Last Week in Texas with Michael Smith | Episode 21

BCLT's Expert Series

What is the difference between bad behavior and sanctionable behavior? And can bad behavior be cured? Two opinions give us excellent guidance on these questions.

 

One of the most interesting questions this week—what is the difference between Waco and Austin? Judge Yeakel’s venue decision tells you all that you need to know.


Episode Transcript

SPEAKERS

Wayne Stacy, Michael Smith

 

Wayne Stacy  00:00

Welcome, everyone to the Berkeley Center for Law and Technology’s Last Week in Texas podcast. This is Wayne Stacy. And it’s February actually, it’s March 1. So welcome to March. Today, we’re here with Michael Smith. Once again, Michael, thanks for joining us. 

 

Michael Smith  00:17

Thanks for having me Wayne. 

 

Wayne Stacy  00:19

So, Michael, we missed a week ice storms, trials, all sorts of fun in Texas. But it didn’t keep the courts from pushing out several really interesting rulings. 

 

Michael Smith  00:31

Well, that’s true. The first couple that I thought were really interesting. Last week were cases dealing with section 285 findings of exceptional case and attorneys fees. And the first one, which which of course, I studied closely, because I’m in front of Judge Gilstrap a lot is in Judge Gilstrap and arises out of a case that was tried last year where the plaintiff got an award of $25 million in the form of a lump sum royalty. So they come back in and they asked for a finding of exceptional case, and attorneys fees and talk about all the terrible things that they say that the their opponent, the defendant did. And Judge Gilstrap starts out by saying that, as is typical in hard fought high stakes civil litigation, the court had a lot of discovery and pre trial disputes. He had targeted sanctions, he had what he called stern directives, at times in an effort to encourage the parties to shift their discovery tactics and work more cooperatively. He could see that the parties had a particular way of doing business on both sides. And he didn’t like it. And he tried to change what they were doing. But he said something interesting after that, he said, if this were a simple case of limited reach, it might be out of the ordinary to have sanctions and directives like that. But he said it’s not out of the ordinary in a complex case of substantial impact, such as that particular case. So to me, that tells me that courts recognize that conduct that that they might consider exceptional in a smaller case, unfortunately, is kind of par for the course in larger cases. And I don’t know if that was your experience as well.

 

Wayne Stacy  02:10

Well, I never had had a reason for a judge to talk to me in a stern voice or give me the side I assumed that I was always blameless. But I get the Judge’s point on this is that a raised voice a stern statements isn’t justification for coming to the court with a 285 motion. It’s really steering.

 

Michael Smith  02:36

But it is it is steering. And I’ve been in a couple of hotly contested trials lately with Judge gills trap where he really lowered the boom on the parties and said, This is not how this case is going to go forward. And the parties followed that admonition. And the trial was a whole lot easier, because you didn’t have to worry about that. You just focused on getting your evidence out and and parties work together after that. But in this case, kind of the opposite happened. The plaintiff had identified five categories of conduct it said supported its claim, and it started out with a fight over identifying email custodians. And the court rules on that and says, okay, no sanctions here. And in the future, I’ll consider this conduct if and when an appropriate motion under 25 is decided, which is pretty standard. Well, the plaintiff says, Well, we took this as a signal from the court that the defendants conduct warranted fees. And the judge said, No, you’re reading too much into the footnote. I just said that I will consider this when I’m assessing a motion for fees. And and that’s kind of the I mean, you’re a West Texas boy, you’ll get this. That’s the that’s the rattle going off. That’s the judge letting you know, I’m keeping list of who’s been naughty and who’s been nice. But the court said that didn’t mean I’m going to assess 285 fees based on this. I was trying to warn both of you to stop having his main disputes. But at this point, the court says what the whole rest of the opinion about which is he says neither party is without blame on these issues. Both sides made a clear strategic decision. The plaintiff was going to demand overbroad discovery, and then and rush to file motions to compel and the defendants weren’t going to produce anything until the motion to compel was filed. And Judge Gilstrap says I tried repeatedly to get the parties to stop doing this. But apparently I wasn’t able to. And he runs down all these other things. Corporate representative depositions, email production, non email production, and repeatedly says yep, there was improper conduct here. But Mr. Plaintiff, you were doing improper things too. So this isn’t going to be a basis for 285. And when he gets to the end, he puts the quote that we all learned in law school that he comes to, he who comes to equity must come with clean hands, and he says the plaintiff doesn’t have clean hands so I’m not going to give you 285 fees. To for what the defendant did.

 

Wayne Stacy  05:03

Michael, the quote I loved out of all of this was that although the parties and that’s parties plural, not singular, although the parties conduct is not a model of how to practice before any United States District Court, this court declines to find that a coroner is entitled to its fees. It’s a, it’s a great statement to really separate sanctionable conduct from bad conduct. And really, a really a warning to anybody seeking discovery. If you’re going to do overbroad discovery, you’re probably not going to get good sanctions.

 

Michael Smith  05:42

Right. If you’re going to excuse the dark on the other side, who’s who you’re having trouble working with, you’re going to you’re going to excuse their conduct if you engage in the conduct. And when he says it’s not a model, that’s one of the things that makes this opinion useful. Because when he goes through and details, what people did wrong, he tells us that what the defendant was doing was wrong, what the plaintiff was doing was wrong. So this is kind of a primer on how not to do things. It’s not quite the primer on how not to do things that our next case is, but it does make it very useful to go through and say, am I am I engaging in this conduct, because if I am, I better hope the other side’s doing it too, or I’m gonna get hammered at the end.

 

Wayne Stacy  06:24

Well, and it’s for those looking it up the it’s the acorn Samsung case, and it really is something that should be studied for, for anybody that’s looking at acceptable, acceptable conduct. Inevitably, and the bad part of this, Michael is people are going to be also looking at this to see what they can get away with, and how, how difficult they can be without getting sanctioned.

 

Michael Smith  06:49

Right. And and, and I do think people are going to miss the point that the reason that the defendant got away with some of this conduct was because of what the plaintiff was doing. But you might not always be able to count on the other side being a jerk when you need them to, to excuse what you were doing. So that’s the danger there. We had a couple of other interesting cases out of Judge Gilstrap last week, one having to do with depositions, it was it was one of the few cases, we still have where cases are consolidated. And the plaintiff wanted and and the the the plaintiff was trying to cut down the defendants deposition of its corporate representative by saying, look, there’s four cases or seven cases or some just give him seven hours, and they have to split it. Well, sometimes courts will do something like that. But in this case, the court said no, you needed to show good cause, or a compelling reason to limit the defendants below what they would have gotten individually. And you didn’t show that here. So that’s kind of a data point, I put a put back, because that wasn’t always the rule. Sometimes the rule used to be something like four hours plus one hour per additional defendant. And that way, it wasn’t seven times seven, but it might be seven plus five, if you had seven defendants or something like that. So this is a useful data point for where we are now on that.

 

Wayne Stacy  08:18

Well, here’s another interesting one that came up in front of Judge Gilstrap was a very rare motion in his court, it was a motion to lift to stay. You just don’t see me those because they’re not a lot of stays granted. But it is a great data point in this age, just Google case.

 

Michael Smith  08:34

Well, it is because it points out that all these requests are very fact specific. The the plaintiff was asking the court to lift the stay based on the conclusion of ex parte proceedings. And Judge Gilstrap decided to do that the defendant said well, but some of the patents are still subject to some IPR proceedings. And he said, well, but that’s not enough to stop this from going forward. So it it kind of lets you know, I need it’s not always cut and dried, what’s your results going to be on this? So you need to look and see what facts you’ve got. But if there’s a way forward, my experience with Judge Gilstrap has been, and we’ve talked about this in the last few weeks with some of the orders where he goes forward to trial. If there’s a path forward, he’s going to take it, and he may find a path forward that you and your opponent didn’t think was a path forward. But that’s just way that the way this works. So don’t just assume well, as long as I’ve got anything out there, the courts not going to go forward with the case.

 

Wayne Stacy  09:35

Well, now we get to the Northern District of Texas on an exceptional case fee. It’s actually a fee award, but probably not what’s what the parties were really thinking about. And this is a great case to compare to the one we just talked about where there were no fees awarded, where I think everybody that’s seeking fees even against bad actors are coming away a little disappointed.

 

Michael Smith  10:00

Well, no, I agree. And the thing that this tells us is, in the case we just talked about the conduct stayed the same the whole trial in the whole case. In this case, the conduct changed, and the award changed. And what happened in this case was the plaintiff. When they were talking with the defendant, both before and after suit was filed, they said, You’re infringing your product is infringing our patent, and they kept attaching products of their own product. And the defendant kept saying, That’s not our product, that’s your product? Well, well, no, it isn’t. That’s your product. So. So this went on for 10 months where the case couldn’t really go anywhere, because the plaintiff would never look at what they were sending to the defendant. And in the process, the court also noted that the plaintiff was engaged in some other combat. Now, the court dismisses the case the first time after after going through that and says there is not infringement shown of the other products because you’ve got the wrong photographs attached. It dismisses it, plenty of free pleads comes in the case goes forward a little further. And then after some additional proceedings, the court dismisses it a second time, this time for good. Defendant comes in once 285 Finding and fees on everything. And the court says you get fees, up through the first dismissal because it went beyond just negligence. It went far beyond negligence. Your conduct was entirely inappropriate. And I love this, he talks about this wasn’t just negligence, this wasn’t just excusable attorney error. It displayed a degree of obfuscation and bad faith beyond mere attorney incompetence. I mean, you got to be working to be this bad. But so the court awards fees up to that point. But after that point, he says the same conduct wasn’t present the predicate there was a colorable claim, even though I dismissed it, there was a colorable claim for infringement, there was a legitimate basis for the claim, and there wasn’t objectionable conduct. So you get your face up to the first dismissal, which in this case, was $107,000. You didn’t get your fees after that.

 

Wayne Stacy  12:12

So 107,000 in fees on probably 40 to 50,000, in briefing. It’s a hard way to make a living. 

 

Michael Smith  12:18

Yeah, yeah, probably that that they might have been better. It might have been better to just limit it down to the fees for the first thing. And of course, for all we know, the plaintiff would have been willing to pay that or pay something that still would have put the defendant ahead. But But again, when you lay that next to the other opinion we have from Judge Gilstrap this week, it gives you some really good data points on bad conduct that results into 85 awards.

 

Wayne Stacy  12:45

Well, in this, this is a great example is it’s never too, too late to change your tactics, whether it be with a different lawyer or a different approach, you can help clean up some prior bad, bad acts.

 

Michael Smith  13:02

You raise a good point I was talking with someone just the other day about that. And they raised the question of well, does it signal weakness? Does it signal something if we change our conduct if we change our lawyers late in the game? And I said, well, it what it signals is that you’ve found a problem and you fixed it, that you found the lake and you’ve plugged it. So while you might think a lay person might think oh, well, you’re, you’re it looks bad that you’re having to make a change. I can tell you when I’m on the opposite opposite side, I’m very disappointed when the other side starts making sense and when they start not filing the objectionable pleading so it is absolutely never too late to change your conduct. And this is an indication the courts will take that into consideration when it happens.

 

Wayne Stacy  13:54

Once we moved to the Western District, I think we got a in an introduction for the new magistrate you want to tell us tell us the goal. I guess the court with the new new magistrate.

 

Michael Smith  14:05

Well, we did we had one of the regular meetings of judge all brides patent rules advisory committee by zoom last Friday, and Judge Albright began that by introducing the incoming Magistrate Judge Derrick Gilliland of Longview, who will be moving to the wrong side of I 35 in April and begin working as the second magistrate judge on the Waco division docket Derek’s of familiar face up here. He worked in Waco for a while and then moved to Daingerfield where he worked for the next Patterson firm and now he’s had his own firm, sorry, Gilliland in Longview, and he’s done a lot of patent cases in the Eastern District and in the Western District over the last several years. I’m very excited about having him there, because he has so much experience in a lot of patent heavy courts. One thing I remember telling him the other day today is I’m looking forward to being in front of you, because I know you know what all the tools are. When we bring up a regularly occurring issue, you’ll know well, here’s how here’s how judge Gill strap handle that here’s how judge Schrader or Judge Ward, or Judge Mazagon, or judge all Bryter, Judge Akel, you’ve got all those arrows in your quiver and can tailor it to what what a case needs. So we were very excited about that, he’ll be handling much of the discovery in the claim construction caseload for the Waco patent docket, as well as about a fifth of the non patent, civil docket. And of course, parties will have the opportunity to consent to trial before him. Once he gets on starts doing scheduling conferences. The court also noted that in 2021, he conducted 107 claim construction hearings. And he’s already had three patent trials to a verdict so far in 2022. So he often kind of gives us an introduction to here’s the state of what the Waco patent docket looks like. Here’s how many cases we’ve got, here’s how many hearings we’re having. And then he goes into the specific issues that he wants the committee’s feedback on at that particular meeting. And at this meeting, there was one specific issue he wanted to talk to us about.

 

Wayne Stacy  16:17

Well, I guess one of the other topics that came up was with court ordered mediation. And I really liked that you, you brought some emphasis to this topic, because I hear tech companies, I hear maybe some of the California influence from time to time talking about mediation in the Eastern District, the Western District of Texas, as being something very negative, even more so than just general mediation. So I love to hear, hear kind of the thoughts on mediation going forward in the use there in the Western District, at least.

 

Michael Smith  16:55

Well, what what Judge Albright told us is that he’s become convinced that it would be helpful to the efficient management of the docket, if they had more cases settle a little earlier than they are now. And the idea is, when unlike Judge Gilstrap with Judge Gilstrap, when you have your scheduling conference, you get your trial setting, and that generally, unless there’s a pandemic, it doesn’t move. So he starts out with eight cases set and then drops to three to two and then one. Well, Judge Albright doesn’t do that he sets trials after the claim construction hearing. And what he told us is, if I had even a little better idea how many cases are ready to go three months from now or four months from now, it would help in setting it. So if you could just if you’re going to settle a case, if you could just settle it a couple three months earlier than you would have otherwise, that’s a big help to the court in knowing how many cases to set for a certain week. So what he wanted to know is, from a practitioners perspective, when’s the right time to set for a deadline for court ordered mediation? And again, when I say court order, there’s a footnote here. And that is that if the parties both tell the judge, you know, mediations not going to be helpful in this case, he won’t order it. But if at least one of the parties thinks it will, he’s going to have a default deadline in here. And what he proposed was, say 30 days after opening expert reports, what did what did people think about that? And some people said, that’s fine. Some people said, No, we needed after rebuttal reports. Some people said, you know, right after Markman is a really good time to talk about settlement, because you have constructions out, but we had a very, very useful discussion. He talked to judge Albright talked about, was he going to have a list or not have a list? And the answer is yes and no, no. In patent cases, yes. And non patent cases, but not a pre approved list. Just a helpful list of here, people you can call if you want to. He’s not going to have communications with meat mediators, he said, and basically, we had a chance to talk to him about how does he see mediation as a tool in his court? So you had out lawyers from all over the country talking about? How are you going to do this? How are you going to do that, but this will add a little bit more structure than we’ve had in the past and hopefully will encourage some cases to settle a little bit sooner. My input was that I like it a little bit on the earlier side. I mean, as I put it on the call, I don’t really need to see a rebuttal report. Once I’ve got an opening report. I know there’s going to be around reports that say did not. So I don’t really need to pay for those. I know what the positions are, and then let’s go mediate. But but there was good discussion about in some cases, it may make sense to go past that. And the judge made clear if the parties say they want to move it to another date. That’s fine with him. He’s just trying to figure out what to put in his order as a starting point.

 

Wayne Stacy  19:58

Well, it’s interesting I I’ve even seen mediators toying with multiple mediations knowing that the patent world won’t settle on the first one in just trying to, to work through the the couple of couple of rounds that’s necessary to get these cases resolved.

 

Michael Smith  20:17

Yep, that’s absolutely the case. I remember back when cases used to mediate once and now it seems like it’s don’t tell anybody I said this, but it seemed seems like it’s three now. After we talked about mediation, the one of the co chairs of the judges committee, John Gragg, no went through the changes that the judge is anticipating, including in a forthcoming set of revisions to his OGP, his order governing proceedings, and there were several things, interesting things there that some of our listeners might be interested in. One has to do with deadlines for motion to transfer venue, the court used to have an earlier date for that, then he pushed it back a little bit. Well, now he’s going to push it back up. And the reason for that is so that venue discovery, if there is a is going to be concluded several weeks before the scheduled claim construction hearing. Now, we know Judge Albright has an order now saying that he’s not going to have a Markman, if there’s a venue motion that hasn’t been ruled on. This avoids having to take hearings off the calendar because it’ll finish the briefing at least three or four weeks before the hearing. So he’s got a chance to get that hearing out and doesn’t have to take the hearing off. I’m sorry, get the order out, not not take the hearing off calendar. So when you start seeing an earlier deadline, that’s the idea. It’s to try to to get those orders ruled on a little bit quicker than they have been.

 

Wayne Stacy  21:44

So Michael I saw that the judge put out a specific procedure recommendation, I’m not sure what the right word would be. But some kind of guidance on indirect and willful infringement pleading.

 

Michael Smith  22:00

Right, we’ve talked numerous times about Judge Albrights procedure on plaintiff starting out with claims of indirect and willful infringement. And with willful infringement, certainly, and often with indirect, what he does, as regular practice is he dismisses those right out of the box with leave to conduct discovery on them, and with leave to replete them later, if you uncover the facts that support them. We know that’s his policy, and the OGP is going to be modified to require meet and confer on that issue, and probably will provide a little guidance to let people know that that is his policy. To avoid unnecessary motion practice. You don’t need to file an opposed motion. And you don’t need to oppose a motion to do that, because both sides are going to get what they want. But that is going to be added to the OGP.

 

Wayne Stacy  22:54

I also saw time limits on Markman hearings. 

 

Michael Smith  22:59

Yeah, the the judge told us that it was his assumption then and now what he said on the hall on the call and what came out shortly after that we’re a little different. So let me explain. On the call, he said he’s looking at changing the default time that he schedules, claim construction hearings down from whatever it is now to just an hour. And I did not look up when he said that. So I couldn’t tell if there were expressions of heart, but no one really had a problem with it. But what he said is, I think, if I heard right, he said he’d only had one in the last year that needed more than an hour. Now remember, he puts out preliminary claim or proposed claim constructions before the hearing. So you know what the constructions are, you know where the court is. And I know my experience with Judge Payne does that Marshall is it shortens hearing substantially. So while in a normal Markman hearing, I need more time than that, if you’re going to give me constructions ahead of time, I really don’t. Now what we were told after the hearing is that the court is looking more like one and a half to two hours. So it may not change as much. But that’s still useful to know that the court typically is saying that these hearings don’t take more than an hour. And again, that doesn’t surprise me if I get preliminary and constructions I can give you a shorter hearing.

 

Wayne Stacy  24:19

So Michael, I’m gonna get a lobby for you to throw something into the court when you get a chance judge co had the greatest rule on Markman hearings out here. And she would allow what she ordered the parties to do is pick terms and then pick evenly matched Junior associates. We want somebody to like your three to five, or your two to five. You pick your two to five their pick their two, but it’s like a boxing match. We want to know the Featherweight. So we want you say the good times for the heavyweights, but she was trying to train the next generation. And I loved that because it was awesome. But everybody I saw complied with it. And kind of a term that you knew was okay. You could give a third year, their first Martin. And that was she give a little extra time for those terms for people to work through it and deal with it. 

 

Michael Smith  25:18

That’s, that’s great. And that actually was something that Judge Albright brought up on the hearing. He says his default going forward is going to be that all hearings unless somebody requests otherwise are going to be by zoom. And the reason is that he didn’t mind I mean, it’s eight steps from him from his from his office to the courtroom. He does it because he notices a lot more lawyers are able to attend, and a lot more clients are able to attend, and he likes it. When more lawyers or their clients are there, he welcomes the clients. And he and he thinks they can see better what’s going on. But the thing that he really, you can tell how enthusiastic he is about it is that young lawyers get to participate. And I’ll talk more about this later, because he went out of his way to talk about it. But younger lawyers get to participate more when they don’t have to fight to be part of the travel team. And he can tell that and that’s one major reason that he is indicating he says he’s the he’s the biggest proponent of zoom on the planet. And but but I had that question come up in a case this week, someone said, Well, we got a Martin coming up with Albright, the other side’s lawyer, somebody in Waco is going to have it live. And I didn’t know the answer before. And I know the answer now.

 

Wayne Stacy  26:38

Well, that that, that addresses one of the problems with the district courts that have said, they will give you more time to argue if you’ll bring a lawyer with six years in less than experience, we still have to bring them. Yeah. And that cost a lot of money to drive a lawyer around specialties patent lawyers, you know, to drive around flying around. So it’s not worth it. And zoom solves that. If you ever paired that with an encouragement to use junior lawyer against junior lawyers, he could actually change, change the Patent Bar.

 

Michael Smith  27:11

Oh, yeah, no, no, no, that’s not that’s not a bad idea. Because that, but the problem is, of course that would that would require talking to the other side in that would require coming up with an agreement. But But no, that would be a great thing to do. Because it would give an excuse to bring the people in because it’s like, think jet, I heard judge Gilstrap say this one time, he said, I know who did the work. Y’all just don’t let him stand up. And he used to have a rule on charge conferences, that he would he would tell people or strongly encouraged people to bring the associate in who’d been sitting in the courtroom watching trial for the last four days a because he knew that was probably the person who’d worked on the charge. But also I mentioned it to him one time passing us it thank you for doing that. Because that it actually gave the lawyer on the other side that wouldn’t have gone in a chance to go in and he said, Hey, I remember what it was like being a first year associate. So it gave these people a chance to get in and see see how this stuff is done?

 

Wayne Stacy  28:12

Well, Zoom plus a little encouragement can really be a game changer for these junior lawyers. And you know, what I found, Michael, is that while lawyers will hate each other and fight over whether the document was produced when it comes to giving younger associates a chance doing what’s right for their team, they’ll they’ll reach out to each other. Oh, yeah. Never never had an argument never even across word. Everybody’s looking to build up their own team.

 

Michael Smith  28:45

No. And that was something that I really enjoyed about the last trial I had it was it was hotly contested. But as soon as the jury was out, everybody was let was cooperating and coordinating and trading stories and and doing it kind of the way that that you like to see it done.

 

Wayne Stacy  29:02

So Michael, I’m gonna give you that homework assignment, see if you can get hearing us gentle encouragement.

 

Michael Smith  29:07

Understand, I understand I will find a way to bring that up.

 

Wayne Stacy  29:11

Still Still doing working with the University here. Our job is to help help lawyers, so… 

 

Michael Smith  29:17

Absolutely, absolutely. And And incidentally, that was the thing that Judge Albright actually closed out the meeting with was explaining he teaches a trial advocacy class at UT in Austin. And they start there, their course standing up arguing motions transfer, and then they graduate to motions to summary judgment motions. So he has people that are working with the students all the time, and he issued an open invitation anybody that wants to participate in that program at UT. He told people give cat lady a call and she’ll get you hooked up to get involved. We do that locally with the Baylor trial team that comes up to Marshall that we we judge every February they come up Sit in the courtroom and Judge Gilstrap and judge paying raked over the coals. We sit in the jury box, we raked him over the coals and kind of let him know how this compares to what you would actually see in real life.

 

Wayne Stacy  30:11

So I guess I’m a little surprised. I thought all the trial lawyers came out of Baylor I didn’t know any came out of UT, 

 

Michael Smith  30:16

They do, and that’s why they have to have so much more teaching at UT because they’re just not naturally as gifted that way.

 

Wayne Stacy  30:24

There’s your softball for the day. Well, is we talk about, you know, the judge going to training and trying to provide guidance, and we really see a theme, and what all Brian’s trying to do is put out guidance and develop lawyers. But this, this idea about an order reflecting the rulings, it’s the first time I’ve seen this, and I’d love a little more description on it, how you think it’s going to play out? 

 

Michael Smith  30:50

Well, what the what the the court is going to do is put in the OGP, a provision that emphasizes that the parties artists submit joint proposed orders after a ruling on Discovery. Well, we already know that that helps move things along. But then the clerk that was telling us that said what y’all can do is take your 500 word positions that you sent in to us before we had the hearing, put them into the order as well as the rulings so that the order that’s published and available online will include the background, the dispute for other litigants to study. And I was just floored because that that’s something that I remember two years ago at this meeting, we were telling judge Albright, it’s helpful to practitioners. If you publish opinions on regularly occurring things, it may not be a big issue to the court. But if you say okay, this was the motion, here’s what the party wanted. Here’s what the response was, here’s what the order is going to be and why. If you’ll put some orders out, we can take that back. And and tell people here’s kind of what the courts looking for. What the court is doing here is telling us on orders where I’m not writing an order, giving you the rationale, where I’m just saying, okay, that’s granted, that’s denied. You can put that stuff in the order so that people will know what happened going forward. And whether I won or whether I lost. A lot of times I want to have in what the dispute was, because I know that that order is going to get used against me in a future case. And if I can include some information on making clear, here’s what the facts are, well, then I’ll understand, oh, that’s what it dealt with. You were asking for 37 depositions. That’s why the court said more than six, you can only have six. So so that’s something that think’s going to be very helpful going forward. Now. It’s going to be more expensive. We’re going to fight over it. But that is a way that we can get more information out there so that people understand what the judges approach was, and in what circumstances he found a request was well taken in which ones he found that they weren’t.

 

Wayne Stacy  32:57

Michael, I’d love to move now to some venue opinions. Seems like there were a whole bunch that came out. My first thought is, the venue fight doesn’t seem to be slowing down at all.

 

Michael Smith  33:11

No, it really isn’t. We’re seeing fewer man Damasus. But the venue opinions this morning alone. starting work on next week’s I read three. And I’ve got several that are worth covering here. There was one little bit unusual. And we’re judge Albright had an issue that looked like a first to file argument. But he said it can’t be first file because the the case could not have been filed in the transferee forum. So he says I’ve got to deny it for that reason, reason, but tell you what I’ll do, I’m going to stay the case until the earlier filed court comes out with their claim construction, it won’t be long. And that way we’ll kind of avoid duplication of expert. So even though he couldn’t grant the relief that you would normally see in this situation, because the the case could not have been filed there. He still tried to accommodate the purposes behind it. So I thought that was useful and that I kind of put that in the back of my head, that I might actually make an argument to him, that I that I claim is supported by common sense, even if it’s not supported by the case law or the facts. Another case we had was an improper venue case. We’re starting to see the URL starting to see we’ve seen a number of them already know we’re gonna have another one next week. And this was another situation where the defendant is arguing, okay, where the plaintiff is arguing, okay, the defendant doesn’t actually have a facility, but they still have a regular and established place of business in the Western District, through their employees, which are now working from home during the pandemic, because that’s how companies work now, and judge Albright said, No, you’re asking me to go beyond the language of the statute, and the Federal Circuit’s test and Cray and said in under These facts no the homes of the employees were not the places of the defendant. But but that’s that’s an improper venue argument that that we’re seeing pretty regularly now and pretty regularly denied. We also had a motion to transfer to Austin granted. Judge Albright rejected the plaintiffs argument that Oracle’s Oracle’s recent relocation to Austin should be disregarded as recent and ephemeral and said they’ve only got 3000 employees and 900,000 square foot feet on their campus. So that’s that’ll get you transferred Austin.

 

Wayne Stacy  35:33

Now, I’ve got to ask if if 3000 employees that 900,000 square feet doesn’t qualify as a local investment? I’m not I’m not sure what would to me.

 

Michael Smith  35:48

That actually buy a local investment in the Austin area that is not particularly large for some companies. Recently, you’re seeing companies are executing the biggest lease ever in downtown Austin. They’re building giant facilities. So you’re going to see those sorts of facts coming up, but I thought the plaintiff was kind of going against the wind arguing that 900,000 Squeak was fate was recent and ephemeral. Maybe they meant that facetiously, I don’t know. Now, the order that everybody got all exercised about this week is what we’re calling the Texas Hold’em, venue order. And that was an order where Broadcom had a witness that said nothing happened in Texas, there’s nothing in Texas, nobody’s ever been in Texas, I don’t even know that there’s anything east of, of, of New Mexico. And then they get down to the exchange where he’s being asked because the defendant has a facility in Austin. And and the judge says he got called on his to seven off suit, he got asked, What’s your understanding of what type of products are worked on at your company’s Austin facility? And he says, Well, I have very little, almost everything I’ve worked on has been done at other facilities. So I don’t know exactly what happens in Austin. Um, that was your opponent that was supposed to be saying, here’s what’s done in Austin, and there’s not much done there. So so the judge went on at some length talking about the specific investigation talking about the facts of that that case, and saying that, he said, it’s clear there is activity in the Western District. It’s clear that the proof such as it is that there isn’t work being done in the Western District was questionable. So he denied the motion in that order. But that but the Texas Hold’em reference got a lot of people’s attention.

 

Wayne Stacy  37:43

Well, and to me, it was sad that that drew the attention because I remember a quote from from Judge Ward. What was it too cute by half? That’s what this looked like to me that it was carefully crafted to off you skate. Maybe mislead?

 

Michael Smith  38:04

The Absolutely, he said, The the judge went through the facts of the investigation and said, someone else did it. The person you’re putting up as the witness doesn’t have knowledge of it. He kept adding in disclaimers to discredit employees in Austin. But the thing that he kept doing was, was basing it on other cases, other products, other cases they’ve been involved in. And as we know, the Federal Circuit has told us, Judge Albright, you can’t make a decision about what witnesses are necessary based on what you think, based on what you’ve seen. In other cases, it’s got to be based in this case. And those words came back to haunt the defendant here, because that’s kind of what their employee had done. He said, Oh, I’ve been doing this job for all these years. And we don’t do anything there and nothing’s ever been part of there. But when you looked at what he said about the actual facts of the case, you ran into the the two seven offsuit. As the judge put it.

 

Wayne Stacy  39:03

Well, then we’ve got what you refer to as the Apple hotel, I think adds a nice little flavor.

 

Michael Smith  39:11

Oh, yeah, the it is starting. For those that don’t know what’s going on. Apple’s putting in a billion dollar facility around Austin, which we now know is going to include a was it 190 109 Two room hotel in it. So Apple comes in once a transfer based on convenience and judge all bite goes through all the facts here, but the facts are a little different here than what we normally see. The judge points out that Apple’s footprint in the Western District is much larger. He points out that the plaintiff is also in Texas. He points out the plaintiff doesn’t have any contacts or any anything in California. He points out that the events giving rise to the action occurred in both venues. You had manufacturing going on the Western District of Texas So when you compare the the cases fit to Texas, to the parties and to the facts of the case in Texas, and then you compare it to California, he said on these facts, he wasn’t satisfied that Apple had satisfied its burden. And he talked about the convenience that he’s supposed to look out for these witnesses. And he says, well, apples got a hotel for its employees for their convenience when they’re in Austin. So that the balance of conveniences is starting to shift a little bit when the witnesses are able to travel freely for business. And they don’t have the same inconvenience that they had when they were having to stay in other facilities and make other arrangements. So that’s an interesting set of facts we haven’t seen before to this extent. So I suspect that’s not the last that we’re going to hear this case.

 

Wayne Stacy  40:51

So Michael, I wanted to close up with two cases, one in Waco, and one in the Austin division, the one in Waco is was addressing the claim construction deadline or the claim construction point in time for discovery. And I guess the question is, you know, how firm is the the courts rule on, on Discovery?

 

Michael Smith  41:16

No, and that’s, that’s a characteristic of the Western District of Texas before Judge Albright, and one that he’s maintained, is that there is a moratorium on Discovery before claim construction. Unlike the Eastern District, there’s not other than some kind of halfway and mounting derogatory, I’m just saying, when you compare what’s required to what’s required under other rules, the disclosures only go partway. And you can’t get document discovery or depositions or anything beyond that. So you have that moratorium up until claim construction. But the question has always been well, what discovery can you get before claim construction, because judge Albright has been clear, if you’ve got something that you think will help promote the efficient resolution of the case, come see me. And I’ve done that I’ve, when there’s a motion to dismiss, and we think there’s there’s discovery relevant, we asked for that the plaintiff might ask for venue discovery. Well, in this case, the plaintiff was suing Dell. And it went to judge Albright and said, I would like for the court to open discovery in a limited way before claim construction, by requiring Dell to give me some basic discovery on the number of accused devices and contact information on the defendants supplying manufacturers, because they were all going to be overseas. And and the the products were are the parts that issue are made overseas. And they said if we don’t start until claim construction, because all this stuff is going to have to go through lengthy procedures, it’s going to slow the case down. So Judge Albright found that under the facts of this case, that was a good argument. And this was worthwhile to go ahead and ask the defendant provide the basic information so that the plaintiff is ready to go with Discovery against these third party suppliers, foreign third party suppliers as soon as we get through with claim construction.

 

Wayne Stacy  43:09

Well, that’s just seems like good, good planning. And something that people often overlook is thinking about third party discovery until it’s too late in this one seems a plaintiff was was thinking ahead and the court recognize that.

 

Michael Smith  43:24

Yeah, yeah. It’ll be interesting to see to what extent and again, I can’t I can’t overstate this. Judge Albright is open to anybody that wants to come in, say, Hey, we’ve got this early discovery we want to do and he may say, Yes, he may say no, but this is one of those discovery orders, where the court provided the rationale for the ruling, so that you can look at it and say, Okay, now, where do I think I fall on this continuum?

 

Wayne Stacy  43:53

Well, Michael, I loved to finish the case with or finish the day with a case from the Western District, but from Judge Yeakel seems like a it’s maybe an outcome that people would associate more with California than Texas.

 

Michael Smith  44:08

I think that’s correct. The case is a patent case that was pending in front of Judge Yeakel in Austin. So we’re down the road about 90 miles from Waco. We’re in the Austin division where a lot of Waco cases for different reasons end up and Judge Yeakel is presented with a request to stay the case. And because IPRS had been instituted as two three of the seven asserted patents, it wasn’t a complete overlap with what was being asserted. But Judge Yeakel said that IPR petitions were timely filed, the plaintiff was not was not a competitor and a stay would simplify the issues. So he granted the stay. That probably is not the ruling you would have seen from some other courts. But since we’re all very interested in what’s the difference between what a ruling would be in Waco and what it would be in Austin It’s one to look at and and kind of put put in the back of your head and think about when you’re deciding where you want to be and whether you really want to fight to go from Waco to Austin from Austin to California. Just another thing to think about.

 

Wayne Stacy  45:18

Oh, it’s it’s a good reminder, the Western District of Texas is a big place and there’s more than one judge. 

 

Michael Smith  45:23

Absolutely. 

 

Wayne Stacy  45:24

So, with that, Michael, I wish you a good week and we’ll talk soon.

 

Michael Smith  45:29

Okay, talk to you soon. Take care