Court Won't Move Patent Lawsuit Out Of East Texas, Despite Plaintiff's 'Ephemeral' Connection To Texas

from the we're-all-from-east-texas-now dept

As has been discussed plenty of times, a disproportionate number of patent lawsuits are filed in East Texas, under the belief that the venue is the most friendly to patent holders (there is some debate lately about how accurate this is, but either way it remains, by far, the most popular place for patent lawsuits). This happened even in cases where there was clearly no reason for the case to be heard in Texas. My favorite is the story of two San Jose, California companies, whose offices were blocks away from each other... who ended up in an East Texas court to fight a patent battle. Two years ago, the Federal Circuit suggested courts should be more willing to transfer cases that don't really belong in their district -- a clear warning shot at East Texas.

In response, there were a few cases moved to more convenient locations. However, there were also some rather transparent efforts by patent holders to convince a court that these lawsuits should remain in East Texas. For example, some patent holders started suing lots of companies all over the place, so they could argue that East Texas was just as convenient as anywhere else. Then there are the cases that sue a bunch of big companies elsewhere, and then find some random small company in East Texas to include as well -- sometimes picking companies that don't even exist.

One trick that's getting popular is to set up a shell corporation in East Texas right before filing the lawsuit. Unfortunately, it looks like this particular tactic is working. We recently mentioned one such case involving a company from Michigan that "moved" in name only to Texas right before filing the lawsuit. The judge in East Texas refused to move the case, saying that the move could have been for any reason, such as the "tax benefits." As I noted at the end of that post, if you want to make some money, now is a good time to set up a "business" that helps others quickly set up an "office" in East Texas, because it's about to get popular.

It's now about to get even more popular.

In another case with a very similar story -- involving a patent holding company who sued Apple, Sirius XM, Archos and others over a patent -- the patent holder, one Personal Audio LLC, had only set up offices in Texas two months before the lawsuit and has no employees in Texas. In fact, the "office" just happens to be in the same office as the patent holders' lawyers. The district court refused to transfer to Massachusetts (despite a bunch of the witnesses being in Massachusetts), saying that East Texas was now the "home venue" for the company, so it made sense. The companies appealed, but it looks like the Federal Circuit has agreed with the lower court. Even while noting that Personal Audio's presence in Texas is "both recent and ephemeral," it refused to transfer the case, saying that the defendants failed to make a "compelling showing that Massachusetts is a more convenient forum."

The key point may have been that none of the sued companies were based in Massachusetts -- so companies looking to transfer cases out of East Texas might want to think about their home districts as possible destinations. However, the fact that so many witnesses were in Massachusetts and that the patent holder clearly was not really in Texas seems like reasonable arguments for moving the case. Apparently the courts feel differently.


Reader Comments (rss)

(Flattened / Threaded)

  1.  
    icon
    Ronald J Riley (profile), May 14th, 2010 @ 4:30am

    Knowledgeable Court

    Mike Masnick is spewing nonsense once again about patents and in this case about why inventors file lawsuits in that venue.

    Mike said, "As has been discussed plenty of times, a disproportionate number of patent lawsuits are filed in East Texas, under the belief that the venue is the most friendly to patent holders (there is some debate lately about how accurate this is, but either way it remains, by far, the most popular place for patent lawsuits)."

    Inventors and those who invest in the work of inventors go to court in East Texas because of the court's expertise and because they do not allow the kind of legal maneuvering and delaying tactics which intellectual property thieves use to bankrupt inventors.

    Serial infringers (like Apple) love to howl about bias in Eastern Texas, but that is simply not the case. The reason why so many plaintiffs prevail is that only the best and most egregious cases make it to court. Considering the cost of patent litigation, only the best cases have their day in court, and that means that invention thieves get way with stealing far more inventions than they are actually sued for. The reason that they continue to use a business model which results in high profile litigations is that it is incredibly profitable for them to do so.

    This is why large corporate patent piracy is so prevalent. It has historically been very profitable for large companies to simply steal what they want. For every case where they are held accountable they are likely getting off scot free on scores of other cases. The lawsuits which we see are just the tip of a much larger problem, patent larceny on the grandest of scales.

    I most certainly know much more about inventor motivation than Mike Masnick. Like Mike, I have a long history of entrepreneurial activity, the only difference being that I have 20-30 years more experience.

    Like inventors, Mike Masnick produces an intangible product. I guess that makes Mike Masnick a NPE whose work product has so little value that it is not going to be worth a lawsuit:)

    Granted his work product is far less valuable. But in both cases the work product is not a hard-line.

    There are differences in our businesses, Mike Masnick's business appears to be mostly focused on serving big corporate interests while inventors focus on producing inventions which will be the foundation of new companies and even whole new industries.

    With this in mind which business do you think has the most social value, TechDIRT and the related insight-less business or inventors who are producing inventions which are so valuable that transnationals take them?

    One last point, the Eastern Texas court is acting as a magnet, drawing inventors to the region. I predict that having a fair & knowledgeable court is driving an economic boom in the region and that as Silicon Valley is stagnating under the weight of so many disreputable large companies. I expect that eastern Texas will over time replace Silicon Valley.

    Ronald J. Riley,


    I am speaking only on my own behalf.
    Affiliations:
    President - www.PIAUSA.org - RJR at PIAUSA.org
    Executive Director - www.InventorEd.org - RJR at InvEd.org
    Senior Fellow - www.PatentPolicy.org
    President - Alliance for American Innovation
    Caretaker of Intellectual Property Creators on behalf of deceased founder Paul Heckel
    Washington, DC
    Direct (810) 597-0194 / (202) 318-1595 - 9 am to 8 pm EST.

     

    reply to this | link to this | view in thread ]

  2.  
    identicon
    Martin, May 14th, 2010 @ 4:54am

    thereisacow

    Possibly, the purchase of a cow would help their case.

     

    reply to this | link to this | view in thread ]

  3.  
    identicon
    SpewDetectorInc, May 14th, 2010 @ 4:55am

    Re: Knowledgeable Court

    No, Ronald it is you who is spewing.

     

    reply to this | link to this | view in thread ]

  4.  
    identicon
    Kurata, May 14th, 2010 @ 5:34am

    That is when I'm more or less happy with the french court system. You file a lawsuit depending on the defendant location, not a convenient or your own location.
    That is to say, if I live way up the north in France, and I'm suing someone in the south, then I am the one who has to move to the south.
    I thought it was the same system in the USA but I guess it's not.

     

    reply to this | link to this | view in thread ]

  5.  
    identicon
    Anonymous Coward, May 14th, 2010 @ 5:48am

    RJR raped and killed a patent in 1991 and all his links discuss the matter. Hes currently busy raping patent law as a whole.

     

    reply to this | link to this | view in thread ]

  6.  
    icon
    Chronno S. Trigger (profile), May 14th, 2010 @ 5:58am

    Re: Knowledgeable Court

    Before you go and tare apart Mike's business model, you may wish to learn more about it. All you see is the tech blog, if you scroll up, you will see there is much more.

    Maybe if you get your head out of your ass and quit speaking for your affiliates, you could see that.

     

    reply to this | link to this | view in thread ]

  7.  
    icon
    Mark Harrill (profile), May 14th, 2010 @ 6:13am

    Re: Knowledgeable Court

    Show me how many of these companies in East Texas have an actual product on the market and then maybe I'll think about believing your "Serial infringers" line. Having an idea is not enough, show that you can execute it and then maybe you have a case.

    And don't act like this East Texas court didn't think through the possible ramifications of being the go to Patent Court: more business in town, more tourism, more hotel and sales taxes, its a win win for the town of Marshall that frankly doesn't have much else going for it.

     

    reply to this | link to this | view in thread ]

  8.  
    identicon
    JEDIDIAH, May 14th, 2010 @ 6:32am

    Re: Knowledgeable Court

    > Inventors and those who invest in the work of inventors go
    > to court in East Texas because of the court's expertise
    > and because they do not allow the kind of legal
    > maneuvering and delaying tactics which intellectual
    > property thieves use to bankrupt inventors.

    Any Texan should be a ashamed by the idea of forum shopping in general, regardless of the excuse. These carpet baggers should be sent packing. Anything less would simply be dishonorable.

     

    reply to this | link to this | view in thread ]

  9.  
    identicon
    angry dude, May 14th, 2010 @ 6:46am

    Re: Knowledgeable Court

    "Like inventors, Mike Masnick produces an intangible product."

    The only intangible "product" Mikey produced is a lot of internet traffic to his shitty website techdirt.com
    (which he reserved to himself denying the rest of us the right to use this domain, which is an obvious comnbination of two English words)

    hey Mikey

    Put your money where you mouth is: give up your techdirt.com domain

    Only then you;l have some moral right to talk abotu socializing other;s inventions

    But he won't do it of course: instead he;ll spew more nonsense about scarce and unlimited goodies
    ah well..
    The only unlimited thing in this world is stupidity on mikey;s shitty blog

     

    reply to this | link to this | view in thread ]

  10.  
    identicon
    Willton, May 14th, 2010 @ 7:46am

    Witnesses? You mean >potential< witnesses

    However, the fact that so many witnesses were in Massachusetts and that the patent holder clearly was not really in Texas seems like reasonable arguments for moving the case.

    Not really. The people you claim are witnesses are only potential witnesses. The people Apple cited may never be deposed during discovery or called into court for trial. Furthermore, even if they are deposed for discovery, such depositions can be administered via video deposition. Thus, hinging a motion to transfer on the location of people who may never be involved in the suit is not strong enough to render the district court's decision clearly erroneous.

     

    reply to this | link to this | view in thread ]

  11.  
    identicon
    Anonymous Coward, May 14th, 2010 @ 8:08am

    Re: Re: Knowledgeable Court

    angry dude is back! We missed you!

     

    reply to this | link to this | view in thread ]

  12.  
    identicon
    Pixelation, May 14th, 2010 @ 8:19am

    It seems you should have your company located somewhere that will be able to hold a trial sooner than East Texas if you want to avoid the "big" state.

     

    reply to this | link to this | view in thread ]

  13.  
    identicon
    Anonymous Coward, May 14th, 2010 @ 9:22am

    Re: Re: Knowledgeable Court

    The difference is that it is economically feasible for online one person to have a given domain name, it would be impractical for two people to have the same domain name. In the case of a patent, it's perfectly reasonable for two people to sell the same product and so no patents are needed. You're kinda confusing trademarks with patents sorta. Trademarks are to reduce confusion, patents are to destroy the public good.

     

    reply to this | link to this | view in thread ]

  14.  
    identicon
    Anonymous Coward, May 14th, 2010 @ 9:24am

    Re:

    A system whereby the plaintiff has to move generally makes more sense.

     

    reply to this | link to this | view in thread ]

  15.  
    icon
    Ronald J Riley (profile), May 14th, 2010 @ 9:29am

    Are faster courts as knowledgeable?

    "It seems you should have your company located somewhere that will be able to hold a trial sooner than East Texas if you want to avoid the "big" state."

    There are somewhat faster venues but it is unclear if those venues rules stop abusive delaying litigation tactics which are routinely used by large corporate predators.

    Ronald J. Riley,


    I am speaking only on my own behalf.
    Affiliations:
    President - www.PIAUSA.org - RJR at PIAUSA.org
    Executive Director - www.InventorEd.org - RJR at InvEd.org
    Senior Fellow - www.PatentPolicy.org
    President - Alliance for American Innovation
    Caretaker of Intellectual Property Creators on behalf of deceased founder Paul Heckel
    Washington, DC
    Direct (810) 597-0194 / (202) 318-1595 - 9 am to 8 pm EST.

     

    reply to this | link to this | view in thread ]

  16.  
    identicon
    Any Mouse, May 14th, 2010 @ 9:48am

    Re: Re: Re: Knowledgeable Court

    Not by much, I'd imagine. The spew-patrol is back, it would seem. Next, TAM will be back to posting as TAM.

     

    reply to this | link to this | view in thread ]

  17.  
    identicon
    Willton, May 14th, 2010 @ 9:48am

    Re:

    That is when I'm more or less happy with the french court system. You file a lawsuit depending on the defendant location, not a convenient or your own location.
    That is to say, if I live way up the north in France, and I'm suing someone in the south, then I am the one who has to move to the south.
    I thought it was the same system in the USA but I guess it's not.


    Wrong, that is the way it is. In order to sue a defendant in a particular state, that state must have personal jurisdiction over the defendant. However, when a huge corporation such as Apple does business in damn near every state in the Union, including Texas, then such states have personal jurisdiction over the corporation. In such circumstances, hailing Apple into court in Texas is fair game.

     

    reply to this | link to this | view in thread ]

  18.  
    identicon
    Anonymous Coward, May 14th, 2010 @ 2:43pm

    Re: Are faster courts as knowledgeable?

    I always love when you manage to make a post shorter than your hilarious signature.

     

    reply to this | link to this | view in thread ]

  19.  
    identicon
    Admiral Patent, May 17th, 2010 @ 8:11pm

    Re: Are faster courts as knowledgeable?

    Ronny, you said: "I predict that having a fair & knowledgeable court is driving an economic boom in the region and that as Silicon Valley is stagnating under the weight of so many disreputable large companies. I expect that eastern Texas will over time replace Silicon Valley."

    I couldn't have said it better myself Ronny! It's about time someone noticed the potential of these innovative companies that are flocking to Texas. Why just last week we had a solar panel company that has invented "lunar panels", which the president hailed as the solution to the energy crisis, move their legal offices to a local p.o. Box. This is going to spur on innovation and incite the mass exodus from Silicon Valley (avg I.Q. 130) to East Texas (avg I.Q. Magenta)

    Love,
    Genera.. I mean, Admiral Patent. xoxo

     

    reply to this | link to this | view in thread ]

  20.  
    icon
    Texas Auto Insurance (profile), May 19th, 2010 @ 5:42pm

    Migration

    Companies will find loopholes that know one would ever think of. I guess you really have to think out the box for this. So, I company from Detroit would try to make it look like East Texas was their domicile and then file a lawsuit because they are more "laxed" on patent lawsuits in East Texas. Interesting. Auto Insurance in Texas Texas Auto Insurance

     

    reply to this | link to this | view in thread ]

  21.  
    identicon
    wvhillbilly, May 19th, 2010 @ 7:09pm

    Re: Knowledgeable Court

    Inventors? Stealing? Piracy?

    Looks to me like most of the people suing in East Texas are patent trolls who have NO invention to protect, only naked patents, and who are in my estimation engaging in a form of legalized extortion.

    I say patent trolls (and those who support them) are the real pirates.

     

    reply to this | link to this | view in thread ]

  22.  
    identicon
    Joe, Jul 9th, 2011 @ 2:06pm

    Re: Knowledgeable Court

    This asshole is a piece of shit.

     

    reply to this | link to this | view in thread ]


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