Apple Shutting Down Stores In East Texas To Avoid Patent Trolling Cases In The Troll's Favorite Docket

from the oddities-of-patent-law dept

For nearly fifteen years, we’ve written about how patent trolls love East Texas, and spent years building an entire industry in some small Texas towns centered around patent trolling, and dragging companies from all over into east Texas to face lawsuits. Almost two years ago, we were pretty thrilled to see the Supreme Court slam the door on the most blatant jurisdiction shopping by patent trolls in the TC Heartland case. And while some of the East Texas judges have tried to come up with creative ways to reinterpret the Supreme Court’s ruling, so far that hasn’t worked that well.

Still, a key aspect of the TC Heartland case was that the proper venue was the judicial district where a company actually “resides,” which the Supreme Court suggested is where the company was incorporated and not just where it sold products. However, in that appeals court ruling mentioned above, interpreting part of the TC Heartland ruling, the Federal Circuit noted that there “must be a physical place in the district” as one part of a larger test. For lots of companies, that’s no big deal, but Apple (a company that faces more than its fair share of patent troll lawsuits) realized it had a problem: while it’s certainly not incorporated or headquartered in East Texas, it does have retail stores there. Or did. The company is shutting those stores down to prevent trolls from using that retail presence to argue East Texas is an appropriate venue.

Oh and just to put an exclamation point on the reason why it did so: it’s opening a new store juuuuuuuuuuuuuuust over the border into the Northern District of Texas. Apple’s not officially commenting on the reason for the closures/openings but… come on. MacRumors created this lovely “rough visualization” that drives the point home pretty clearly:

Not only did the overreach by judges in East Texas lead to the big industry of patent trolling they helped build up start to deflate, some of the blowback may be lots of companies — especially in the tech world — will simply refuse to have any presence in all of East Texas to avoid being an easy target for patent trolls.

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Companies: apple

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Comments on “Apple Shutting Down Stores In East Texas To Avoid Patent Trolling Cases In The Troll's Favorite Docket”

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Daydream says:

Uh, I don’t think that’ll actually save them from patent trolls. After all, in the Megaupload case, the prosecution is arguing they have jurisdiction because Megaupload served American customers.
I could see a patent troll claiming that Apple has business in East Texas, by claiming that they provide services to customers living there.

(…Or was the Megaupload thing that Megaupload had servers on U.S. soil and that made it ‘located’ in the U.S.?)

TFG says:

Re: Re:

Somewhat different situations going on here. For one, this doesn’t involve copyright infringement, so the copyright maximalist industries and their bought legislation doesn’t necessarily have a stake in it.

Second, the whole geographical thing doesn’t have to do with whether the laws apply (they do) but rather which court the suit must be brought. In this case, as far as venue shopping goes, there’s a supreme court ruling already on the books that helps Apple out – which is the whole point of this article, so go read it again, and the other article it linked to, to get a fuller understanding of what’s happening here.

James Burkhardt (profile) says:

Re: Re:

One, you are looking at different laws (copyright vs patents), and two, you are looking at different types of courts (criminal vs civil). It seems there are a number of details you have failed to gather before commenting.

In Megaupload, there has been very little adversarial action in US courts. But the question that decision resolved was in that case is whether US criminal copyright law (and criminal forfeiture) could apply at all, not which district holds jurisdiction.

In the Apple situation, the law is about Civil Jurisdiction for the filing of patent claims. No one argues that a US court has jurisdiction, the question is ‘can they file in the Eastern district of Texas’. The supreme court, very recently, (since after the ruling you discuss), decided a case on appropriate venues for patent cases. And while they implied it required filing in the defendants home district, based on headquarters and/or state of incorporation, it was not set hard and fast. And a few Eastern District of Texas judges have tried to interpret the actual ruling to say that retail stores in the district are good enough. With this action, Apple removes the connections to the district. Delivering sales to the district has already been shot down by appellate courts as insufficent.

James Burkhardt (profile) says:

Re: Re: Re: Re:

Doing what? Living but not working? That seems to be covered by the existing jurisprudence.

Notably, the major attempt to push back the SCOTUS ruling was to claim that a sales rep who traveled to the east district to make sales was sufficient. The appeals court walked that ruling back and established that the sales rep’s home base (either his home or an office, i cant remember which, but the area he worked out of) was not in the eastern district, so the mere presence of an employee in the district was not enough. The place of work must be in the east district.

That One Guy (profile) says:


Get a reputation as a friendly place for extortionists(hiding behind ‘patent enforcement’).

Get slapped down(finally) by the US supreme court.

Have a judge make a monumentally stupid ruling in an attempt to salvage that sweet extortionist money/’business’.

Drive companies out of the area, which will likely drive the parasite off as well, since a company would have to be staffed by certifiably insane people to set up shop in the area.

By spending so long courting(pun intended) the slime they’ve instead made the area toxic to anyone not a parasite, ensuring that those companies, their business, and their money stay far, far away. Congrats.

Anonymous Anonymous Coward (profile) says:

Re: Re: Oops

That could work, except that that should be all manufacturers, not just Tech, or any manufacturer with a presence. When they have cleared out, the courts will find that because a product is sold retail, that will create a sufficient nexus. Then things will finally become a bit safer when all retail has moved out and all online retailers refuse to deliver in their jurisdiction. After that, the only economic engine left, agriculture, will find that by using fertilizer x or hormone y they will have violated some troll’s patent application and those manufacturers will no longer sell there. Not sure what grows in Eastern Texas without any assistance, but the likelihood that it would be worth trying to make a business out of it I think is kinda low. Oh, I know, some troll will patent rain and sunshine, because no one else has.

That Anonymous Coward (profile) says:

OMG what will that guy who is collecting the rent on the broom closet that 47 firms operate out of do with this blow to the justice system!?!?1
Will the trolls just abandon their bulls, they purchased to establish East Texas as the proper forum, on the streets?!?! Will there be roving bands of bovines who have outlived their usefulness marauding the town!?!?

When you get SCOTUS to tell them they have gone to far, and they keep doing it… perhaps one needs to reconsider appointments for life.

Gregg De says:

Hate to bump an old thread, but... Quit hating on Texas!

This is a Federal Court and a Federal judge. Gilstrap was appointed by Obama and confirmed by the Senate; Texas has two (2) Senators, just like every other state. Texas could neither bring about this situation nor prevent it.
I loathe the fact that this occurred in a district within my state (or at all), but 99+% of the people in East Texas have absolutely nothing to do with this, with the possible exception of the benefit of increased business from a greater number of out of town customers. I’d be willing to bet the people of East Texas don’t even know or care who is plaintiff and who is defendant, and I’d also be willing to bet that if informed and queried about the situation, they’d find patent trolls to be just as repulsive as the rest of us.

AnonLawyerDTT says:

Re: Hate to bump an old thread, but... Quit hating on Texas!

Shut up. You’re a garbage state and you have garbage parasites flocking to your garbage courts. Look at Albright in West Texas. WACO was known for corruption long before his looney behind showed up. I suggest you stop talking as if you should be proud of your legal system.

You’re a disgrace in the judicial and legal world. 🙂

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