As you probably know, patent reform legislation is moving again. Bills in both the House and Senate have been passed out of committee with bipartisan support and are moving to their respective chamber floors. We are cautiously optimistic we could see a patent reform bill signed into law in 2015. However, some issues remain unsettled and they must be addressed in order for patent reform legislation to be effective in fighting the patent troll problem. We’ll be breaking down these issue areas for you in separate blog posts - they concern Inter-Partes Review (or “preserving the ability to more affordably challenge the validity of a patent outside the court”), venue (or “dealing with the Eastern District of Texas”), pleadings (or “including basic information in the plaintiff's initial complaint”), and discovery (or “limit unnecessary fishing expeditions for evidence before the validity and scope of the case has been determined”).
The Eastern District of Texas is known for being not just the epicenter of the patent troll problem, but, in many ways, the face of a broken patent system. Simply put, trolls cherry-pick the location for filing suits because it is well known that, once in the Eastern District, they have a higher chance of success. (John Oliver humorously explains here.)
Some background: according to the US Government Accountability Office Report, 40 percent of troll cases were brought in the Eastern District of Texas. So it’s no surprise that these small town economies (that have become host, or the “venue,” for patent troll suits) are booming with upscale hotels and restaurants catering to hundreds of patent lawyers who now regularly fly there.
For many startups, especially those that rely on the Internet to reach users (and what startup doesn’t?), the law currently makes it easy for a troll to drag its patent infringement case to a plaintiff-friendly court. In those courts, startup defendants are already at a disadvantage. But the vast majority of defendants aren’t even based in these districts and small, resource-strapped startups cannot afford to litigate there, let alone even travel there. Which is why litigation in the Eastern District of Texas is but one more tool at a patent troll’s disposal to effectively threaten startups and other productive businesses and innovators.
We need to get these cases out of Texas to give defendants a real chance to fight back in a fairer forum to which a startup has reasonable access. Fortunately, the latest version of the Innovation Act addresses this venue abuse. The bill would limit bringing patent infringement suits where the patent inventor conducted research or a party operates a physical facility. It would effectively shut down countless offices in Texas that are nothing more than an empty room with no employees and force cases to courts that are convenient and fair. Successful and comprehensive patent reform requires venue reform.