07.16.17

From East to West and Even Down South at the Eastern District of Texas Patent Trolls Are Losing Everything

Posted in America, Patents at 6:35 pm by Dr. Roy Schestowitz

Related: The Gradual Fall If Not Sudden Collapse of Patent Trolls Associated With Microsoft

Texas sign

Summary: Patent trolls that are accustomed to friendly judges, typically in the Eastern District of Texas, will be circling down the drain if the trend of “fee award” (to the vindicated defendant) continues

THE USPTO (plus courts) repels/drives away trolls while the EPO attracts/welcomes them. Such is the nature of the patent systems in 2017 and the difference seems to be getting more extreme as the EPO lobbies for UPC (trolls-friendly) whereas SCOTUS rules against patent trolls, e.g. TC Heartland regarding forum shopping at the Eastern District of Texas.

“Shipping & Transit LLC is not a new patent troll. Like many other trolls, it merely rebranded itself after plenty of negative publicity…”Well, earlier today we wrote about Shipping & Transit LLC and various other patent trolls. We would like to show that this new litigation terrain (or trolling dynamic which deters trolls) is exacerbating nationwide.

California

Shipping & Transit LLC is not a new patent troll. Like many other trolls, it merely rebranded itself after plenty of negative publicity; we wrote about it when it was known as Arrivalstar as this had gone on for years. Not only is this troll doomed in courts; some courts are forcing the troll to pay its victims. As the EFF put it last week (we somehow overlooked this announcement):

Shipping & Transit LLC, formerly known as Arrivalstar, is one of the most prolific patent trolls ever. It has filed more than 500 lawsuits alleging patent infringement. Despite having filed so many cases, it has never had a court rule on the validity of its patents. In recent years, Shipping & Transit’s usual practice is to dismiss its claims as soon as a defendant spends resources to fight back. A district court in California issued an order (PDF) this week ordering Shipping & Transit to pay a defendant’s attorney’s fees. The court found that Shipping & Transit has engaged in a pattern of “exploitative litigation.”

Shipping & Transit owns a number of patents that relate to vehicle tracking. We’ve written about its patent trolling on numerous occasions. In many cases, Shipping & Transit asserted its patents against businesses that simply sent email to customers with a tracking number. In other cases, it has sued municipal transport agencies and logistics companies.

Eastern District of Texas

“Gilstrap was mentioned here and elsewhere many times before. He is a big part of the problem because he presided over many of these cases.”The situation is similar in the Eastern District of Texas (EDTX), which in May suffered the blow known as TC Heartland. The region will no longer attract quite so many trolls and lawyers, who typically attacked companies that aren’t based in the Eastern District of Texas. Remember Rothschild Connected Devices Innovations LLC (RCDI)? There were many articles about it last month (we wrote about it earlier this month, exactly a week ago) and this from the EFF we also overlooked (published shortly after we had returned from holiday). The EFF takes note of the “patent-friendly Eastern District of Texas” and notes that there is a “fee award”, i.e. just like the above, the “notorious patent troll practicing this model [is] to pay the defendant’s attorney’s fees.” This ought to discourage trolling.

Patent litigation abuse thrives when patent trolls can force defendants into making a hard choice: pay the troll (even though the claim is absurd) or pay even more to your lawyers. This week, the Federal Circuit issued an encouraging ruling that will make it harder to use this gambit. Overturning a contrary decision by the patent-friendly Eastern District of Texas, the appellate court required a notorious patent troll practicing this model to pay the defendant’s attorney’s fees. The lower court had given the troll a pass because it dismissed its case early (which would give impunity to any troll that runs away when the defendant fights back). This week’s decision is an important win for victims of abusive litigation.

Meanwhile, the patent microcosm (litigator) is up in arms over reasonable responses. “My record on NPE’s speaks for itself,” Rachel wrote, “but I find Issa’s language choice and singling out of a federal judge to be utterly unacceptable…”

Why? Gilstrap was mentioned here and elsewhere many times before. He is a big part of the problem because he presided over many of these cases. Here is what was actually said:

Yesterday, the House IP Subcommittee on the Courts, Intellectual Property and the Internet conducted a hearing entitled: The Impact of Bad Patents on American Businesses. During the hearing, Chairman Darrell Issa (R-Calif.) and House Judiciary Committee Chairman Bob Goodlatte (R-Va.) did not mince words expressing their displeasure with the EDTX’s handling of the Supreme Court’s recent decision in TC Heartland.

At the opening of the hearing, Chairman Issa explained that Judge Gilstrap’s interpretation of TC Heartland “rejects the Supreme Court’s unanimous decision” and is “an act I find reprehensible.” It only got worse from there.

Chairman Issa explained that Judge Gilstrap may be more interested in serving the surrounding hotels and law firms, but that his recent decision outlining his TC Heartland analysis “does not serve justice” (ouch). Then, Chairman Issa finished up with: “it is not common for a member of Congress to call out an individual judge or a district, but after a long period of enrichment of a community by judges who consider that community’s well being as part of their goal, I can reach no other conclusion…”

Indeed. They just said the truth. Bluntly. What’s wrong with that? More politicians like that are needed.

“Another politician, Eric Lesser, has also decided to tackle patent trolls, even in the East Coast.”

Massachusetts

Another politician, Eric Lesser, has also decided to tackle patent trolls, even in the East Coast. There was this news article about it on Friday: [via Tom Hochstatter‏]

When the internet security company Cloudflare decided to engage in all-out war with what it views as a “dangerous new breed of patent troll,” it found a receptive audience with Eric Lesser, who became the youngest state senator in Massachusetts when elected to office in 2014.

Senator Lesser, now a 32-year-old in his second two-year-term, was in the same Harvard fraternity as Facebook CEO Mark Zuckerberg, but says he didn’t really think much about tech until after working on President Obama’s first presidential election campaign in 2007. “I was traveling around with him and carrying suitcases and handling logistics for his traveling team,” he explains.

When the campaign was over, he joined then-senior advisor David Axelrod at the White House as a special assistant; he also became involved with the Council of Economic Advisors and more specifically with the agency’s chairman at the time, economist Austan Goolsbee. “That’s really when I started to get exposure to a lot of tech policy and some of the issues,” he says.

We are glad to see the political system, not just a bunch of large corporations, organising themselves against patent trolls. This will almost certainly assure the destruction of patent trolls, e.g. by taking away their lifeline with imposition of penalties (like defendants’ legal fees).

“They will need to change career (if they can) and stop harassing people who actually make things.”Expect patent trolls and their facilitators to get very, very angry and verbally aggressive, as we noted in our previous post. They will need to change career (if they can) and stop harassing people who actually make things.

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