into the plaintiff's trial strategy, and learned that the plaintiff's strategy was to settle with most defendants for a small fraction of its reasonable royalty damage analysis at trial - sums which were substantially the same as the cost to get the case to the Markman hearing. The settlement demands were not based on the plaintiff's analysis of the defendant's sales times the 2-3% royalty it proposed, it appears from Judge Davis' recitation of the plaintiff's statements at the hearing - they were "deeply discounted" to make settlement "very attractive" given the estimated defense costs. (Readers, stop me if you've heard this before). Defendants, in turn, told Judge Davis that they wanted a cost-effective way to defend these cases without being forced to settle based on cost of defense, and in this case, they believed that three claim terms would be case-dispositive, and proposed addressing that common issue first.

Judge Davis agreed and ordered the defendants to provide the three claim terms in the next two weeks, and set a rifle-shot Markman hearing (my term for this pre-Markman Markman) on those terms less than three months later - June 21, 2011. After that the defendants could file their summary judgment motions and the Court would decide whether the defendants were right and they did have a case-dispositive claim construction defense. All discovery unrelated to this narrow Markman and summary judgment process was stayed - a holding almost without precedent in Eastern District practice in patent litigation - and much other civil litigation - in the past twenty years. Judge Davis also denied the plaintiff and some defendants' request to bifurcate liability from damages, holding that damages discovery was necessary for parties to evaluate the case for settlement purposes - although it appears that this discovery would be stayed until after the first Markman as well.

Finally, Judge Davis noted that if the rifle-shot Markman and related summary judgment rulings didn't resolve the case (as I note the Markman ruling did in the Raylon case in December) then the parties would be expected to proceed with the Markman on the other terms (let's see, under his new order limiting claim terms that'd be seven, right?) on October 13, 2011, and trial the following September. Of course if the summary judgment does end up being granted, we are potentially back in the same situation as Raylon, with the defendants potentially seeking remedies for an untenable claims construction or litigation position. And unlike Raylon, where for Judge Davis the dots didn't line up for an objectionable litigation position, here the plaintiff's connection between its settlement strategy and defense costs is a completely different set of facts. If it gets that far, it will be really interesting to see what happens, to put it mildly.

PACid presents a similar situation but earlier in the process. The order issued this week consolidates the cases, orders the parties to stop seeking extensions to answer absent good cause (there is a footnote specifically addressing "unending agreements to extensions of times" which will ring a bell with some local counsel) with some exceptions, and sets the case for scheduling conference. Now-familiar language follows which requires the plaintiff to submit for in camera review a table summarizing the licenses or settlements to date, including damages if the case as to those defendants had gone to trial. Judge Davis also orders the parties, represented by lead and local counsel (whose attendance is required) to be prepared to discuss the plaintiff's litigation and settlement strategy, the possibility of staged trials, phased by issue, specifically noting validity with infringement to follow, or by defendant (which I note is not a theoretical possibility around these parts this month).

Once again, Judge Davis appears to make clear that these orders are intended to address the specific concerns raised by multi-case, multidefendant litigation, as fully fleshed out in the Parallel Networks case, and as will be in the PACid case. But these orders represent - at least to this reader - the same sort of judicial creativity that we have seen in recent years when case management issues arose, whether it be Chief Judge Robert Parker coming up with The Plan in 1991, or Judge Ward coming up with patent rules in 2001. The character of the cases that come before the Eastern District judges over the years change, and sometimes the rules and procedures have to change to accommodate that. And sometimes the judge just needs to pop the hood and tinker with the rules to make them work within a particular case, as Judge Davis expressly stated he was doing here. Still, the Parallel Networks case represents probably the most significant departure from the standard way patent cases are handled in the Eastern District since Judge Ward started using patent rules, and it will be fascinating to see how it works out - and whether "rifle shot" Markmans become the norm in large cases to give defendants a cost-effective chance at getting a claimed case-dispositive issue addressed early on.

Of course one always has to be careful what you wish for. I am reminded of a scheduling conference many years ago when I was a law clerk for Judge Sam B. Hall, Jr. and a defendant's lawyer interrupted Judge Hall as he was beginning to read of the trial setting and other deadlines in the case. "Oh, Judge," the lawyer said, "you don't need to do that - we have a summary judgment motion that will take care of this case for you." Judge Hall stopped, leaned forward, and said "well now ... y'all always say that" and proceeded with setting the case for trial anyway. I can't remember if Judge Hall ended up finding the summary judgment motion in that case as persuasive as the lawyer thought it was. But I do remember that somehow the Court didn't always find every issue claimed to be case-dispositive as case-dispositive as the lawyers filing it did.

And this beautiful Colorado evening as I patrol the halls waiting to see which of my boys will try to sneak out of bed after being ordered there (probably requiring action by me on orders of She Who Must Be Obeyed) I just can't wait to see if the defendants in the Parallel Networks case have as good a claims construction position and summary judgment motion as they have said they do. If they do it will be interesting to see if this new procedure, which of course is as case-specific as case-specific gets right now, hardens into place in Judge Davis' court. And also if it migrates to other Eastern District courts as an effective way to balance the plaintiff's ability to have his patent infringement claims heard, even when they are against large numbers of defendants, against the defendants' ability to have their liability determined by the merits of the claims and not by the costs to defend a case under the local patent rules. After all, I hear there's a case in Marshall with over 370 defendants ...

Excerpts from Michael C. Smith on March 20, 2011 & april ,20,2011