LAW360

By Hannah Albarazi

Law360 (July 28, 2022, 6:37 PM EDT) — Even faster than U.S. District Judge Alan Albright threw open the doors of his Waco, Texas, courtroom to patent litigators, a new court policy to randomly assign patent cases across the Western District of Texas shut them, flummoxing attorneys and leaving some firms with new Waco offices rethinking their investments.

Attorneys and legal experts told Law360 that firms that gambled on Waco may be having regret after the chief judge in the district announced a new policy Monday that requires new patent cases filed in Waco to be randomly assigned to the 12 trial judges in the Western District, effectively releasing Judge Albright’s grip on the country’s patent litigation.

“Firms that invested in Waco because of the popularity of Judge Albright’s court will not see the return on investment they were expecting,” Wendy Verlander, a patent litigator and managing partner of Verlander LLP, told Law360. She is based in Massachusetts, but has represented clients in Waco.

Paul R. Gugliuzza, a law professor at Temple University who co-wrote an October law review article that sounded an alarm on the potential for “judge shopping” in patent litigation in Waco, told Law360 in an email, “This is obviously bad news for patent litigators in WDTX.”

“The effect of the order will, in my view, drive the number of new patent cases filed in Waco down to zero in short order,” said Gugliuzza, who wrote the article with American University law professor Jonas Anderson.

Judge Albright, a former Bracewell LLP patent litigator tapped by then-President Donald Trump to be the sole federal judge in the Waco Division of the Western District, began soliciting patent cases shortly after he assumed the bench in 2018. By 2021, Judge Albright’s courtroom handled nearly a quarter of the country’s patent litigation.

Judge Albright’s bold approach lured top firms to Waco, but his unconventional tactics also evoked concern about forum shopping from academics, the Federal Circuit, U.S. senators and U.S. Chief Justice John Roberts.

Still, law firms continued to eagerly expand their patent practices in Waco. Among them were Winston & Strawn LLP, Patterson & Sheridan LLP, Carstens & Cahoon LLP, Gray Reed & McGraw LLP and Munck Wilson Mandala LLP.

The increase in patent traffic in the Western District, and Waco in particular, has also led some big firms to open or expand offices in relatively nearby Austin and Dallas, including Duane Morris LLP, Quinn Emanuel Urquhart & Sullivan LLP and Kirkland & Ellis LLP.

Weathering Waco

It was not immediately clear what effect Chief U.S. District Judge Orlando Garcia’s decision will have on their Waco operations, but some of the law firms that responded to Law360’s requests for comment said they’re rethinking their investments, while others said they’re confident they will be able to weather the change.

Vincent Allen, a Dallas-based partner at Carstens & Cahoon told Law360, “Firms like ours who have invested in opening offices in Waco in response to the surge of patent litigation are now re-thinking whether those investments are worthwhile in the long term.”

Allen, whose boutique firm opened its Waco office in late 2020, said the order means that attorneys all over Texas will be affected as patent case filings shift to other venues.

But other attorneys, including those in BigLaw, say the order doesn’t change much for them.

Gilbert Greene, an Austin-based intellectual property attorney and a managing partner at Duane Morris, told Law360 that while the Austin office has handled its share of Waco patent cases, it had been thriving long before Judge Albright made Waco a prominent destination for patent litigation.

“Therefore, regardless of which venues may start to see an increase in patent filings as the Waco filings start to decrease, our firm and our Austin office will be well-positioned to continue supporting our clients in whatever venues they might find themselves for patent litigation,” Greene said.

Challenging Waco’s Reign

Waco’s future as a patent litigation center was thrown into question when Anderson and Gugliuzza’s article concluded Judge Albright’s solicitation and concentration of patent cases allowed patent plaintiffs to go judge-shopping and threatened to undermine public confidence in the impartiality of the judiciary.

Random assignment would eliminate these concerns, they said.

In a rare show of bipartisanship, two senior members of the Senate Judiciary Committee — Sens. Patrick Leahy, D-Vt., and Thom Tillis, R-N.C — echoed those concerns.

Extensively citing the academics’ work, the senators wrote a letter in November to Justice Roberts, in his role as presiding officer of the Judicial Conference of the United States, asking him to direct a study into actual and potential abuses in the Waco Division and to consider implementing changes.

In January, Justice Roberts ordered the Judicial Conference to review the forum-shopping issue. Anderson told Law360 in an email that all that heat “raised the stakes and put the Western District of Texas (not just Waco) in an uncomfortable spotlight.”

He said this new policy will severely limit the Waco Division’s appeal to patent plaintiffs, but there will still be a lot of patent cases in Texas overall.

Some patent litigators say Waco will remain a place where firms will want to be.

“I have little doubt that the Waco court will remain a major patent litigation venue,” David G. Henry, a longtime patent attorney who joined Munck Wilson this month from Gray Reed to open the firm’s Waco office, told Law360.

Since Waco has a growing economy that generates legal work, Henry said most general practice firms that may have been initially attracted to Waco for the patent litigation work would still want to maintain a presence there.

But “firms that only have interest in patent litigation may question carrying the overhead of maintaining a permanent presence in Waco,” he said.

Andy Powell, a Waco-based patent litigator at Naman Howell Smith & Lee PLLC — which was founded in Waco in 1917 — shared Henry’s outlook.

Powell told Law360 that “while it is too early to say how this order will impact the overall legal market in Waco, to the extent that there are law firms that have opened up specialty boutique offices in Waco focused primarily on patent litigation work, this may have a negative impact.”

“However,” he said, “for law firms that have been in Waco for many years with a broad client base and that have a varied legal practice, this order should not significantly impact their overall operations.”

And not all patent litigators think the new policy will last.

What’s Next

Spencer Fane LLP partner Erick Robinson, who co-chairs the firm’s intellectual property practice and works out of Houston and Austin, told Law360 this order may only be temporary as Judge Garcia is set to retire in three months and U.S. District Judge Alia Moses will replace him as chief judge.

Robinson said that because the Western District does not require local counsel, “there just are not that many lawyers focused on Waco. Rather, most firms believe having an office in Texas is good enough and the only thing that matters is having counsel that knows the local rules.”

Henry said he expects that without the Waco court’s special approach, processes may slow down for patent cases nationwide.

Without the certainty of access to the Waco court, Henry said plaintiffs in patent cases may consider filing in the Eastern District of Texas, the District of Delaware, the Northern District of California or the Eastern District of Virginia, where “more courts than most have, similarly to the Waco court, aligned themselves for patent cases.”

Gugliuzza, the Temple law professor, told Law360 he thinks the flood of patent litigation in Waco will soon run dry, noting that “the odds of having the case sent 200 miles away to San Antonio (5 in 12) or 600 miles away to El Paso (2 in 12) is too great to justify the 1 in 12 chance of having the case stay in Waco before Judge Albright.”

“This is obviously bad news for patent litigators in WDTX,” Gugliuzza said. “Most likely, we’re headed back to where things were in 2018: a modest number of patent cases in the Austin Division (less than 100 per year) and basically no patent cases elsewhere in the district.”

Gugliuzza said that in the short term, he expects to see a lot of patent cases shift to Delaware and the Northern District of California, but he said “it may only be a matter of time until another successful ‘court competitor’ for patent litigation emerges.”

He pointed out there are still about 80 divisions in 30 districts where only one or two judges hear all cases filed — “precisely the system that attracted plaintiffs to Waco and Judge Albright.”

At least one firm that recently opened an office in Waco, Gray Reed, told Law360 that it doesn’t expect the order to affect the firm.

Kyle Sanders, Gray Reed’s soon-to-be managing partner, said that while “the handwriting seemed to be on the wall” following Judge Garcia’s decision, “in terms of Gray Reed’s [intellectual property] practice, because our priority at this time is to provide expertise in patent prosecution, copyright, trademark, trade secret and other areas, this order doesn’t impact us.”

Sanders said he expects Gray Reed’s Waco office will continue to play a significant role serving over 70 Waco-based clients, as Amazon.com Inc., SpaceX and others have put significant operations in Waco, and Waco-based Baylor University continues to grow.

Janis E. Clements, an Austin-based patent attorney with Greenberg Traurig LLP — a firm that has defended major tech players including Samsung, LG Electronics and eBay in patent disputes — said none of their Texas offices were formed or staffed in response to Judge Albright’s large docket. As a result, she doesn’t expect Greenberg Traurig “to be affected at all” by the order.

She also voiced her support for the coming change.

“Randomly assigning cases across the district will more evenly distribute the volume of cases, while also removing the ability to select a particular judge in districts with only one Article III judge,” Clements said.

Defending Albright

Many patent litigators have pushed back on the criticisms of Judge Albright and the concentration of patent cases before him.

Henry of Munck Wilson told Law360 a court providing patent law expertise, specially trained staff and patent-specific standing orders was a boon, especially given that few federal judges even want to handle patent cases.

The reason people gravitated to Waco to file patent cases “isn’t because it’s a plaintiff’s haven where they can’t lose,” Henry said, but because Judge Albright understands patent law, which makes litigating patent cases in his court “a dream” in comparison to many other districts.

Henry said he doesn’t believe the criticisms.

He said law firms aren’t leaving Waco because even if Judge Albright is only assigned one out of every 12 cases going forward, there are still about 900 cases pending before him. It will take years for those cases to work their way through the system and for attorneys’ Waco workflow to actually dry up, he said.

Henry also said judges in the Western District can adopt Judge Albright’s rules or transfer cases assigned to them back to him, which would keep his docket full.

Robinson of Spencer Fane called the new policy unfair and inefficient, and speculated that “Big Tech’s desire to only be able to be sued in their home court drove the actions of the senators.”

Big tech companies have indeed been critics of the rising number of patent suits being filed. Google’s general counsel Halimah DeLaine Prado wrote a blog post in April calling for the end of patent litigation forum-shopping.

“Having cases tried all over the district (including cases filed by the same patent owner) with different rules, timelines, and applications of law is the antithesis of efficient,” Robinson said.

Verlander, the Massachusetts litigator, said the uncertainty created by the new policy may dissuade patentees from filing in Waco and could inspire plaintiffs to move for intra-district transfers.

She also said she’ll be watching to see what the rest of the Western District does with its new docket of patent cases.

“Hopefully, the other judges will build on Judge Albright’s model,” Verlander said.

–Editing by Brian Baresch and Lakshna Mehta. Graphic by Jason Mallory.