Friday, December 5, 2008

Guest Column

Patent verdicts in Eastern Texas no longer a slam dunk

The old saying tells us that there are no guarantees in life, that at most we can count only on “death and taxes.” Many things we expect must happen in a particular way turn out differently. The best recent example may be the result of this year’s American League Championship Series. This especially can be true in dealing with litigation. Lawyers routinely tell clients in going to trial that anything can happen, particularly with a jury trial. 

For a long time, one perceived exception to this general litigation guideline has involved patent cases brought in the U.S. District Court for the Eastern District of Texas. Over the past several years the Eastern District has become the forum of choice for patent plaintiffs. In fiscal year 2007, 359 patent cases were filed in that one district, or 12.4 percent of all patent cases filed in the U.S.

Plaintiffs have gravitated to these courts north and east of Houston, because the Eastern District has been providing plaintiffs some degree of certainty. Plaintiffs have come to expect several things, including a relatively short track to trial, the use of specific local patent rules, a no-nonsense policy toward discovery, and a low likelihood of cases being transferred out of the district. Most importantly, plaintiffs have relied on the reputation that its judges rarely grant defendants summary judgment and that its juries frequently decide in favor of plaintiffs. Indeed, until recently, no jury in the Eastern District had invalidated a plaintiff’s patent. This had the result of limiting defendants for practical purposes to non-infringement defenses and provoking many, often lucrative, settlements in plaintiffs’ favor.

Lately, however, this pro-plaintiff orientation has been proven not to be absolute. As a case in point, recently Palomar Medical Technologies Inc., a Burlington-based manufacturer of light-based cosmetic treatment devices, prevailed in a significant patent infringement lawsuit brought by its competitor, Wayland-based Candela Corp., in the Eastern District of Texas. On Oct. 7, a jury found that Palomar’s accused products did not infringe Candela’s asserted U.S. Patent No. 5,810,801 (’801 patent), titled “Method and apparatus for treating wrinkles in skin using radiation.”

Furthermore, the jury found all of the asserted claims of the ’801 patent to be invalid. Specifically, the jury found them anticipated by one prior art reference and rendered obvious by four separate combinations of additional prior art. Following the trial, the jurors told counsel they had spent the bulk of their deliberations considering the prior art and the validity of plaintiffs’ patent.

Palomar’s victory is only the fourth time that an Eastern District jury has invalidated a patent. All four, however, have come in the past two years. Why are Eastern District juries now willing to consider and, more and more, accept invalidity defenses? Perhaps defendants are doing a better job of educating juries on their role in being the ultimate decision makers about the validity of patents. Perhaps, the less patent-friendly publicity of the past few years, as Congress debates patent reform and industry complains about the costs of patent litigation, has filtered down and is making an impression. Perhaps in the current economic climate, juries are taking a harder look at whether plaintiffs really should be entitled to significant recoveries. Whatever the specific combination of factors in play, plaintiffs can no longer necessarily rely on the same previously perceived advantages in the Eastern District.

John Gutkoski is a partner in Foley & Lardner LLP’s intellectual property litigation and emerging technologies practices, representing companies in national and international patent infringement and technology disputes spanning multiple disciplines. He can be reached at jgutkoski@foley.com or 617-342-4000.