If You're An East Texas Company, Are You Now More Prone To Patent Infringement Lawsuits?

from the watch-out dept

Fri, Jun 26th 2009 2:04am — Mike Masnick

Joe Mullin has an interesting story, questioning why PubPat -- a group that has fought against bad/questionable patents and bad patent policy -- appears to be working closely with a guy who fits the classic definition of a "patent troll" and who just sued Google, Yahoo, MySpace, PayPal, Amazon, Match.com, and AOL over a patent (5,893,120) for storing and retrieving data using a hashing technique.

However, what I actually thought was a lot more interesting is buried a bit down in the article. Beyond suing those seven big name internet companies, the lawsuit also included "the world's largest futures exchange, CME Group, and two software companies located in the Eastern District of Texas." Which two software companies? Softlayer Technologies and CitiWare Open Source Technologies -- both of which look like web hosting/data center type places with some additional services/software included. Heard of 'em? Probably not. Mullin speculates reasonably that the two companies may have been added as a strategy to fight off any attempt to change the venue outside of East Texas.

As you may have noticed, with courts getting a bit more leeway in moving such cases, a few have been moved out of East Texas -- especially when none of the parties involved are really based there. So, now, the patent holders who so love filing there are coming up with new strategies, including suing a whole bunch of different companies so they can argue that Texas is "centrally located" or equally as (in)convenient for everyone. Yet, you have to imagine that with a couple of companies located in East Texas, they'll be able to make an even stronger case against moving the case. So, if you're a tech company that's actually based anywhere in East Texas, you may now have a really big target on your back in patent lawsuits, effectively acting as an anchor to keep the case located there.

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Filed Under: east texas, lawsuits, patents

20 Comments

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Anonymous Coward, 26 Jun 2009 @ 3:27am

This couldn't be more perfect...unless you're a company in east Texas. Here's how this will play out:
This technique will work so well, that no company will locate in east Texas and all those already located there will move to avoid getting caught in the patent troll trap. All of the tax base there will dry up and all of these judges will lose their jobs. It might take some time, but the situation will resolve itself. Though, I fear it will be a case of curing the infection by killing the host.
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Anonymous Coward, 26 Jun 2009 @ 3:33am

An open-source software company located in East Texas? They were just asking for it!
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CleverName, 26 Jun 2009 @ 5:16am

Probably just shell companies
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Anonymous Coward, 26 Jun 2009 @ 6:14am

Now I'll have to move.
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Michael L. Slonecker, 26 Jun 2009 @ 6:59am

Something seems quite strange here merely from perusing the complaint filed with the court. Beyond its naming numerous parties as defendants, and beyond its unusually casual recitation of actionable items (under our federal system it is sufficient to use "notice pleading", but this on its face appears to fall far short of the mark), the "Prayer for Relief" provides in pertinent part:

29. that the Court award a compulsory future royalty;

This is not to my knowledge a remedy that a court is empowered to grant under Title 35. Past damages, damages through the period of a lawsuit, pre and post-judgement interest, attorney fees, injunction? Yes, under certain circumstances these are possible remedies.

But...a compulsory license? This is news to me.
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Chuck Norris' Enemy (deceased) (profile), 26 Jun 2009 @ 7:21am

Re:
My thought exactly. Or they have a deal to settle for the amount of $0 and get a 2% cut of the court winnings through the back door. Devious!
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Anonymous Coward, 26 Jun 2009 @ 7:46am

It's called forum shopping, and it isn't really unusual. These guys have likely spotted a particular court or group of judges that lean towards patent holders, perhaps they are older and less technically savvy, etc. Finding a group of 80 year old judges that still drive cars from the 70s and hand write all their judgments might be a good place to start.

Since hashing techniques are quite an old concept, A quick search of google also turns up a number of other "hashing" patents, which suggests that the patent owners haven't been very zealous in protecting their work.

If you take their patent and remove everything that is common computer operations (since the 1950s) there isn't a whole bunch in the patent that is new or unique.
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angry dude, 26 Jun 2009 @ 7:50am

Re:
After reading the complaint I have a strange feeling

(http://thepriorart.typepad.com/files/bedrock_computer_technologies.complaint.pdf )

They sue a couple of tiny Texas companies, probably just shells, and a bunch of huge Delaware multinationals

The complaint DOES NOT name the actual infringing products/services..

Furthermore, I do not get how you can ask for both "be enjoined from making, importing, using..." and "compulsory future royalty"

Strange... to say the least

Do East Texas judges throw out claims of infringement which do not specifically name actual infringing products/services ?
How is discovery going to happen ?
Will they ask for the entire codebase from Google and Amazon ?
All of the hundreds of millions of software codelines ?

Any lawyers here to clarify ?
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angry dude, 26 Jun 2009 @ 8:21am

Re: Re:
oops, Softlayer Technologies is actualy quite large

But the other one is tiny
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Anonymous Coward, 27 Jun 2009 @ 2:06pm

The obvious fightback by the courts would be to start severing cases that are clearly about separate acts of alleged "infringement" -- and then moving the non-East-Texas-defendant ones out of East Texas.
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Michael (profile), 27 Jun 2009 @ 9:49pm

Re:
That is exactly what I was hoping when I read this.
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Michael (profile), 27 Jun 2009 @ 9:55pm

Re:
What about the forum area; the issue of patents has been discussed at length however the forum issue isn't something I noticed when I'd looked at similar topics in the past.

Why isn't there some electronic courtroom system where you'd only have to visit a local court (with a built in conference room) and it would link up with the remote court. There would have to be some witness of the local jurisdiction there, and the only applicable laws would be shared between jurisdictions (hence it would inherently be either a federal or international level law case even though the courtroom may be local.); how could anyone say someone violated a law in Texas without being there anyway?

With a bridged courtroom like that, the next issue would be judge. I see coin-toss OR availability being the deciding factor there.

Of course why not skip that step and have a national pool of judges outside of any involved states, and thus less likely to be sympathetic to either party.
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staff1, 29 Jun 2009 @ 8:52am

the ganders fight back
what's good for the goose...

the CAFC's more stringent rules governing transfers has forced patent holders to evolve. infringers of course would like to be sued in their back yards. inventors want at least a fair fight, suing in a neutral juris with knowledgeable judges and a short time to trial. infringers would rather drag things out til hell freezes over.
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Anonymouse, 24 Jul 2009 @ 8:49am

waaaaaaaaahahahaa
wahahaha, what goes around comes around!
what a surprise! ...NOT!

they finally get to try on themselves what they have been inflicting on others for so long.
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Can't Say, 24 Jul 2009 @ 10:18am

You don't know the half of it
Mike, I'm part of a huge lawsuit going right now and would be happy to provide my insight into why the Eastern Texas district has become patent troll friendly. My email is on the comments field.
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Anonymous Coward, 28 Jul 2009 @ 4:26pm

Re:
you do realize that Houston is considered East Texas. Not so small of an issue now is it?
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Anonymous Coward, 29 Jul 2009 @ 3:20pm

Houston is not in the judicial "Eastern District of Texas." It's in the Southern District of Texas.
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Tom Anderson, 12 Oct 2009 @ 9:52pm

"eager deletion"
Lame... this patent is exactly the same as a patent filed in 1989 by the same person.

http://www.google.com/patents/about?id=3U8XAAAAEBAJ&dq=5,893,120

Patenting "eager deletion" of hash records is LAME!!! But apparently it's LUCRATIVE, if you can get the naive East Texan judges!!!
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Ronald J Riley (profile), 13 Oct 2009 @ 7:22am

East TX New Silicon Valley
Mike Masnick,

Didn’t you know that East Texas is rapidly becoming the hottest area of the country for innovative start up companies? Inventors are flocking there for comradely, culture reasonable real estate prices and country living.

Meanwhile, Silicon Valley has become dominated by Piracy Coalition members who have strangled the area’s inventive spirit. It is not the place for start up companies. The decline will be long and painful.

Eolas is a perfect example of what inventors do for society. It is a shame that they have to sue all these big companies. It doesn’t have to be this way, those companies could change their ways and start licensing rather than trying to steal.

Perhaps both you and Joe Mullin can explain why the two of you constantly root for those who are stealing billions of dollars from America’s inventors. Mullin’s work looks suspiciously like that of Rick Frenkel which raises the question of rather or not Rick Frenkel continues to work in this area.

Ronald J. Riley,

I am speaking only on my own behalf.
Affiliations:
President - www.PIAUSA.org - RJR at PIAUSA.org
Executive Director - www.InventorEd.org - RJR at InvEd.org
Senior Fellow - www.PatentPolicy.org
President - Alliance for American Innovation
Caretaker of Intellectual Property Creators on behalf of deceased founder Paul Heckel
Washington, DC
Direct (810) 597-0194 / (202) 318-1595 - 9 am to 8 pm EST.
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Anonymous Coward, 26 Apr 2011 @ 2:30am

very sad american
i carefuly read over the said patent and it defies belief and beyond words that the examiner would have approved it. this is a really sad statement for this country and it's patent system.
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