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Texas Trolls Set New Filing Record

Patent lawsuits at
Record high for 14 years;
Reform bills in works

On April 23, more new patent lawsuits were filed than on any previous day in at least the past fourteen years.

One hundred and ninety suits were filed that day, most of them by non-practicing entities (NPEs, aka “patent trolls”) in the Eastern District of Texas. The previous record was 86 suits filed on November 1, 2013.

Eighty-five of the cases were filed by a single entity, which sued companies and organizations including the NFL over a shopping cart function on websites. One hundred and fifty-three of the cases were filed in the Eastern District of Texas.

When products that allegedly infringe a patent are sold nationwide, a patent holder may sue the alleged infringer in any of the 94 US federal district courts. The remote and rural Eastern District of Texas has become popular over time as a venue thought to be friendly to patent owners and unfriendly to patent infringers – especially foreign or out-of-state technology companies.

As a result, many NPEs set up offices in the Eastern District of Texas, many of them in the building next door to the federal courthouse in Marshall.

In 2012, 1,260 patent cases were filed in East Texas, compared to less than 1000 in #2 district Delaware. The Central District of California (which includes LA) was #3.

Although the Eastern District of Texas is sometimes referred to as a “rocket docket” where cases are handled quickly, that hasn’t actually been true for several years. (The Eastern District of Virginia is a true “rocket docket” for patent cases, where lawsuits can go from filing to trial in less than a year.)

The increase in patent case filings in April has been attributed to suggested amendments to a US Senate patent reform bill that would establish new fee-shifting rules in patent cases.

This fee-shifting provision has not yet been introduced, let alone passed, but the draft would make the law apply retroactively to cases filed on or before April 24, 2014.

The proposed law would require courts to award fees if the losing party’s case was “not objectively reasonable.”

As we reported, the US Supreme Court recently issued two decisions to make it easier for courts to shift attorneys’ fees from the prevailing party to the losing party in patent cases.

The US Congress, with the support of the White House, has been working on a number of bills to crack down on so-called patent trolls.

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