Texas two-step

2 April 2013 By Reynolds Holding

Texas’ renown for favoring plaintiffs in merger and intellectual property lawsuits looks overblown. Judges recently tossed several such claims that seemed headed for big verdicts and legal fees. Dealmakers and targets of patent owners need not cower before the Lone Star State.

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A U.S. district judge in Texas ruled on March 27 that a company could not sue to enforce a patent that it had bought from another firm because the patent was invalid. The decision was one of the first in the Eastern District of Texas to dismiss such a lawsuit. It follows several recent court verdicts in the district against patent holders that sued for alleged infringement.
On March 28, a Texas appeals court denied lawyers a fee for settling an M&A lawsuit that resulted in additional disclosure but no cash for investors. The suit challenged the $450 million merger of Frontier Oil and Holly Corp in 2011. The ruling was the second in the last few months by a Texas court to reject a settlement calling for legal fees but not cash for shareholders. In recent years, Texas has been among the most popular states for filing lawsuits contesting mergers and acquisitions.

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