Davis: Budding consensus on patent reform

By Diane Davis

It’s a well-known fact that Texas continues to lead the nation when it comes to business development and job creation and that smart, common-sense legal reforms have been a cornerstone of our success. 

Over the past decade, important changes here in Texas have put an end to the abusive, frivolous lawsuits that plagued our civil justice system and helped make Texas an economic powerhouse even while the rest of the nation struggled.

But if Texas is to maintain our strong position and reputation, we must continue to combat lawsuit abuse wherever it rears its ugly head. Right now, eyes are on East Texas and the potential for abuse in our federal courts.

The American Tort Reform Foundation in its annual Judicial Hellholes report put the Eastern District of Texas, a U.S. District Court, on its “Watch List” just last year. The designation is just one step away from being a “Judicial Hellhole,” defined in the report as a place where judges systematically apply laws and court procedures in an unfair and unbalanced manner.

While the report rarely focuses on federal district courts, the Eastern District of Texas is rightly being singled out for driving an ongoing surge of lawsuits involving patents.

The surge is being driven by “patent trolls”— those who buy up patents not to incorporate them into competitive new products and services that help expand the economy but simply for the purpose of filing nettlesome infringement lawsuits.

Their litigation, the report continues, results in billions of dollars in settlements and verdicts, and threatens some of America’s most innovative job creators and financial service providers. And their favorite venue is East Texas.

Shockingly, 3,879 defendants were named last year in new patent case filings in the East Texas, a 70 percent increase from 2009, and more than four times the next highest number for new defendants, 884, in the District of Delaware. This influx of cases is turning our local U.S. District Court into the “center of the patent litigation universe,” according to the report. These facts warrant our attention and concern.

There are several reasons, according to the report, why this particular court seems to attract such litigation. First, local rule changes have led to speedier trials, allowing more patent cases through the system, and our federal judges often side with patent plaintiffs, granting among the highest awards for damages in the country.

In recent years, our local federal court has handed out 12 of the largest 25 awards nationwide. Are these cases and results justified by the facts of the case?

Perhaps. I’m not a lawyer, but I’m alarmed that others could be abusing our laws – and our local federal court – for their own personal gain. That would be lawsuit abuse, and it can affect all of us by increasing prices on products and hurting job creation.

Diane Davis is executive director of East Texans Against Lawsuit Abuse.