New Bill Designed To Stop Egregious Venue Shopping By Patent Trolls

from the sorry-east-texas dept

Abusive patent litigation siphons tens of billions of dollars from the economy every year. In addition to burdening American entrepreneurs with lost revenues and great uncertainty, the scourge of frivolous lawsuits depletes funds that otherwise could have used toward research and development, venture-capital investment and other essential business activities.

While it isn't the kind of comprehensive corrective to America's "patent troll" problem that we'd like to see, the newly introduced Venue Equity and Non-Uniformity Elimination Act would address one small piece of the problem. The bill, S. 2733, would curtail rampant venue shopping that unfairly distorts legal outcomes by allowing plaintiffs to select friendly judges in advance.

According to research from George Mason University's Mercatus Center, nearly half of all patent cases are filed in the U.S. District Court for the Eastern District of Texas. Through the first half of 2015, the Tyler, Texas-based court heard 1,387 patent cases, compared with an average of 19 such cases in other federal judicial districts.

The district has become so notorious as a magnet for "patent troll" litigation that Samsung ramped up its giving to charities near the court, and even built an ice skating rink next to the court's Marshall, Texas division, undoubtedly to present a more friendly face to local juries. The City of Tyler even advertises itself as "IP friendly" and lists the big awards the court has doled out. The current state of affairs is so absurd that John Oliver even covered it.

When the Federal Circuit heard oral arguments this month in TC Heartland, a case that deals with venue, it blamed Congress for the current mess. As the panel explained, the present situation arose from a 1990 case called VE Holding that overrode the previous, stricter, rules following an interpretation of a 1988 law. Therefore, since Congress messed it up in the first place, they should be the ones that fix it.

Yet, cracking down on venue shopping alone offers a more modest goal than the sorts of comprehensive patent-reform legislation that have stalled in Congress in recent years. The last major push for comprehensive reform – H.R. 3309, the Innovation Act of 2013 – passed the U.S. House in December of that year with broad bipartisan support and an overwhelming margin of 325-91. At the time, it held a 7-1 margin of support among Republicans.

Alas, the bill also drew host of special interests to the table, who swiftly ramped up an intense and well-funded opposition campaign (get your fill of AstroTurf at www.savetheinventor.com). After failing to clear the Senate during the 113th Congress, the Innovation Act was reintroduced last year by House Judiciary Chairman Bob Goodlatte, as H.R. 9. Both that measure and a Senate companion bill (S. 1137, the PATENT Act) included venue-reform provisions. Despite strong support from free-market groups (including R Street) and a wide variety of other organizations, a coalition of special interests has obstructed either bill from moving forward.

The holistic approach to patent litigation reform appears to have been swallowed up by fear-mongering. Opponents have gone so far as to claim that an effort pushed by some of the most conservative legislators actually represented Obama's liberal vision for a "patent-free society." Narrowly-targeted reform efforts like the one introduced by Sens. Jeff Flake, Cory Gardner, and Mike Lee (none of whom are even remotely considered to be on the "liberal" end of the spectrum), present a new opportunity to move forward.

The fruits of innovation should go to entrepreneurs and inventors, not trial lawyers. Addressing abusive patent litigation is essential to ensure that America's rules to reward technological innovation remain in line with the Constitution's mandate to "Promote the Progress of Science and the useful Arts."

Nathan Leamer and Zach Graves are from R Street, a free market-based, think tank in Washington DC


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  • icon
    ThatDevilTech (profile), 31 Mar 2016 @ 4:03pm

    Hey Techdirt.....

    Come on...EVERY time this comes up, and the EDTX is mentioned, you have to mention that Samsung "built" the ice skating rink. That rink was there BEFORE Samsung came in and sponsored it, or donated any money. Quit posting that false information, or do a bit of fact-checking please.

    Granted, the earliest I can find is 2009, a YouTube video has the Samsung sponsors on the rink boards, BUT the Wonderland of Lights has been going for at least 27 years in Marshall (when the ice rink operates from Thanksgiving to about New Years).

    I'll be glad when they put the venue shopping to an end too, but quit mentioning something that has been there before Samsung came to town.

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

    • icon
      nasch (profile), 1 Apr 2016 @ 7:37am

      Re: Hey Techdirt.....

      Hm, Mike replied to the PIAA guy who posted after you, but not to this. Mike, you don't want us to think you're ignoring this so you can continue to write about something that isn't true, do you? I don't want to think that but you've been called out for it at least twice now. If you have references indicating the ice rink was constructed by Samsung I would be interested to see them.

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

  • icon
    Vidiot (profile), 31 Mar 2016 @ 5:18pm

    Many thanks to the guest authors for this update... and for the sad news of the repeated quashing of reform efforts.

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

  • identicon
    Barry O, 31 Mar 2016 @ 5:45pm

    Lawyers Playing Games

    The very thought that lawyers are "gaming" the application of law is revolting, at best. There is no reason to believe that any lawyer would do something as shameful as seeking a friendly venue. They are, after all, officers of the court.

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

  • identicon
    staff, 31 Mar 2016 @ 6:07pm

    lies and more lies

    Don’t believe the lies of thieves and their Chinese style propaganda. Just because they call it 'reform' doesn’t mean it is.

    For our position and the changes we advocate to truly reform the patent system, or to join our effort, please visit us at https://aminventorsforjustice.wordpress.com/.../our.../
    or, contact us at tifj@mail.com

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

  • icon
    Whatever (profile), 31 Mar 2016 @ 9:32pm

    R Street, a think tank financed and supported by big insurance, which of course would love to see venue shopping stopped for various reasons.

    Perhaps it would be good to have a discussion about the contributors and the reasons behind their postings...

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

    • icon
      nasch (profile), 1 Apr 2016 @ 7:39am

      Re:

      Perhaps it would be good to have a discussion about the contributors and the reasons behind their postings...

      Go for it, nobody is stopping you. Understanding motivations for holding a position is always good.

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

      • icon
        Whatever (profile), 1 Apr 2016 @ 12:23pm

        Re: Re:

        Well, near as I can figure out, the insurance industry (which may be on the hook to pay off some settlements) would likely prefer if THEY could force the venues to be places they like, rather then being where the patent holder's offices are. Moving the cases to places which are more friendly to insurance companies or that are more willing to accept endless motions to delay, slow down, and otherwise put cases on hold would certainly be in their interest. The "think tank" or whatever it is is stacked with insurance industry people (can you say Astroturf?).

        So yeah, it's one of those good questions: Why is the insurance industry's group so interested in the subject?

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

        • icon
          nasch (profile), 1 Apr 2016 @ 1:38pm

          Re: Re: Re:

          rather then being where the patent holder's offices are.

          That should really be "offices". This is generally a fake office with no employees, just to be able to sue in that jurisdiction. It's not as though these companies actually operate in Texas (or at all, generally).

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

          • icon
            Whatever (profile), 3 Apr 2016 @ 11:37pm

            Re: Re: Re: Re:

            The problem is if it's their legal office (ie, company address, where they can be served, etc) then it should be good enough for the courts. Creating a different standard (say, where the CEO of the company actually lives) would create other problems. There are plenty of companies incorporated and "legally" based in certain states, but none of the employees are there. Yet, they can be served at the address, which is good enough for the courts.

            Would it be fair to punish corporations over individuals?

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

            • identicon
              Anonymous Coward, 4 Apr 2016 @ 7:51am

              Re: Re: Re: Re: Re:

              Would it be fair to punish corporations over individuals?

              Yes. But you go ahead and keep worshipping at the corporate altar, buddy.

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

  • identicon
    awake, 1 Apr 2016 @ 12:30am

    link correction

    youtube link to john oliver excerpt does not come up.

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

  • icon
    That One Guy (profile), 1 Apr 2016 @ 4:16am

    If you don't want it done to you...

    I imagine there would be many a fit thrown if there was a venue where it was well known that the overwhelming majority of copyright and patent infringement cases heard there resulted in a 'Not guilty' verdict for the defendant, and people accused of such from all over the country filed to have their cases heard there, no matter where they lived or where the one filing the lawsuit was based. After all if they don't live there, and the person suing them doesn't live there, then it should be pretty obvious that the case has no business being heard there.

    The idea that restrictions on venue shifting such that patent infringement cases are heard either in the area of the accused, or the area of the accuser is somehow 'anti-inventory' is beyond ridiculous, and is little more than parasites throwing a fit because their favorite weapon, a ludicrously biased court might be taken away from them, meaning they might actually have to double-check that they have a case before sending out the shakedown letters.

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

  • identicon
    Another Internet Bigmouth, 1 Apr 2016 @ 8:16am

    Mercatus, sure, why not

    On the theory that a blind squirrel finds a nut every now and then, sure, I'll accept the research you cite from the Mercatus thinktank. I even agree with it, and a large part of my living is tied up in dealing with such litigation. But bear in mind the same source you cite also supports a lot of the incumbent-favoring deregulation or skewed regulation that results in things like non-competitive and therefore crappy broadband access, and so forth. Note further that Mercatus is a Koch-brothers funded think tank AT George Mason U., and is not an organ of that public university.

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

  • identicon
    ryuugami, 1 Apr 2016 @ 10:44am

    Venue Equity and Non-Uniformity Elimination Act

    Really. VENUE Act.

    How many hours have been wasted making up that recursive backronym? It sounds like something you'd find in a comic. The government is slowly but surely becoming a parody of itself...

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


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