East Texas Court Finally Issues Newegg Order Two Years Late; Judge Upset About How Newegg Handled Things

Patents

from the might-want-to-look-in-the-mirror dept

Last week we wrote about an incredible situation in East Texas, where Judge Rodney Gilstrap had not issued a ruling in 20 months on a filing by Newegg concerning a ridiculous jury decision. As we had noted, everything about the case was fairly ridiculous. The patent in question, 5,412,730, was ridiculous and never should have been issued in the first place. The troll who owned it, TQP, should never have been allowed to shake down hundreds of companies by claiming that anyone encrypting web traffic infringed. TQP was able to bring in $45 million in settlements from this one bogus patent alone. Newegg brought out the biggest names in encryption to point out that the patent was bogus, and also pointed out that even if the patent was valid, it clearly did not infringe. No matter, the East Texas jury still sided with the troll, because that’s East Texas.

Newegg, in response, asked Judge Gilstrap to basically overrule the jury, and issue a “Judgment as a Matter of Law” (JMOL) which is basically the judge saying that the jury got the law wrong in determining its verdict. And then… nothing. As new things happened in related cases, Newegg filed updates with the court, as kind of a nudge. Newegg had vowed to appeal the case, but was procedurally unable to do so until Gilstrap ruled one way or the other on the JMOL. So, eventually, last week it took the somewhat extreme step of filing a Writ of Mandamus with the appeals court, basically asking it to order Judge Gilstrap to do his job and issue an order.

TQP quickly filed a weak and silly opposition to the writ, not addressing the actual issues raised (because what are they going to argue — that the judge should never rule on the case?). And before Newegg could reply, it appears that someone in Judge Gilstrap’s office finally woke up and issued an order, siding with Newegg in the JMOL. In short, after doing nothing for 20 months, leaving everyone hanging on a jury verdict over this bogus patent, and ordering Newegg to pay $2.3 million, the court said, “Oh yeah, jury wrong, no infringement”:

The Court concludes that under either Newegg’s or TQP’s interpretation there was not a showing of substantial evidence that the claim limitation is infringed.

In other words, no infringement, the jury was just wrong, everyone get on with their lives. Seems like this could have happened quite a long time ago, no? At the end of the filing, Judge Gilstrap finally addresses this issue and rather than being apologetic, he appears to be pretty angry at Newegg. As for why this happened? Well, that gets buried in a footnote:

After Newegg?s Petition for Mandamus was docketed in this case, the Court, among other actions, immediately asked the District Clerk to investigate why its systems had failed in this case, both to understand the issue and to, hopefully, determine a way to prevent such an occurrence in future. District Clerk David Maland forwarded his findings to the Court:

I am responding to your inquiry of July 8th as to why defendant Newegg’s posttrial motions have not been appearing on the 6 month CJRA pending motion report. Upon inquiry, it was discovered that an order staying Case No. 2:11-cv- 428, a case with a similar number, was inadvertently docketed in the instant case on June 7, 2013 (docket entry #242 – see attached screen shot; erroneous order also attached). A note was made by the docket clerk at that time that the stay order was filed in error, but she neglected to lift the stay flag in the database. The bottom line is that a stay was created when the erroneous order was entered in this case and the stay flag remained in place until it was discovered and removed on July 8, 2015. This prevented any pending motions in this case from showing on your pending CJRA motions report during that time period.

Please accept my deepest apology for this situation. We have advised the deputy clerk in question of her error and have taken curative actions designed to avoid repetition of this kind of error. Please contact me if you have any questions.

So, yes, there’s an apology there from the court clerk, but you’d think that the judge might want to issue one as well. But, no, he goes… the other way, scolding Newegg.

The Court is aware that more time has passed since the briefing has been complete on Newegg?s Motion than is optimal. However, although approximately 20 months have passed since the trial in this case, the time at which Newegg?s Motion for JMOL was fully briefed and Newegg?s Supplements were before the Court?the point in time where these matters typically would have been decided?was approximately 12 months ago. While Newegg did file an electronic notice with the Clerk?s office during this time (approximately 8 months ago), this is the sole action that Newegg has taken. Never once in this time has counsel for Newegg directly contacted the Court?s staff inquiring about this matter. How this situation could simultaneously be so prejudicial that a resort to mandamus might be considered while, at the same time, Newegg could not be troubled to pick up a phone and call the Court?s staff is baffling.

Finally, the Court intends to address, by written opinions, the issues that it has carried within a reasonable time. The Court, like most courts, has a busy docket, which periodically may cause more time to pass in a particular case than is optimal. In the future, the Court suggests that the parties themselves would be better served (and costs reduced) if they elected not to shoot first and ask questions later.

This is both misleading and ridiculous. First of all, Newegg repeatedly (four times) had filed additional information with the court, which you’d think should be sufficient to remind the court that it has a pending issue to attend to. And while it is true that Newegg’s lawyers did not call the court clerk to find out what’s up, Newegg’s chief legal officer, Lee Cheng, says that’s because basically everyone warned them that the East District Court does not look kindly on parties reaching out to the court in such a manner. Cheng tells me:

I asked my counsel to do everything possible to expedite judgment. Since pretty much the verdict was delivered. I?d specifically inquired whether we could/should call and/or write and/or file a notice on a monthly basis politely reminding the Court that we were awaiting judgment, if for nothing else but to build a record. I was specifically advised by counsel and local counsel (based on his knowledge of local practice) that the Court would likely not look kindly on repeated reminders to issue a judgment. We reminded the Court as frequently as we dared?4 times.

We asked. We asked. We asked. We asked. We were advised strongly to avoid ex parte and/or repetitive (after 4 attempts) requests. Then we filed a very respectful Mandamus petition, almost 15 months after the final briefing on a renewed JMOL motion. Newegg did not attribute any ill intent or will as the cause of delay. Hardly a ?shoot(ing)? and not even remotely, under any objective standard, premature.

Separately, Cheng responded to Gilstrap’s closing whine that his docket is so busy that this one slipped through the cracks, by noting that there are ways to deal with that:

I would continue to suggest, with utmost respect, that his incredibly busy docket could be lightened if he were to grant venue transfer motions more frequently that are almost certainly supported under binding Supreme Court precedent, and if he and his clerks didn?t have to deal with extra motions seeking permission to file Section 101 challenges to patent validity permitted under Alice.

In other words, maybe it’s time for East Texas to give up its reputation as welcoming patent troll lawsuits at every opportunity and send those lawsuits, that are clearly about jurisdiction shopping, to other courts where they can be handled more efficiently.

Filed Under: east texas, encryption, patent trolls, patents, rodney gilstrap, writ of mandamus
Companies: newegg, tqp