Patent Trolls in Texas Take Another Hit

Plaintiffs in patent lawsuits used to flock to the Eastern District.of Texas because they could sue anywhere in the United States and the Eastern District has long been notoriously friendly to plaintiffs. In 2016, Marshall, Texas with a population of only 24,000, was home to an astonishing 25 percent of all patent filings in the U.S. In May of 2017, however, the Supreme Court ruled unanimously in TC Heartland v. Kraft Foods that plaintiffs can’t forum shop to find a friendly court. Instead patent plaintiffs must file in districts where the company  being sued is incorporated or where it has an established place of business.

Businesses are now responding to the Supreme Court’s rule by shifting their establishments. Apple, for example, looks like it will close both of its retail stores within the Eastern District of Texas and instead open a new store in Dallas, just south of the Eastern District of Texas border.


Well, one certainly hopes Apple will get both tax breaks and a sweetheart rental deal from its landlord, because apparently, that is the way the free market in America is supposed to work. One assumes that is the process particularly when attempting to escape the scourge of patent trolls. Though in a certain light, that would describe any company attempting to enforce a design patent on a rectangular shape with bevelled edges - 'Samsung has already been found to infringe Apple's patents. The argument centers on how much it owes Apple for copying some of its patented features, like the rectangular shape of the iPhone. .... The design patents are for a black, rectangular, round-cornered front face (D'677); a similar rectangular round-cornered front face plus the surrounding rim, known as the bezel (D'087); and a colorful grid of icons (D'305).'

What are you, some kind of Communist?


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Raymond is the resident expert lawyer here, but this Sup. Ct ruling was very narrowly decided on a patent venue interpretation, and did not even cite the famous International Shoe "long-arm jurisdiction" decision, which basically holds a company can be deemed to "do business" even if they make one sale, by mail, in another state, though in practice some courts hold one sale is not enough. Good that trolls are defeated but as a practical matter patent trolls are not that big a deal to big companies, though they are annoying.

Having worked in product development in "big companies", I strongly disagree with your contention. It IS true that "big companies" have the resources to work around (or through, or over) a patent, but it definitely does significantly impact product development. But my main comment is: Ray, Ray - it is the small companies that do most of our innovation and it is they who are very badly hurt by the trolls.

Wrong, Li. Small companies are not scared of trolls. Trolls benefit small companies as customers to license their patents, among other ways, so they can have the financial muscle to take on the big company infringers who spit on them. Big companies are not worried about trolls either. Apple would rather defend against a 100 troll lawsuits than one big lawsuit against Samsung.

Small companies want a strong patent system as a way to compete against larger established companies and so the larger companies will take them seriously when they offer a license. It is the big companies who want to weaken our patent system so as to prevent competition. The patent is the great equalizer in our system but only if it has any teeth. Sort of like a handgun to a small woman who is about to be physically attacked by a much larger man.

I think you are picturing a large small company, with an active legal department.

That cuts small-small companies, garage startups, right out.

Basically it is a filter. Do you have product development skills? Check. Do you have a good night idea? Check. Do you have a good legal staff and deep pockets for a patent fight (potentially with a well-honed troll operation)? At this point many don't, do they pivot away from some availabile market.

Or they stay as employees of a large company, creating less innovation, but with less exposure.

Stop it, you're clueless. Back when patents were stronger, even the smallest companies could get someone to buy their patent, enforce it on contingency, fund their litigation, etc.

Sorry, Alvin, not buying it. Legal threats from big companies in the form of IP protection keep small, innovative companies up at night not the threat of competition from big companies, which to unsophisticated outsiders would find surprisingly hidebound and bureaucratic. A smartphone has hundreds of thousands of distinct components in it, all of which run the risk of patent litigitation. As products get more complex, the large of large numbers and the infinite greediness of rentseekers both virtually guarantee lawsuits. If you want to see failed patent troll attempts to hurt small business see the case with NewEgg a while back and the recent case with Cloudflare, who both beat the trolls. The judge even wrote last week: "Abstract ideas are not patentable" God bless Judge Chhabria. Stop enriching rentseeking lawyers and incumbents and let people compete. Small companies just don't have $100,000 sitting around in case they get trolled by lawyers.

Sorry, you're very wrong. I work for a small startup, and we recently had a troll try to come after us. Our lawyers had to sit them down and patiently walk through their idiotic, never-should-have-been-granted patent, and point out that we don't actually do what they describe. They backed off, but if they hadn't, we would have been in trouble. Not because we were infringing, or even because they had a good patent, or because we don't have our own patents, but because even a basic patent trial is super expensive, and small start-ups don't have huge cash reserves, much less the time it takes to handle discovery.

Big companies have no problem with patents, because they have huge patent reserves, plenty of cash flow, and existing legal teams. They like big barriers for entry to block competition.

Small companies that love patents are the patent trolls. It takes very few people to run a troll office, and they can be pretty decent reward given the extremely low risk. The ones that are actually making things hate the current system.

What's really frustrating is the way the Supreme Court keeps slapping software patents down, and the Federal Circuit keeps propping them back up.

Wow! Thanks to all three of you, very nice discussion. I'm surprised anybody even knows what a patent is on this blog, much less can talk about them, from the primitive discussions I've seen to date. From my viewpoint, it seems the big companies never took out a license from patent trolls and just fought, while the small companies took at a license, to make the troll go away (typically in the five figure range) which gave the trolls sustaining power to continue to go after the big companies and hope to score (which they hardly ever did, though to be fair any settlement with a big company and a troll would be under an NDA).

Bonus trivia: some founder of Microsoft, one one of the early employees, who's a mega-millionaire, became a patent troll and in a way helped advance patent law (akin to Jerome H. Lemelson, Google this name if you're unfamiliar with this 'pre-internet' troll and generous grantor to MIT)

The museum was based not on spirit of country but rather the spirit of the earth, and so the photographs, and there were hundreds if thousands of photographs, were not an expression or an impression but rather a fragment, a question baked in stuff; great stuff, colorful and prosaic, but there wasn’t any hope, and that was the effect of power. It created an artistic effectivism with a new definition of art than the one Jonathon had understand. The idea was entirely based on a complete betrayal of geographic borders, and the marketplace for the art refused any sentimentality. Jonathon realized he could create an exchange market for publishers where the lock of corporate bonds could be opened with the key of higher returns.

"not that big a deal to big companies"

You know what you did there. They are hugely important to small companies (or solo innovators) who may walk away from a territory if they see a patent.

Related: In Will Wilkinson's defense of billionaires he suggests IP law as an area for improvement.

"Policy failure is rife, and it’s bound to account for a portion of even the best-deserved fortunes. Patents, for example, are government-granted monopolies meant to incentivize innovation. But the evidence suggests we’ve overshot the mark, and the pace of innovation would quicken, and many of America’s biggest fortunes would shrink, if patent protections were weakened."

"Eastern District has long been notoriously friendly to plaintiffs. "

WHY are the government judges there so heavily biased toward plaintiffs ... compared to rest of U.S. ?

Smells like corruption.

Who judges Texas judges ?

Those judges are fostering a meaningful part of the local economy.

Go look around any of the Eastern District towns - Marshall, Tyler, Beaumont, Texarkana. These places have been on the decline for decades. The dusty, empty little town square near the courthouse can suddenly sustain a restaurant or two when there’s a steady stream of big city lawyers passing through each day. And those lawyers need hotel rooms, and local counsel to work with, and sometimes office space if they’re going to be there for a few days or weeks. And sure, maybe one of the favored local counsel happens to be the judge’s son, and maybe the best lunch spot that’s walkable from the court house happens to be run by the judge’s wife, but lots of other people benefit too.

You can argue the merits of strong patents and whatnot but the Eastern District of Texas phenomenon is a local issue. It’s about small dying communities that engage in extraction and holdup to keep themselves afloat. They recognized that the legal system allows businesses to be pumped like oil fields or processed like steer. The shift to patent litigation was an innovation in reaction to tort reform in Texas that impacted the volumes of other types of cases that had been their bread and butter.

Does it matter that half the typical jury pool hasn’t even graduated high school? Not to them. Do they care about the nuances of pleading requirements or patent-eligible subject matter or adequate disclosure? Yes when smacked down by the Federal Circuit or Supreme Court, but otherwise mostly to the extent of their interest in minimizing the hurdles to plaintiffs bringing and sustaining lots more cases.

From the journal "Science and Technology Law Review," an analysis of why the Eastern District is so famous, done with the properly boring level of scholarly rigor:

That link is hideous. I cut it down a bit:


... please just post a simple answer to my question -- since you have done all the research on these obscure web sources

>plaintiffs can’t forum shop to find a friendly court.

Yes. That should only be allowed for political lawsuits. 7 is the number of hook shots.

Apple can escape patent infringement lawsuits in the Eastern District of Texas by closing shop there. On the flip side, the patent owner plaintiffs cannot escape the trial-like proceedings in the U.S. Patent Office that invalidate about 80% of all patents challenged without leaving and contacting the country? Nor they can escape all the anti-patent rulings by the Supreme Court over the past 12-15 years and legislation by congress weakening patents.

For your information Alex, so-called "troll" litigants are at least as meritorious in court as big company litigants. Their patents are just as strong.

What nobody has mentioned here, is that most patents issued in the US are bullshit, either it overlaps with another patent, represents a tiny embellishment to someone else's idea, or in reality fails the "not obvious to one trained in the art" requirement.

As @Alvin above mentioned, this leads to the (reasonable) presumption that a patent is not valid when challenged in court.

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