Waco, the once-frontier town of roughly 135,858, has had its share of both tragedy and overcoming adversity. Home of Baylor, army bases, and a rich, diverse, and sometimes fraught local history, the relatively small West-Texas town was (unfortunately) once best known in popular culture for the Federal standoff with the Branch Dividians, and the subsequent fallout from those events. But no matter the ups or downs, Waco seems to have never lost its Wild West mentality. That is no less true for what it is quickly becoming most famous for—a steady deluge of patent litigation. There appears to be a new sheriff in town, and his plaintiff-friendly procedures and pronouncements are attracting some of the most notorious patent trolls.
Judge Alan D. Albright, a former patent litigator who resides in Austin, was sworn in on September 18, 2018, as the sole judge in the Waco division of the Western District of Texas. Because of a quirk in the local rules, any case filed in Waco is assigned solely to him; thus, forum-shopping entities can rest assured he will be the Judge to hear their case. After being sworn in, he gave a steady stream of interviews to patent firms and associations, in which he unveiled a series of standing orders adopting aggressive trial schedules and “streamlined” procedures in an attempt to attract patent litigation. Patent litigants quickly accepted his invitation; in particular, large patent aggregators, NPEs, and litigation-financed campaigns have quickly adopted it as their primary friendly jurisdiction, one in which they can, and do, widely assert various patents.
As identified in our Q2 2021 report, the Western District of Texas is now responsible for one quarter of all U.S. patent filings—driven practically single-handedly by the single-judge Waco division, over which Judge Albright solely presides—of which 82% are related to a NPE. It has eclipsed the District of Delaware as the nation’s top destination for patent filings, and despite the Division’s relative size, is now hosting billion-dollar disputes between some of the nation’s top companies. And as the data shows, the favorable procedures have primarily attracted non-practicing entities, patent aggregators, and of course, litigation-funded entities seeking tactical litigation advantage based on divisional forum shopping.
When looking at his impact on litigation, it has, importantly, attracted a new breed of NPEs—ones that leverage the COVID pandemic and relative availability of free private capital, as investors began looking for ways to invest in non-cyclical returns, and the traditional opprobrium surrounding litigation financing in the U.S. waned. Since taking the bench, filings in the Western District by patent aggregators have has increased a whopping 11,900%—unsurprising when you note that his court is on pace to attract more than 1,000 new filings to his single-judge docket, suddenly making his court one of the most congested in the nation.
This has resulted in over 60% being tied to aggregation entities.
And of those known aggregator cases, nearly all are associated with known third-party financing (based on all ownership and investment available data). This means a substantial portion of the cases that Judge Albright hears are backed by (often undisclosed) third-parties.
With that said, it seems that the Albright effect has been carried over to other judges in the Western District of Texas. From 2018 to 2020, the dockets of the other judges in the District have seen a 719% increase in aggregator filings, and an overall increase in general
This means that 65% of all cases that the other judges see are related to an aggregator.
Third-party financing has also increased 715% from 2018 to 2020.
Nearly, 47% of all cases are backed by a known third-party.
The immediate effects of Judge Albright’s decisions seem to have led to an explosive growth of Super NPEs that have a complex web of entities and financing. The long-term effects still remain unknown, besides more and more defendants being dragged out into the Wild West. But it seems clear that even with quick telephone Markman hearings and high settlement rates, it is practically impossible for the Waco division to keep up with the caseload and maintain the aspirational time-to-trial their standing orders profess to offer.
Definitions
NPE aggregators were defined as NPEs that have more than one affiliated subsidiary also bringing patent litigation.
Third-Party Financing was defined as any third party with a financial interest, other than the assertors.
Super NPEs are defined as those that are an aggregator and have access to third-party financing.
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