If you got sued for patent infringement in 2015, chances are pretty good that you were sued in the Eastern District of Texas. An astonishing 2,514 patent lawsuits – or 44 percent of the national total – were filed there this year. Over 1,500 of these cases were filed before a single judge: Judge Rodney Gilstrap. While patent suits have clustered in Eastern Texas for nearly a decade, this year saw an unprecedented concentration. This extreme forum shopping raises important questions about procedural fairness and due process.
Why are so many patent cases filed in the Eastern District of Texas? It’s not for the barbecue. And it’s not because the remote, largely rural district is a technology hub. Rather, it’s because local rules and practices make the district attractive to patent plaintiffs. More specifically, local practices make the district very attractive to companies – known as patent trolls – whose sole business model is to buy patents and sue.
For example, the Eastern District of Texas judges that most frequently hear patent cases have standing orders requiring parties to submit letter briefs asking permission to file for summary judgment. This makes it harder for defendants to avoid a costly trial. A recent study found that judges in the district granted only 18 percent of motions for summary judgment on the basis of patent invalidity. (In contrast, the grant rate nationwide was 31 percent.) Considering that this study did not include cases where the defendant wasn’t even permitted to file for summary judgment in the first place, it follows that the true grant rate in the Eastern District of Texas is even lower.
In addition to the inconvenience of litigating in a distant forum, local rules make discovery more expensive. The local discovery order in patent cases requires parties to automatically begin producing documents before the other side even requests them. This practice ‒ which, in EFF’s view, is not consistent with the Federal Rules ‒ particularly burdens patent defendants. That is because unlike shell company patent trolls, operating companies need to search and produce a huge volume of documents. These burdensome discovery practices create pressure to settle weak cases and thus attract trolls to the district.
by Colleen V. Chien, Associate Professor of Law, Santa Clara University School of Law, former White House Senior Advisor on intellectual property and innovation; and Michael Risch, Professor of Law, Villanova University School of Law
Although patent reform is not a partisan issue, it has divided those who write and think about the patent system for a living. Earlier this year, 51 law and economics professors wrote a letter to Congress pointing to the “large and increasing body of evidence” supporting legislative patent reform. Weeks later, 40 professors shot back, expressing “deep concerns with the many flawed studies.” We aren’t saying who was right, because one of us signed the second letter and the other authored a number of the contested studies. One of us joined the Obama administration to support patent reform, the other opposes it.
But there is one issue upon which we — and most stakeholders — agree: The staggering concentration of patent cases in just a few federal district courts is bad for the patent system. We believe that changing where patent lawsuits can be filed will solve many of the problems in the debate.
Under a 1990 federal circuit court ruling, defendants can be sued in any district where they sell their products, which is basically anywhere. According to a forthcoming paper by Professors John Allison (University of Texas at Austin), Mark Lemley (Stanford) and David Schwartz (Northwestern), non-practicing entities — pejoratively referred to as “patent trolls” — bring a majority of the patent cases decided in the Eastern District of Texas. The issue is not limited to trolls, however: Kraft Foods is a plaintiff in Delaware in a current case on this issue.
Recently, I was informed that I needed to stop using the words “patent reform” in my work. Such words, it was explained to me, had become too contested. The words “patent reform” had become a political tool used by one side or the other in the fierce debate over how to effectively police the specter of patent trolls, whether through congressional reform or state and federal administrative efforts. It seems to me, though, that these words—“patent reform”—are too important to give up to one side or another, and so, this is an attempt to give new meaning to these words going forward.
What then are the steps that must be taken if we are to give meaning to the words “patent reform?” First, any patent reform needs to take into account what I and my co-author Erica George have referred to as the dual objectives of the patent system. Our constitutional patent regime seeks not only to incentivize the economic activity of a patent claimant but also to protect the preconditions for creative activity that serve as the basic building blocks of scientific inquiry and information exchange. We call this the patent bargain: The patent owner gains a property right in the information in exchange for disclosure of the patent to the public. Too often though, when we speak about patent law, we value the rights of the patent claimant over the right of the public to have access and use to the information contained within the patent.
Recognizing these dual objectives would center patent reform in two ways. Initially, if we see that patent reform serves democratic values other than the economic goals of innovation, it may limit the ongoing deterioration of our current debate into a contest between different interest groups. As we have seen within the context of copyright law, this can lead to significant industry capture that can harm coherence and continuity of the current law. Additionally, honoring the dual objectives of the patent system may also help to center the debate in progressive values of transparency, access, and equity. I object, for instance, to the current legislation before Congress that imposes significant attorney fees in patent litigation because it may dissuade nonprofits and public interest groups from engaging in litigation to challenge undesirable patents. Such choices would significantly undermine access to different avenues of patent litigation, thus undermining the dual objectives embodied in our patent bargain.
by Sean M. Flynn, Associate Director, Program on Information Justice, and Intellectual Property Professorial Lecturer in Residence, American University Washington College of Law
The Trade Promotion Authority (TPA) bill that was released last week contains a fascinating Section 8 on “Sovereignty.” The section appears intended to make all trade agreements with the U.S. not binding to the extent that they contradict any provision of U.S. law, current or future. If valid, the section would go a long way to calming fears in this country that new trade agreements, like the old ones, could be used by corporations or other countries to force the U.S. to alter domestic regulations. (See, for example, analysis on how the leaked TPP text could enable challenges to intellectual property limitations and exceptions like the U.S. fair use doctrine).
Here, I analyze Section 8’s promise using The Washington Post's “Fact or Fiction” Pinocchio scale. For containing numerous blatantly misleading characterizations of international law, including outright falsehoods concerning the ability of U.S. Congress to determine when international law binds, I give the provision four Pinocchios.
U.S. Senators are again pushing a bill aimed at providing more protection of consumer data stored by American tech companies overseas.
Sens. Chris Coons (D-Del.), Orrin Hatch (R-Utah) and Dean Heller (R-Nev.) recently reintroduced the Law Enforcement Access to Data Stored Abroad Act (LEADS Act), which languished in the last Congress. The LEADS Act would change the Electronic Communications Privacy Act (ECPA) and, in part, would prohibit federal officials from using a warrant to obtain information stored abroad, unless the information sought belongs to an American.
In a press statement, Sen. Coons said, “Law enforcement agencies wishing to access Americans’ data in the cloud ought to get a warrant, and just like warrants for physical evidence, warrants for content under ECPA shouldn’t authorize seizure of communications that are located in a foreign country. The government’s position that ECPA warrants do apply abroad puts U.S. cloud providers in the position of having to break the privacy laws of foreign countries in which they do business in order to comply with U.S. law. This is not only hurts our businesses’ competitiveness and costs American jobs, but it also invites reciprocal treatment by our international trading partners.”
The senators’ statement on the LEADS Act claims it would “clarify ECPA by stating that the U.S. government cannot compel disclosure of data from U.S. providers stored abroad if accessing that data would violate the laws of the country where it is stored or if the data is not associated with a U.S. person – that is, a citizen or lawful permanent resident of the United States, or a company incorporated in the United States.”
The U.S. Court of Appeals for the Second Circuit is hearing an appeal of a federal court refusal to set aside a government issued warrant to obtain email account information stored by Microsoft in Ireland.
See here for more information about the LEADS Act.