Houston: Not Yet the Next Marshall

           Patent infringement suit filings have remained relatively steady for the past eight years, according to Stanford Law School’s Intellectual Property Clearinghouse. New patent suits range between 2,300 and 2,800 filings per year. But Marshall, Texas is the venue of choice for a disproportionally high number of those filings. Since January 1, 2008, for example, there have been 295 patent suits filed in the United States District Court for the Eastern District of Texas.  And sixty percent of the district’s patent suits are traditionally filed in the district’s Marshall Division. 

            There are several reasons why plaintiffs’ lawyers prefer Marshall. The sitting judges and their magistrates are considered fair and experienced. Jurors in the division have also demonstrated a deep respect for individual property rights. And there is a perception, although no longer substantiated, that cases reach trial quickly through Marshall’s “rocket docket.”

But another reason why plaintiffs prefer Marshall is the district’s “Rules of Practice for Patent Cases.” Those rules require prompt disclosure of discoverable information and prevent gamesmanship in the discovery process. More importantly, the rules are strictly enforced by the judges and magistrates. Plaintiffs’ lawyers know that they will be able to get the information necessary to support their case; and get it quickly or have an available remedy.

The crush of patent cases filed in Marshall over several years has caused its “rocket docket” to slow. And plaintiffs may search for other venues. One possibility is the United States District Court for the Southern District of Texas (located primarily in Houston, Texas). The venue may become attractive because, effective January 1, 2008, the district adopted its own “Rules of Practice for Patent Cases” that mirror those used in Marshall. Adoption of those rules, however, has not yet lead to a dramatic increase in patent suit filings. Only thirty-two patent cases have been filed in the district during 2008 (compared to twenty-eight last year). Time will tell whether the new rules attract suit filings. Because new suits filed under those rules are just now becoming ripe for the adjudication of discovery disputes, we will soon learn whether judges and magistrates in the Southern District of Texas apply the rules as strictly as the jurists in Marshall. If so, plaintiffs’ lawyers may find Houston a more attractive venue for their patent cases.

BOLI Increases May Reflect Institutions' 2008 Success or Failure


2008 was a dismal year for some of the country’s largest financial institutions. But it was a relatively good year for others. By coincidence or otherwise, the successes and failures of these institutions appear to be reflected by increases in their reported holdings of bank owned life insurance or BOLI.

An increase in BOLI holdings will generally result from one of three events, or some combination of them. Reported BOLI holdings may increase because the bank bought new policies on its employees. They may also increase when the reporting bank acquires a competitor and, during the process, the competitor’s BOLI policies. Increases may also occur when investment returns raise the cash surrender value of existing policies.

            Over the preceding four quarters, BOLI holdings of Bank of America, Citibank, Wachovia, Washington Mutual, and Wells Fargo have been:

                        Dec. 07            Mar. 08            June 08            Sept. 08           % increase

BOA                14.3B               14.5B               16.5B               17.1B                  19.5

Citi                   3.9B                 4.03B               4.05B               4.1B                       5

Wachovia       14.6B               14.4B               14.5B               14.6B                     0

WaMu             4.9B                 5.028B             5.072B             no report               3.4

Wells Fargo    4.9B                 5.15B               5.19B               5.36B                   9.38

While the relationship between BOLI increases and institutional success may be coincidence, a correlation exists nevertheless. Bank of America, with its 19.5% increase in BOLI holdings, recently reported third quarter 2008 net income of $1.18 billion, or $0.15 per share, a figure far lower than a year ago but significant in relation to other 2008 returns in the industry. Bank of America also received approval for the $50 billion acquisition of Merrill Lynch. Wells Fargo likewise achieved solid growth in loans and deposits during 2008 and is on track to complete its acquisition of Wachovia by year’s end. This success correlates to Wells Fargo’s 9.38% increase in BOLI holdings over the last year.

Wachovia, Citibank and Washington Mutual did not fare as well in 2008. Citibank required bailout money from the federal government and has cut tens of thousands of jobs during the year. Wachovia and Washington Mutual were acquired by competitors while on the brink of collapse. These failures correlate to the relatively pedestrian increases in their BOLI holdings. But perhaps the most interesting question is why their BOLI holdings increased at all (Wachovia’s did not). It seems unlikely that these institutions invested their cash in additional policies. The reported increases may therefore be attributable to investment gains which, at these percentages, are similar to the returns available from treasury bills or similar investments.