Big verdicts in patent cases mean big attention by the media, but is there a way to turn all the attention into something positive? The U.S. District Court for the Western District of Pennsylvania is trying to do just that.
High-profile patent cases tend to draw a lot of attention, especially when they result in a verdict in the hundreds of millions of dollars or more. One can imagine, then, the kind of attention that a billion-dollar verdict can attract. In late 2012, a Pittsburgh jury held that Marvell Technology Group should have to pay $1.17 billion in damages to Carnegie Mellon University in a patent infringement verdict based on data storage and retrieval technology. This award was based on a finding of direct literal infringement of the claims of two patents owned by CMU. As it happens, this may be just the sort of attention that the Western District is looking for.
Pilot Patent Program
In 2011, the Western District became one of 14 district courts selected to participate in a 10-year pilot patent program, as selected by the Administrative Office of the U.S. Courts. The program included courts in New York, New Jersey, Maryland, Illinois, Florida, Nevada, Texas, Tennessee and California, in addition to the Western District of Pennsylvania.
The program allows the selected district courts to study the differences in reversal rates and the period of time that elapses between the filing of a patent case and the beginning of a trial for both patent and non-patent judges. The program is designed to enhance efficiency and expertise in patent cases in participating districts.
One of the mechanisms the program enacts is a designation of a number of judges within the district as "designated patent judges." Under the program, when a patent case is newly filed, the case is randomly assigned to an Article III judge, as usual, but if the judge is not a designated patent judge, he or she may decline the assignment, at which point the case is assigned randomly to one of the designated patent judges. To date, the following judges have been designated as patent judges in the Western District: Chief Judge Gary L. Lancaster and Judges Joy Flowers Conti, Arthur J. Schwab, Nora Barry Fischer, Cathy Bissoon and Mark R. Hornak. Such a mechanism is intended to encourage consistency and efficiency in the patent litigation process.
The Western District was selected for participation in the program in no small part because of its implementation of local patent rules in 2005, being among the first of the district courts to do so. The rules were implemented in an attempt to highlight the court's capabilities for handling patent cases and were designed to streamline patent litigation to "add efficiency to the litigation of patent cases by reducing the amount of time for discovery, and removing the uncertainty surrounding how anindividual judge might schedule the case," per "Order In re Appointment of Additional Designated Patent Judge," Misc. No. 11-283, (W.D. Pa. Jan. 31 and May 9, 2012). It is no coincidence that the U.S. District Court for the Eastern District of Texas has the same type of rules in place. By enacting the local patent rules, the Western District was making a statement that it wanted more patent cases.
In order to get a complete picture of the CMU case, it is helpful to first discuss what the case was about and why the damage award was so large. CMU won on a jury finding of direct literal infringement of claim four of Patent No. 6,201,839 and claim two of Patent No. 6,438,180. The jury also found that Marvell induced infringement by encouraging customers to use its chips. Both findings were made despite assertions of invalidity of the patents based upon a Seagate patent application.
The CMU patents relate to information storage and retrieval technology systems and methods developed and patented by CMU. Specifically, the CMU patents describe a way of reducing "noise" when reading information off hard disks. As it happens, this is a particularly pervasive technology, and court documents indicate that Marvell sold more than 2 billion chips containing the technology between 2003 and 2012.
Although no determination of willfulness has been made as of press time, the jury held that Marvell knew of the asserted patents before the lawsuit, that Marvell had no reasonable defense for its actions, and that Marvell knew or should have known that its actions were infringing. If CMU succeeds in convincing the court to rely upon these answers, the damage award may be increased, resulting in a staggeringly large damage award of potentially more than $3.5 billion.
It should be noted, however, that achieving a large patent verdict and keeping it on appeal are two very different matters. "Judge Fischer's careful work suggests that this verdict has a better chance than many big verdicts of standing up on appeal, but history has not been kind to billion-dollar patent awards," said Michael J. Madison, professor of law and faculty director of the Innovation Practice Institute at the University of Pittsburgh School of Law.
Uptick in Patent Litigation?
The Western District advertises that it consistently ranks in the top 20 of the 94 district courts in the nation for swift disposition of civil cases. The court also advertises that motions to transfer or change venue are statistically very small. Since being named as a participant in the pilot patent program, the number of patent cases being filed in the district has doubled, according to a report in the Pittsburgh Post-Gazette.
Beyond implementing the pilot patent program and putting local patent rules in place, how can a district court attract more patent litigation? Perhaps a record-setting patent infringement verdict could help. According to Bissoon, the verdict has garnered a lot of attention for the court. In particular, Bissoon mentioned the notoriety that the case garnered among the attendees of the NYIPLA 91st annual dinner in honor of the federal judiciary, particularly for Fischer, who presided over the case.
Over the past 30 years, the Western District of Pennsylvania has transformed itself to include a large number of technology-oriented companies. The region's technology industries have an annual payroll in excess of $10 billion, which represents approximately 25 percent of the region's total industries. Having a sophisticated and experienced local venue to handle patent disputes should only serve to foster and support the tech transformation in the region.
Can this verdict launch the Western District to the kind of patent litigation celebrity that the Eastern District of Texas has enjoyed with its reputation as a potentially patent plaintiff-friendly district? Is ita one-off decision, or has the Western District redesigned itself to attract this type of high-profile patent litigation? Only the passage of time will answer these questions.