I Hear The Weather's Nice In East Texas, Too, But I Doubt That's Why Patent Litigants Move There…

from the tax-benefits dept

We’re all familiar with the many reasons why patent holders try to file their lawsuits in East Texas — a notoriously “patent holder friendly” court, such that the it remains (far and away) the most popular court for patent lawsuits. However, in recent years, there has been some effort underway to get cases that obviously don’t belong in East Texas to be moved elsewhere, with some success. However, to deal with this, we’ve seen a variety of tactics from patent holders, including suing lots of companies in a variety of places so that “any place” is better than somewhere else and picking a random tiny local East Texas company to sue along with all the big companies, just so you can claim “hey, the lawsuit belongs in East Texas.”

Apparently, another tactic is to move your “operation” from wherever it was to East Texas just before filing the lawsuit — so you can claim that you’re actually based there. That happened in a recent lawsuit, and the company being sued tried to have the venue moved, claiming that the “move” to East Texas was “a sham” designed solely to set the venue. However, as Joe Mullin notes, East Texas’ most famous judge for patent cases, Judge Ward, is having none of it, suggesting there are plenty of other reasons a company might “move” to East Texas right before suing over patent infringement:

“[Defendant] argues that [plaintiff] moved its location from Ann Arbor to Longview as a sham concocted simply in anticipation of this litigation. . . . [A] business opens its doors in a particular location for a number of considerations, including the cost of rent, market profitability, cost of doing business, and tax benefits. The Court declines to scrutinize litigants’ business decisions in order to determine whether opening an office in a particular location has a legitimate business purpose or is merely a ‘tactic . . . to manipulate venue.’

If you want to make some quick money, now might be a good time to set up a business that helps “small companies” quickly “set up offices in East Texas,” because I get the feeling it’s about to become a booming business…. for the tax benefits, of course.

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Comments on “I Hear The Weather's Nice In East Texas, Too, But I Doubt That's Why Patent Litigants Move There…”

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Anonymous Coward says:

I hope a federal court overturns the East Texas’s courts decisions. I just don’t see how this is constitutional being that the constitution calls for IP to promote the progress of science and USEFUL arts. I don’t see how intentionally suing people in East Texas, even moving your operations there before a patent lawsuit, does anything to promote the progress of anyone but corrupt lawyers and their evil scams.

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