Obituary: Eastern District of Texas Patent Troll Haven, 2003-2017

The patent troll haven in the U.S. District Court for the Eastern District of Texas (EDTX) died suddenly today.  The cause of death was a U.S. Supreme Court decision that destroyed the basis for filing patents suits anywhere in the country.  Trolls had flocked to EDTX after the local judges had made the venue extremely hospitable for patent plaintiffs.

Based in Marshall, Tyler, and Texarkana, EDTX began its life as a sleepy federal court serving its rural residents.  Marshall in particular was best known for its annual “Fire Ant Festival” and as the “Pottery Capitalof the World.”  Few if any of its farming and blue collar residents had ever invented anything, let alone heard of patents.

During the 1960’s, the EDTX court became popular for asbestos litigation.  By the late 1990’s, much of that litigation was resolved.  The large number of local plaintiff’s trial lawyers who worked on the asbestos litigation needed something new to do.  Fortunately, two events coincided to turn the court into the patent haven it became.  First, a 1990 decision by the Federal CircuitCourt of Appeals (overruled today by the Supreme Court) made it possible to sue corporate patent defendants anywhere in the country.  No longer could a defendant be sued only in its state of incorporation or principal place of business—a patent infringer could be sued anywhere its goods or services were sold.  In the modern Internet era, this was literally everywhere. 

Second, in 1999, local attorney T. John Ward was appointed to the EDTX bench.  Judge Ward soon realized that his fellow local attorneys could profit from the 1990 appeals decision.  He rewrote the local court rules to make EDTX very friendly to patent plaintiffs.  Cases would rarely be disposed of by summary judgment, but would instead come to trial quickly.  The rural Texas juries were made up of patriotic citizens who would defer to the government’s blessing of a patent grant.  Most defendants would settle rather than risk a trial, making the venue ideal for trolls trying to extort settlements for patents of dubious validity.  And if a case went to trial, patent plaintiffs won more often.

Judge Ward’s strategy was successful.  In 1999, only 14 patent cases were filed in EDTX.  By 2014, that number had grown to over 1,400 patent suits, making the EDTX the most popular district in the entire country for patent cases.  In 2015, 44% of all patent suits in the country were filed in the EDTX. This was despite the fact that few technology-based companies were located in the EDTX.  Local businesses boomed, especially those that served the trial industry, such as hotels and catering services. The court became so successful that it was featured in a 2015 John Oliver segment about patents.  One frequent patent defendant, Samsung Electronics, was even forced to curry favor with the local populace by building an ice rink in front of the Marshall courthouse—no small feat given east Texas weather.

By 2016, Judge Rodney Gilstrap (Judge Ward’s successor in the Marshall Division) had become “the busiest patent judge in the country.”  Judge Gilstrap presided over one quarter of the patent suits filed in the entire country.

EDTX was a particularly welcome haven to so-called “patent trolls.” The term was coined in the late 1990s to describe a patent owner who didn’t practice its patents, had no intention of practicing them, and whose sole business was to sue on patents to get licensing fees from companies with a real business. In many cases patent trolls hadn’t even filed the patents in question, but acquired them from third parties. EDTX became the forum of choice for trolls, but trolling got so out of hand that even the State of Texas urged the Supreme Court to do something.

All that changed with today’s Supreme Court decision.  Now, patent defendants can only be sued where they physically reside, such as their state of incorporation, or a place they do business and actually infringe the patent.  The EDTX has been eliminated as the forum of choice for patent plaintiffs, who now must file suit in a place with some connection to the alleged infringement.

EDTX is survived by numerous local trial lawyers, local businesses that had grown to service the trial industry, and patent trolls everywhere.  It’s unclear if memorial services will be held in Marshall, but celebrations will undoubtedly be held in Silicon Valley, California, and other technology centers.

NBA Playoff Special: Wacky Basketball Patents

With the NBA playoffs in full swing, it's time for some wacky basketball patents.  I have seen the Giant Pop-A-Shot at arcades. 

My favorite, however, is "The Snuffleupagus."

John Oliver Takes On The Patent Trolls

The problems with the existing patent system are no longer just a matter for patent lawyers. Rather the mainstream media has taken notice: In yesterday's "Last Week Tonight," John Oliver discusses patent trolls.

My Latest EFF Project: Letter To The Federal Circuit About Transparency

Government transparency is an important issue.  In our complicated society, people need to know what their government is doing, so they can take steps to disagree if they don't like what is happening.

Recently, the U.S. Court of Appeals for the Federal Circuit took a big step backwards on transparency.  Up until December 2014, the Federal Circuit would post on its website both its published opinions (its decisions in a case) and court orders affecting the procedure of a case. After December, the court effectively decided to stop posting orders. For example, in the third quarter of 2014, the court posted over 180 orders; but in the first quarter of 2015, the court only posted six orders.

Why are orders important? They inform the public of important events in legal cases that aren't a final, published opinion. These can include orders dismissing an appeal, orders granting temporary relief, orders transferring lawsuits from one trial court to another, and many more. For example, public interest groups like EFF rely on such orders to decide whether to participate in a case going forward, by filing an amicus brief. It's therefore very disappointing that the Federal Circuit decided to stop posting most of its orders.

Yesterday, EFF, along with Professor Dennis Crouch (the editor and author of the popular Patently-O blog), sent a letter to the Federal Circuit asking them to restore the publication of orders. EFF's blog post about the letter is here; Professor Crouch's blog post is here.

My Latest EFF Amicus Brief: Commil v. Cisco

Last Thursday, EFF filed the latest amicus brief I helped write.  As explained in EFF's blog post, the case involves the level of intent necessary to induce someone else to infringe a patent.  In Commil v. Cisco, the U.S. Court of Appeals for the Federal Circuit had ruled that a good faith belief that a patent is invalid is a defense to a claim for inducement.  The Supreme Court agreed to review the case; EFF's brief supports the Federal Circuit's rule.  Public Knowledge also has a very good blog post discussing the case.

EFF Files Comments With Patent Office About Review Of Issued Patents

In 2011, Congress passed the America Invents Act (AIA) to enact certain patent reforms.  The AIA included some provisions allowing review of issued patents in the Patent Office, which can be much cheaper than district court litigation.  Last week, EFF filed comments with the Patent Office about the review proceedings, which I helped draft.  EFF's blog post about those comments is here.

Pfizer Extends The Life Of Patents

"Pfizer announced a new breakthrough Friday that vastly extends the lifespan of near-death patents." You have to read this carefully.  Because "nothing causes Pfizer officials more distress than seeing a once robust patent expire at a young age, a “terrible tragedy” that allows dozens of generic manufacturers to copy it and offer pharmaceuticals to customers far more cheaply."

"Jabberwocky" Parody Featuring Alice Corp. v. CLS Bank

One of my most recent EFF amicus briefs was in Alice Corp. v. CLS Bank Int'l. The case deals with the patentability of computer software and business methods.  The Supreme Court heard oral argument in the case on Monday, March 31.  While the transcript makes it seem likely that Alice Corp. will lose its patents, it's unclear whether the Court will make a broad ruling either upholding or limiting software patents.

Fortunately, EFF's Parker Higgins has come up with an explanation of the oral argument: In the form of a parody of Lewis Carroll's "Jabberwocky."   Now it almost makes sense.  Almost.

EFF's Amicus Brief In Alice Corp. Case Cited In Forbes Article

An article in Forbes extensively cited EFF's amicus brief in Alice Corp. v. CLS Bank.

Three Supreme Court Briefs In Five Days

February was a busy month for me.  It resulted with EFF filing three Supreme Court merits briefs over a five day period.  The time crunch resulted when the Court agreed to hear Alice Corp. v. CLS Bank Int'l. on December 6, 2013 -- and then on January 10, 2014, the Court agreed to hear both Limelight Networks, Inc. v. Akamai Technologies, Inc. and Natuilus, Inc. v. Biosig Instruments, Inc.  All three cases are patent cases seeking review of decisions by the Federal Circuit Court of Appeals.

Because our brief in Alice Corp. supported the respondent (the winning party in the appeals court), it wound up being due on February 27, 2014.  In the other two cases, our briefs supporting the petitioners (the parties that lost) were due on March 3.

Alice Corp. discusses when abstract ideas can be patentable, under 35 U.S.C. § 101.  As applied in this case, the statute affects the patentability of business methods and computer software, an issue on which the courts have been divided.  Previously, the Federal Circuit heard the case before a panel of 10 judges to try to resolve the issue; EFF and I had filed an amicus brief in that proceeding.  However, the court was unable to decide anything precedential, splitting 5-5.

The Supreme Court agreed to hear the case to try to set a definitive precedent.  Our amicus brief in the case argues that the software industry was doing just fine without patent protection before the Federal Circuit concocted the notion of broad software patents in 1994.  As the brief put it:

"Software patents do not promote innovation in the computer software industry—in fact, the recent flood of such patents impedes innovation."

EFF's press release about our brief in Alice Corp. is here.

Limelight is another appeal from an en banc Federal Circuit case.  The case originally dealt with the issue of whether anyone is liable for patent infringement if no one person performs all the steps of the patent, that is, if separate entities perform separate steps of the claim.  EFF's amicus brief argued against joint liability for patent infringement, because joint liability could ensnare innocent third parties such as users of someone else's technology.  This time an 11 judge court, splitting 6-5, did decide something, but not the question of joint liability.  Instead, the court held that a party (Limelight) could be liable for actively inducing infringement of a method claim as long as the party induced one or more other parties to perform all the steps.

The Supreme Court agreed to review Limelight.  EFF filed a similar amicus brief as it did in the lower court which argues, among other things, that better claim drafting could avoid the whole problem.

Finally, Nautilus involves 35 U.S.C. § 112(b), which requires that patent claims "particularly point out and distinctly claim the subject matter which the inventor … regards as the invention." Here, contrary to the statute, the Federal Circuit's current rule doesn't require that a claim be either particular or distinct.  The Federal Circuit merely requires that the claim not be "insolubly ambiguous," a very difficult standard to meet.  In other words, claims aren't indefinite so long as a meaning can be ascribed—“however difficult that task may be” and even if this meaning is “one over which reasonable persons will disagree.”

EFF and Public Knowledge filed an amicus brief asking the Supreme Court to review Nautilus. I didn't work on that brief, but when the Court agreed to review the case, I worked on our amicus brief on the merits.  Our merits brief argues that vague patents harm innovation and the patent system; gives examples of patent owners drafting intentionally vague claims; and points out (as in Limelight) that better claim drafting can solve the problem.

Federal Circuit Upholds De Novo Claim Construction

In today's Lighting Ballast v. Philips Electronics case, the en banc Federal Circuit upheld the previous Cybor case, which provides for de novo review of claim construction. The court took the case en banc to decide whether or not to overrule Cybor and allow for deferential review of a district court's factual findings. The vote was 6 in favor of upholding Cybor and 4 against, showing the the CAFC remains deeply split on some issues.

My Latest EFF Amicus Brief: Alice Corp. v. CLS Bank

On Friday EFF filed the latest amicus brief I helped write.  This brief supports Alice Corp.'s petition asking the U.S. Supreme Court to review a Federal Circuit decision invalidating Alice Corp.'s patents as impermissibly abstract under 35 U.S.C. 101.  The brief is similar to a previous brief we filed twelve days earlier in WildTangent v. Ultramercial -- see that post for an explanation.

The brief supporting Alice Corp. is somewhat unusual.  We agree with the Federal Circuit that it properly invalidated Alice Corp.'s patents.  However, because the state of the law is such a morass, we agree with Alice Corp. that the Supreme Court should hear the case and provide some guidance to the lower courts (although we ask the Court to affirm that the patents are invalid).  With these two related briefs, we ask that the Court review both Alice Corp.'s case and WildTangent's case.

My Latest EFF Amicus Brief: WildTangent v. Ultramercial

Today EFF filed the latest amicus brief that I helped write.  Our brief supports WildTangent's request that the Supreme Court hear a lawsuit brought by Ultramercial LLC.  Ultramercial owns U.S. Patent No. 7,346,545. The patent claims, in essence, showing a consumer copyrighted video over the Internet, provided that the consumer is shown advertising first.  If that sounds like it shouldn't be patented, EFF agrees:  EFF's blog post about today's amicus brief is here.  That post contains links to many previous posts about the case, which has been going on for some time.

The district court had dismissed the lawsuit on the ground that the patent claims were impermissibly abstract under 35 U.S.C. §101.  That statute prohibits patents on abstract ideas.

The Federal Circuit Court of Appeals reversed the district court, but WildTangent asked the Supreme Court to hear the case.  The Supreme Court ordered the Federal Circuit to reconsider in view of a Supreme Court case interpreting §101, Mayo Collaborative Services v. Prometheus Laboratories.  The Federal Circuit issued a new opinion again reversing the district court.

In plain English:  The patent takes an abstract idea -- showing people copyrighted content if they watch an advertisement first -- and adds limitations such as "the Internet." The Federal Circuit's view is that adding "the Internet" to an abstract idea somehow makes it patentable.  Along with many other people, EFF disagrees.  We hope the Supreme Court will hear this case and invalidate this patent.

UPDATE:  Techdirt has this story on Public Knowledge's fine amicus brief also supporting the cert. petition.

Interesting TED Talk on Some Problems With IP Law

Here is an interesting TED talk on some problems with IP law.  It starts out by singing "Happy Birthday to You."  Don't sing along, though, you might get into trouble.

My Interview With The Recorder

The Recorder, a San Francisco-based legal newspaper, recently published a report on intellectual property.  I am interviewed at pages 28-29 of the report (the last two pages of the PDF).

UPDATE:  Here is the video of the interview.

The Hitler "Downfall" Meme Explains Patent Trolls

Patently-O has uncovered this clever use of the Hitler "Downfall" meme video to explain patent trolls.  The native YouTube link is here.  Turns out someone got a patent for "a method and system for world domination."  Anyone who thinks business methods should be patentable must leave the room.

Supreme Court Decides "Reverse Payments" Case

Today the Supreme Court decided FTC v. Actavis, the "reverse payments" case. This case arises in generic drug litigation, where the patent owner pays the accused infringer to stay out of the market until the patent expires.  Because the settlement requires the patent owner to pay the alleged infringer, rather than the other way around, this kind of settlement agreement is often called a “reverse payment” settlement agreement. The lower courts have struggled with whether this violates the antitrust laws.

In today's opinion, the Supreme Court reverses the 11th Circuit, which had dismissed the FTC's antitrust complaint.  However, the Court declines to hold that reverse payment settlements are presumptively unlawful. Rather, they are to be reviewed under the rule of reason analysis. The FTC will be given a chance to prove its case. The vote was 5-3, with the majority opinion by Justice Breyer (Justice Alito is recused). 

SCOTUSblog reports that this potential antitrust exposure "is likely to essentially put an end to such payments in the future."  In the long run, this will hopefully make generic drugs more widely available.

Supreme Court Decides AMP v. Myriad (Breast Cancer Gene Patenting Case)

The Supreme Court just decided Association for Molecular Pathology v. Myriad Genetics, Inc.   The case involved the patentability of genes used to detect breast cancer.

As was expected after April's oral argument, the court held that isolated DNA is not patentable, but synthetic DNA is patentable.  The holding is summarized as follows:

For the reasons that follow, we hold that a naturally occurring DNA segment is a product of nature and not patent eligible merely because it has been isolated, but that cDNA is patent eligible because it is not naturally occurring.

This reverses the Federal Circuit in part, in a unanimous decision by Justice Thomas (Justice Scalia joined the majority opinion only in part, and wrote a brief concurring opinion disclaiming any knowledge about the "fine details of molecular biology").  I had previously written about the Federal Circuit's two decisions here and here.  The Supreme Court agreed with the Patent Office that isolated genes are not patentable.

At one point, the Court repeated an interesting statement from its 2012 opinion in Mayo v. Prometheus:

As we have recognized before, patent protection strikes a delicate balance between creating “incentives that lead to creation, invention, and discovery” and “imped[ing] the flow of information that might permit, indeed spur, invention.” 

The Myriad decision will likely reduce the costs of breast cancer testing such as the type Angelina Jolie recently publicized.

UPDATE:  Here are posts about this case by EFF, SCOTUSblog (also in plain English), Patently-O, and Techdirt.

White House Releases Serious Patent Reform Proposals

Today the White House released "Fact Sheet: White House Task Force on High-Tech Patent Issues."  This includes some serious patent reform proposals, some by executive order and some by proposed legislation.  The Fact Sheet was accompanied by a report about the current problems with the patent system.

EFF's blog post about this important development is here.

UPDATE: Here's a cute animated GIF of a patent troll by the White House.   Techdirt has two stories about this development.  Here is Patently-O's post.

"The 12 Most Terrifying Things Ever Invented for Babies"

These are all actual patents.  Sorry to say.