01.27.18

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Litigation and Patent Trolls Are Moving to China, Which is Bad for American Litigators But Great for American Technology Firms

Posted in America, Asia, Patents at 12:14 pm by Dr. Roy Schestowitz

Sun rises from the east…

American flag

Summary: The migration of patent trolls and so-called ‘assertion’ activity (lawsuits/shakedown) to the Far East is a trade-off between a parasitic sector and a producing sector

“According to RPX Corp.,” said United for Patent Reform some days ago, “of the 19 patent suits filed yesterday, 15 were filed by patent trolls. That’s 79%.”

This isn’t so unusual. Sometimes it’s around 90%. RPX is collapsing and might soon be owned by patent trolls.

Thankfully, however, litigation is down overall. The numbers compiled by Docket Navigator were mentioned the other day in this post which is behind paywall:

Last year, 4,522 patent cases were filed in US district courts, according to a search of the Docket Navigator database conducted by Managing IP on January 7.

This was down 2.7% from 4,650 in 2016, which itself was down…

Litigation in the Eastern District of Texas (EDTX) is down very sharply. This in its own right is very good news. The courts there were notoriously trolls- and software patents-friendly.

If that sort of litigation goes to China, should the US worry? Good riddance. It was a yoke on companies that operate in (or are based in) the US.

To better serve its litigation ‘industry’ and pretend to be richer, China is placing more focus on patents. In fact, quite a few patent bullies go to China (RPX considers that), which has become like a new EDTX (its patent trolls included). IAM, being a proponent of patent trolls, seems to have China envy. Days ago it wrote that “China litigation may have helped IP Bridge secure wireless SEP licence with Samsung” as if it’s actually desirable.

A couple of factors made it seem that the China case against Broadcom – which was filed in the Beijing IP Court – was the one that played a decisive role in the settlement. As this blog noted at the time, the patents-in-suit had no fewer than 20 IPRs awaiting institution decisions at the time of the settlement, so the timing of the deal made little sense from a solely US perspective. Furthermore, industry research has characterised Broadcom as one of the US companies with the largest revenue exposure to the China market. According to Beijing IP Court documents, the court accepted the case against Broadcom on March 21st 2017, and on June 30th, IP Bridge had withdrawn it.

The truth of the matter is, China may be inheriting the very thing the US became notorious for. This, in turn, can discourage investment and operations in China. It’s worth noting that EDTX, in conjunction with ITC for injunctions (extra sanctions/embargo), is currently being used for alleged antitrust.. Watchtroll’s Steve Brachmann put it like this:

On January 10th, image-based barcode reading solutions provider Code Corporation of Salt Lake City, UT, announced that it had filed antitrust actions against Morris Plains, NJ-based engineering conglomerate Honeywell International (NYSE:HON) at both the U.S. International Trade Commission and in the Eastern District of Texas. Code, which is seeking an injunction on the importation and sale of barcode readers marketed by Honeywell for the healthcare industry, alleges that Honeywell engaged in a campaign to mislead distributors about the legitimacy of Code’s barcode reader products as part of an effort to monopolize that market.

Notice how neither company is based in Texas; one is from Utah and another from New Jersey (very far from Texas). Is TC Heartland going to be invoked? How about this new case “lack of personal jurisdiction”? As the Docket Navigator’s Web site put it:

The court granted a British defendant’s motion to dismiss plaintiff’s patent infringement claims for lack of personal jurisdiction under the state long-arm statute.

For a number of years — probably well over a decade — EDTX became the nuisance capital of the US. This capital, however, may be gradually outsourced to large cities in China. Great for litigators in China? No doubt. But it’s bound to hurt the Chinese economy unless the intention is to actually discourage foreign companies from operating there (there are local brands which China is hoping to promote at their expense).

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