Google and several major Android device makers (such as Samsung, HTC, LG, ZTE, and ASUS) scored a procedural win today in the United States Court of Appeals for the Federal Circuit against a patent assertion entity jointly owned by Apple, Microsoft, Erisson, BlackBerry, and Sony. The appeals court handed down a decision in favor of Google's request for a writ of mandamus and instructed Judge Gilstrap in the United States Eastern District of Texas, whose unwillingness to move patent infringement cases out of his district is long-standing and well-document, to stay the proceedings in his court pending a declaratory judgment action in the Northern District of California that will practically dispose of all of the key issues, if not all of the issues, in the Texas case.
Statistically, defendants fare better in the Northern District of California with respect to pretrial decisions. In addition, jurors in that district are, on average, more tech-savvy than anywhere else in the country.
The order granting Google's petition was authored by Circuit Judge Kathleen O'Malley, the same judge who also wrote the opinion in the Oracle v. Google Android-Java copyright case. On Monday, Google appealed the appeals court's ruling on that one to the Supreme Court (which will in the first step have to decide whether to hear the case at all, which is not a given because the SCOTUS is too busy to hear all high-profile cases presented to it).
Nobody doubted that there was substantial overlap between the California and Texas cases. If one court had accepted to move its case out of its district, the risk of potentially conflicting decisions would have been eliminated. In April, the Chief Judge of the Northern District of California held that Rockstar's scare-and-run tactics against Android advanced Apple's strategic interests (though I give Apple the benefit of the doubt with respect to Rockstar's decision to bring widespread litigation over the former Nortel patents jointly acquired by its current shareholders and a former partner, EMC). The California case continued for that reason as well as for others. For Judge Gilstrap in Texas, it would have been out of character to transfer or stay the case he was presiding over, so the only way to resolve the conflict was for the appeals court to speak out on it.
Judge O'Malley is, at the philosophical level, one of the more right holder-friendly judges of the Federal Circuit--clearly more patentee-friendly than Chief Judge Sharon Prost, for example. She also tends to favor a broader scope of patent-eligible subject matter than some of her colleagues. But let there be no doubt about the balanced approach underlying her opinions in the Oracle case (where she agreed with Oracle on copyrightability but stopped short on resolving fair use as a matter of law) and now in this Google matter. I like both of those opinions--twice as many as Google is happy about.
Rockstar's arguments clearly didn't impress Judge O'Malley. One example is that Rockstar had added Google as a defendant to the Samsung case in Texas. The official reason was Google's involvement with the Galaxy Nexus. More than anything else, however, it was a transparent response to Google's previous declaratory judgment complaint in California. Rockstar wanted to get the benefit of the earlier-filed case. Judge O'Malley and her two colleagues on the panel weren't persuaded by this. They ultimately concluded that Judge Gilstrap had abused his discretion in denying a stay of the Rockstar actions in Texas.
The Federal Circuit found that Rockstar is basically run out of Canada, with only a minimal presence in Plano, Texas. By contrast, Google is undoubtedly run out of Northern California and has most of its Android records there. This reduces the burden on witnesses. Judge O'Malley and her colleagues focused on avoiding a waste of resources and chose a "flexible approach, including staying proceedings if the other suit is closely related that substantial savings of litigation resources can be expected."
One part of the decision that is particularly likely to be cited going forward disagrees with the Texas holding that this case was far outside the customer-suit exception (a rule that is rarely invoked so far and may be strengthened if some serious U.S. patent reform ultimately happens, which is more likely than ever should the Republican Party take control of the Senate) because of the fact that Android device makers are allowed to modify and customize the Android platform to a certain extent. The Federal Circuit has now found that the infringement allegations against the different Android device makers are more or less identical, showing that whatever flexibility they might have had regarding the Android platform didn't change the fact patterns to be adjudicated now.
Judge Gilstrap's decision was in no small part based on an all-or-nothing logic: consolidate everything in Texas or consolidate everything in California. The Federal Circuit now says it's more flexible, and in this case more appropriate, to just stay the Texas case in order to let the court in California resolve the issues pending there. In practical terms, this is very close to the effect of consolidation in California. Should none of the asserted patent claims be held both valid and infringed at the same time, Texas won't have anything left to do. Such an outcome is not at all impossible. Two of Rockstar's shareholders are among the five large organizations whose patent assertions against other major players I recently analyzed. Based on partly final and partly intermediate results, only about 9% of those 222 patent assertions (most of them against Android devices) had merit.
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