Former Patent Litigator Becomes Federal Judge And Begins Advertising For Patent Trolls To Come To His Court (And They Have In Droves)

from the forum-selling dept

For years, you may recall that we would write about the insane nature of forum shopping for patent trolls, in which the trolls would flock to the federal courts in East Texas. Going back nearly 15 years, we wrote about how East Texas courts became grand central for patent troll cases, leading to all sorts of sketchy behavior. There are a bunch of empty office buildings setup in small Texas cities (mainly Marshall and Tyler) just to "pretend" to have offices there. Companies engaged in many patent cases started to try to suck up to residents of those small cities, in case they might be on a jury. TiVo literally bought a "Grand Champion Steer" just weeks before a jury was set to rule on a massive TiVo trolling case. Samsung threw so much money at the local "Stagecoach Days" event that it was renamed "Samsung Stagecoach Days," and built a Samsung ice rink right next to the courthouse in Marshall.

For years, people pressured Congress to fix this mess, but instead, the Supreme Court finally stepped in, with the TC Heartland ruling, and said that the proper jurisdiction should be where defendants actually are incorporated. Of course, this seemed to have the reverse effect -- as companies no longer want to be in East Texas. Apple shut down its stores there to avoid the jurisdiction.

Of course, if you thought that the judges would go quietly, you'd be wrong. It's always felt like a few judges in East Texas loved the reputation they'd built up as being super friendly to patent trolls. For a while it was Judge T. John Ward. And when he left the bench (to become a patent lawyer, natch), Judge Rodney Gilstrap stepped into the gap he left. He even tried to ignore the Supreme Court's TC Heartland decision (though the Federal Circuit appeals court was not impressed).

However, as Patent Progress notes, there's a new judge vying to be at the top of the patent troll's Christmas list, and he's in West Texas. Judge Alan Albright, a former patent litigator, was appointed to the bench in 2018 -- and he literally went on a tour to convince companies to bring patent cases in his court:

U.S. District Judge Alan Albright and attorneys who predicted last year that Waco’s federal court would become a hotbed of patent and intellectual property litigation missed their prediction just a bit.

With Albright traveling the country drumming up business and patent attorneys spreading the word that Waco’s new federal judge, a longtime patent litigator, will provide the expertise to create an efficient and welcoming environment in Waco, the response in the past year actually exceeded those predictions.

Since Albright took office in September 2018, more than 250 patent cases have been filed in the federal Western District of Texas, which includes Waco. That total eclipses the number for the previous four years combined and has made the Western District among the busiest in the country for patent cases.

It's hard to read that and not think... that's fucked up. A judge should not be "travelling the country drumming up business." There's a reason that forum shopping is a bad idea -- and this is even worse: it's forum selling. As that article notes, more and more patent law firms are now setting up business in Waco, near Albright's court, and even the troll firms in East Texas are heading just a bit west:

Waco law firm Haley & Olson announced in March it was combining forces with Mann, Tindel and Thompson, an East Texas firm that specializes in patent litigation, to capitalize on the new focus of the Waco federal court.

That should be seen as a problem, but instead, it seems to be business as usual in the federal courts of Texas.

Two law professors have now come up with a new paper delving into this troubling trend, which kicks off with a pretty telling mocked up Craigslist ad, which they say "startlingly... accurately portrays what is happening right now in the U.S. District Court for the Western District of Texas."

The two professors -- J. Jonas Anderson and Paul Gugliuzza -- lay out the problems pretty starkly:

One judge, appointed to the court less than two years ago, has been advertising his district—through presentations to patent lawyers, comments to the media, procedures in his courtroom, and decisions in patent cases—as the place to file your patent infringement lawsuit. And he has succeeded. In 2018, the Western District received only 90 patent cases—a mere 2.5% of patent suits nationwide. In 2020, the Western District is on track to receive more than 800—the most of any district in the country. Importantly, these suits are overwhelmingly filed by so-called patent trolls—entities that don’t make any products or provide services but instead exist solely to enforce patents.

The centralization of patent cases before a single judge, acting entirely on his own to seek out patent litigation, is facilitated by the Western District’s case filing system, which allows plaintiffs to choose not just the court but the specific judge who will hear their case. These dynamics—a judge advertising for patent cases and plaintiffs shopping for that judge—undermine public confidence in the impartiality of the judiciary, make the court an uneven playing field for litigants, and facilitate the nuisance suits patent trolls favor.

As they note, it seems like an easy thing to fix if Congress had the will:

Two reforms would help solve this problem: first, district judges should—by law—be randomly assigned to cases and, second, venue in patent cases should be tied to geographic divisions within a judicial district, not just the district as a whole.

The article even details how in the midst of the pandemic, both Judge Albright and Judge Gilstrap appear to be competing to rush through as many patent cases as possible, in person, so that more trolls will file in their courts:

The COVID-19 pandemic has upended American life. Millions are unemployed. Many who still have jobs—grocery store workers, delivery drivers, healthcare providers—risk their lives every day. Those of us who are privileged have learned to work entirely from home; our biggest risk is a dancing child or stray pet wandering into the background of a Zoom meeting. COVID has disrupted the practice of law, too. Even the U.S. Supreme Court has yielded, holding oral arguments by telephone and broadcasting them live for the first time. The U.S. Court of Appeals for the Federal Circuit, which hears appeals of all patent cases nationwide, has likewise suspended in-person oral arguments until further notice.

But Judge Albright appears determined to forge ahead with patent litigation as usual. Judges in other patent-heavy district courts are, too. Though some judges have compromised and held patent proceedings on Zoom, Chief Judge Rodney Gilstrap of the Eastern District of Texas, who, until last year, heard more patent cases than any judge in the country, recently denied a defendant’s motion to delay an in-person jury trial slated to begin on August 3, quoting poet Robert Frost’s idiom that “the best way out is always through.” What is going on with these judges?

They are in the midst of a vigorous competition to attract patent cases to their courtrooms. As this article shows, Judge Albright is winning. And this court competition is not good for the patent system or the court system more broadly.

As the article notes, this forum selling is the unexpected flip side of historical forum shopping. And Judge Albright seems to have figured out how to sell his court like no judge before. One of the things he'll even do is let patent holders sue in his court in Waco, transfer the case to the more convenient court in Austin... but still have Judge Albright preside over the case. Here's a simple chart of how this has played out in practice:

And again, nearly all of those are going to a single judge. If you don't see that as a problem, well, then you're probably a patent troll. Judge Albright isn't particularly shy about this either:

Immediately upon his appointment as a district judge in 2018, Judge Albright went on a media blitz, letting everyone know that his court would welcome patent litigation. The Waco Tribune-Herald reported that Judge Albright “let it be known in no uncertain terms that he would like his Waco courtroom to become a hub for IP cases.” He attended dinners for patent litigators and patent owners to extoll the virtues of trying patent cases in Waco. Judge Albright stated that he took the position in Waco because he “‘thought it was the perfect place to try and establish a serious venue for sophisticated patent litigation.’” Most tellingly, he gave a presentation at the 2019 annual meeting of the American Intellectual Property Law Association titled, “Why You should File Your Next Patent Case Across the Street from the ‘Hey Sugar,’” referring to a candy store near his Waco courthouse.

You'd think a judge would recognize just how bad this looks, but I guess not.

As the paper details, Judge Albright is the only judge in Waco, so if you file there, you're guaranteed to get him, and he's made it clear that he'll personally handle all the details of patent cases, farming out the grunt work on other cases to magistrate judges:

Secure in the knowledge that patent cases filed in Waco will be heard by Judge Albright, patent plaintiffs are even more incentivized to file in Waco because of Judge Albright’s unique assignment orders to his magistrate judge. Judge Albright assigns all cases to his magistrate to handle all non-dispositive motions—except in patent, copyright, and certain habeas corpus cases. Thus, patent plaintiffs know that Judge Albright will be personally involved in every aspect of the litigation and won’t be distracted with other, non-patent cases on his docket. That level of attention from a district judge during all stages of litigation is exceedingly rare. Delaware, for example, heavily uses magistrates in patent cases. Even the Eastern District of Texas relies on magistrates to handle important motions and pre-trial hearings, including claim construction.

For plaintiffs, choosing the Waco Division could not be simpler. Plaintiffs simply select “Waco” from a drop-down menu of divisions on the Western District’s electronic case filing system and—voila!—the case is automatically assigned to Judge Albright.

The paper goes on to detail more and more and more crazy examples of just how blatant this all is -- and why it's so problematic. At a time when there is so much else going on, I recognize that this might not seem like a priority, but it's insane. A judge is literally shopping for cases -- cases in which he's hardly an unbiased observer, having been a patent litigator before being appointed to the bench. As we've discussed at great length over the years, the closer judges are to patent lawyers, the more likely they are to support patent trolling, and not see the problems with overly broad patents, or patent trolls shaking down actual innovators.

The paper also details how Judge Albright's practices aid patent trolls (which may explain why 85% of these patent cases filed in his court are from trolls). He pushes the cases to move faster, which puts much more pressure on companies to settle to avoid the expense of litigation. And, Judge Albright is much faster than even Judge Gilstrap, whose court in Marshall was regularly called the "rocket docket" for its speed in handling patent troll cases.

And what about that TC Heartland decision that finally started pressuring Gilstrap in East Texas to transfer cases to their proper venue?

Since taking the bench, Judge Albright has likewise staunchly refused to transfer cases out of the Western District. As of July 7, 2020, he has decided thirteen motions seeking transfer away from the Western District under § 1404(a); he has denied eleven. In fact, in a recent order, Judge Albright effectively told Apple—which has been sued at least ten times in cases assigned to Judge Albright and regularly seeks to have those cases moved to the Northern District of California—to stop filing transfer motions.

They do note that the Federal Circuit recently ordered Albright to transfer one of his cases, involving Adobe, and threw some shade at his current failure to regularly transfer cases. Hopefully that means it starts pushing back on him more often.

Again, there's a lot more in the paper, and it's all crazy that this is allowed in a federal court. Congress has many things on its plate, but it should do something to fix this jurisdiction selling by Judge Albright.

Filed Under: alan albright, austin, east texas, marshall, patent trolls, patents, rodney gilstrap, texas, tyler, waco, west texas

Appeals Court Tells Patent Trolls' Favorite Judge He Can't Just Ignore The Supreme Court To Keep Patent Cases In Texas

from the not-how-it-works dept

A few weeks ago, we noted that Judge Rodney Gilstrap, a judge in East Texas who is infamous for handling approximately 25% of all patent cases in the entire country, appeared to be ignoring the Supreme Court in an effort to keep all those patent cases in his own docket. You see, earlier this year, in an important case, the Supreme Court said that the proper venue for a patent lawsuit to be brought should be where the defendant "resides" rather than just wherever they "do business." Previously, patent trolls had said that the lawsuits could be brought wherever a company did business -- which, with internet firms, meant anywhere -- allowing them to file in their favorite court in East Texas. The Supreme Court said "that's not what the law says."

But Gilstrap tried, somewhat creatively, to twist himself around those rules, by arguing that all sorts of other factors could be used to determine "residence" -- basically including (again) if you had any connection to that jurisdiction at all -- and thus continue to allow East Texas to be an acceptable venue. We listed out those factors in the earlier post, but don't need to do so again, because the Court of Appeals for the Federal Circuit has already weighed in and said "nope, that's not how it works."

The ruling is pretty straightforward. Basically, it says "when we say a defendant has to reside in that venue, we mean it."

As discussed in greater detail below, our analysis of the case law and statute reveal three general requirements relevant to the inquiry: (1) there must be a physical place in the district; (2) it must be a regular and established place of business; and (3) it must be the place of the defendant. If any statutory requirement is not satisfied, venue is improper...

The court then points out that words have meaning, and making up a "test" that is untethered to the meaning of the words in the statute is simply not acceptable.

The statutory language we need to interpret is “where the defendant . . . has a regular and established place of business.” 28 U.S.C. § 1400(b). The noun in this phrase is “place,” and “regular” and “established” are adjectives modifying the noun “place.” The following words, “of business,” indicate the nature and purpose of the “place,” and the preceding words, “the defendant,” indicate that it must be that of the defendant. Thus, § 1400(b) requires that “a defendant has” a “place of business” that is “regular” and “established.” All of these requirements must be present. The district court’s four-factor test is not sufficiently tethered to this statutory language and thus it fails to inform each of the necessary requirements of the statute.

And thus, Gilstrap's argument that a "virtual" presence in the district is enough... is not, in fact, enough:

As noted above, when determining venue, the first requirement is that there “must be a physical place in the district.” The district court erred as a matter of law in holding that “a fixed physical location in the district is not a prerequisite to proper venue.” ... This interpretation impermissibly expands the statute. The statute requires a “place,” i.e., “[a] building or a part of a building set apart for any purpose” or “quarters of any kind” from which business is conducted. William Dwight Whitney, The Century Dictionary, 732 (Benjamin E. Smith, ed. 1911); see also Place, Black’s Law Dictionary (1st ed. 1891) (defining place as a “locality, limited by boundaries”). The statute thus cannot be read to refer merely to a virtual space or to electronic communications from one person to another. But such “places” would seemingly be authorized under the district court’s test.

The court dings the other prongs of Gilstrap's test as well, showing that each is insufficient and then sends it back to the lower court to determine which other court the case should be transferred to, but making it clear that "East Texas" is not one of the options.

Filed Under: cafc, east texas, patent trolls, patents, rodney gilstrap, venue, venue shopping
Companies: cray, raytheon

Patent Trolls' Favorite Judge Comes Up With Test To Keep Patent Cases In East Texas, No Matter What SCOTUS Said

from the take-that-scotus dept

We've written a few times about Judge Rodney Gilstrap, an East Texas federal district court judge, whom patent trolls seem to love. For well over a decade, we've discussed how patent trolls absolutely love to file cases in East Texas, and in the past few years, Gilstrap has basically been the judge for patent cases in East Texas. Incredibly, in 2016, Gilstrap alone handled 20% of all patent cases in the country (that was true in earlier years as well). Not 20% of the patent cases filed in East Texas -- but in the whole country. And if you read that link, you see that Gilstrap seems (a) proud of this and (b) insists that people are upset about all the patent cases going to East Texas because they don't like small-town America -- and not because the court makes it that much easier for trolls to shake down everyone.

Now, as you may recall, the Supreme Court, just a few months ago, appeared to slam the door shut on patent troll venue shopping with its ruling in the TC Heartland case. In that case, the Supreme Court ruled that patent law is pretty clear, that you need to sue where the supposed infringer "resides." For years, the courts had ignored this -- despite it being plainly stated in the law -- and said that you could file a lawsuit wherever a company did any business (and with many companies, that means anywhere at all).

Many folks suggested that the SCOTUS TC Heartland ruling should put a real damper on patent trolls running to Judge Gilstrap and East Texas.

However, it appears that Gilstrap may have other ideas. Ryley Bennett, from the Washington Legal Foundation, recently wrote up a depressing article about how Gilstrap appears to have come up with a new "test" for patent venue that more or less wipes out the Supreme Court's ruling. The case was a patent infringement case where Raytheon sued Cray in East Texas. Cray argued for a change of venue, which Gilstrap denied (just a month before the SCOTUS ruling on TC Heartland), pointing to a sale Cray had made in East Texas. So after TC Heartland, Cray asked Gilstrap to reconsider with that new precedent. And here, Gilstrap single-handedly created a new "test" about what is meant by "resides" in, making it possible to keep many cases in East Texas. The key here was that Cray had a single sales person who worked from home in the Eastern District of Texas. And, to Gilstrap, that's enough to establish "residence."

Bennett explains why this is so problematic:

According to Judge Gilstrap, to demonstrate that a defendant maintains a regular and established place of business, there does not have to be a physical presence or place at all—that’s just a persuasive factor for the court to consider. Inventory, under this analysis, is persuasive in finding a regular and established place of business. Thus, under Judge Gilstrap’s interpretation, a plaintiff can secure its venue of choice by using downstream targets. Even when a corporation does not have property in the EDTX, under this test, if the corporation has remote (work-from-home) employees—who are reimbursed for business expenses such as cell phone and internet use, along with travel reimbursement—it can be subject to venue in a district where any of its remote employees resides.

Further, under Judge Gilstrap’s second factor, a defendant’s “representations” can be a mere advertisement about what the company does or where it is located, even if the company is located in a different state. Ironically, although Judge Gilstrap repeatedly stated that the business world has changed since the adoption of § 1400 and it should be adjusted accordingly, he cited a 1910 decision when stating that customer inquiries directed at an agent who happens to be in the EDTX should be considered persuasive when determining if there is a regular and established place of business there.

Judge Gilstrap’s third factor—benefits received—is not limited to sales revenues; rather, any benefit that the defendant derives from presence in the EDTX should be considered. Does this mean that a happenstance conversation in a restaurant with a person who then becomes a customer outweighs other factors and gives rise to a regular and established place of business? Under Judge Gilstrap’s third factor of his test, it does.

In explaining the final factor—targeted interactions—Judge Gilstrap cited a Sixth Circuit personal jurisdiction case as support that existing or potential customers, customer support, or targeted marketing efforts give rise to a regular and established place of business—the same type of personal jurisdiction considerations that the Supreme Court in TC Heartland said did not apply to venue determinations.

Because of all of this, Bennett notes that the new "test" feels an awful lot like the old rules that the Supreme Court just threw out. Not surprisingly, Cray immediately asked the appeals court to weigh in on the issue, while Raytheon has asked to leave Gilstrap's ruling in place. As it stands, CAFC is still reviewing the issue, and various parties are lining up filing amicus briefs urging the court one way or the other.

However, it does at least give the appearance of a highly criticized East Texas court judge effectively stacking the deck with this test in a manner that will allow him to ignore the clear spirit and substance of a Supreme Court ruling, in an effort to keep the patent troll case train to keep dumping cases at his courtroom doorstep.

Filed Under: east texas, patent trolls, patents, rodney gilstrap, scotus, supreme court, venue, venue shopping
Companies: cray, raytheon, tc heartland

Awful Court Decision Says Dr. Phil Producer's Video Not 'Fair Use'

from the wtf? dept

Update:: The lawyers representing Dr. Phil's production company, Peteski Productions, have contested some of the statements made both in the original link we used from The Hollywood Reporter, and in our post below. THR has updated its story, and we've matched those updates. In particular, Peteski says that the video that Rothman copied -- which she claimed was evidence for her false imprisonment claim -- was actually something else entirely. From the filings, Rothman says that the video was a "bona fide example of Dr. McGraw's conduct for her lawsuit," but Peteski says it was not showing evidence of the "false imprisonment" claim at all. Peteski's lawyers argue it was something she sought to use "for commercial gain" (which the Judge disagreed with as noted below). Peteski's lawyer also implies that the false imprisonment claims are frivolous (noting that 200 to 300 people were at the meeting, and only Rothman sued -- and argues that the real reason she used her iPhone to copy the nine second video was for "exploiting it with other media." We've updated the article to clarify that the video is not of the claimed "false imprisonment" -- and that there is some dispute over what the video actually could be used for.

We've seen some awful copyright rulings over the years, but this latest one from Judge Rodney Gilstrap in Texas* is a real corker. First covered by Eriq Gardner, over at the Hollywood Reporter, the story is a complex one involving TV personality Dr. Phil and accusations of him imprisoning a producer who worked for him. What could that possibly have to do with copyright? Well, read on...

* If you recognize the name, it's because for the past few years, he's handled a huge number of patent cases. Indeed, last year alone, he (yes, just this one judge) handled 20% of all patent cases in the US

Gardner sums up the background to the lawsuit nicely:

In 2015, television personality Dr. Phil McGraw was sued by Leah Rothman, who worked as a segment director on his show for 12 years. She alleges suffering emotional distress and false imprisonment when during a meeting, Dr. Phil locked the door, yelled profanities and threatened employees for supposedly leaking internal information to the press. Before she sued, Rothman says she attempted to get evidence by accessing a database of videos from the Dr. Phil Show archives and recording on her iPhone a nine-second clip of something she thought would be valuable to her.

All seems perfectly reasonable, right? But Dr. Phil's company, Peteski Productions, registered the copyright on just the 9-seconds of video she taped with her iPhone... and sued her for copyright infringement. Yes, really. Because nothing says "I'm contesting the claim that I falsely imprisoned you" like "wait, your supporting video evidence violates my copyright."

This should be an open and shut case for a whole host of reasons. But, as a first pass, Rothman's lawyers pointed out that Rothman was clearly protected by fair use. And she is. Except not according to one of the weirdest fair use analyses I've ever seen, courtesy of Judge Gilstrap. It should have been obviously fair use just on the transformative use question -- seeing as she wasn't using the clip for a TV program at all, but as evidence in her own case against Dr. Phil. And, it was just a short clip -- and she wasn't "selling" it. And it wouldn't harm whatever "market" there was for that clip. In short, this should be fair use. Easily. But... nope.

So let's go through Judge Gilstrap's fair use four factors analysis. First up -- the purpose and character of the use -- which looks into the nature of the use, whether it was transformative and whether it was for commercial use. Again, to me, this seems quite clear: the purpose had nothing to do with the reason the work was created in the first place, making it obviously transformative. But, Judge Gilstrap wades into swampy waters by claiming that because Rothman obtained the video via "bad faith" it's not.

Rothman did not copy to then educate the masses or to further the greater good. She copied to aid her pending lawsuit seeking money damages where she is the only plaintiff and sole potential beneficiary. It is possible that a breach of contract or some other act of bad faith may sometimes be necessary to further an important public interest and therefore such conduct might not always weigh against fair use. However, there is a difference between a defendant who “purloins” a private manuscript or confidential video for personal gain and one who obtains, or even misappropriates, materials of significant public interest.... Here, there is no countervailing public interest because Rothman copied the work at issue “solely” for use in her own lawsuit.

This seems wrong on multiple levels. He points mainly to other cases where "bad faith" was an issue, mainly Harper & Row v. Nation Enterprises, in which The Nation published a large excerpt of Gerald Ford's memoir, and it was deemed not to be fair use, in part because of the Nation's own actions and intent. But, in that case, it was clear that what the Nation had done was to publish the excerpt from the book to reveal what was in the book and to undermine the sales of the actual book. In other words, it was in competition with the book.

In this case, the intent was to use it as evidence. That has nothing to do with the copyright aspect.

Similarly, Judge Gilstrap's weird focus in claiming that she was the "sole potential beneficiary" and there was nothing here to "further an important public interest" also seems... just wrong. Rothman's effort was to expose what she felt was dangerous behavior by a very public figure. How is that not furthering the public interest?

Gilstrap notes other cases where "bad faith" harms fair use rulings, but the "bad faith" is always about infringing the copyright. Here, he seems to be arguing that the "bad faith" is... because she wanted to prove something bad about Dr. Phil. I can't even see how that's "bad faith" at all.

From there, Judge Gilstrap looks at whether the use is transformative. Again, this should be an easy yes, given that the use was for an entirely different purpose. Hell, Congress even points out that "reproduction of a work in ... [a] judicial proceeding" is an example of what is meant for fair use. Gilstrap even quotes that line... and then twists himself into something of a logical pretzel to not care much about it:

While it is true that many courts and commentators have acknowledged the general principle that use of a work in a judicial proceeding may be considered fair use, fewer have addressed whether copying an entire work in preparing a complaint is transformative. For example, Wollersheim, upon which Defendant relies, includes only a cursory discussion of fair use and makes no mention of transformativeness.... Instead, she copied the work to give to her lawyers in her California lawsuit. Even if such a use is transformative, it is not highly transformative.

WHAT?!? Isn't the lawsuit she filed based, in part, on the video "commentary and criticism"? This seems to completely twist the meaning of transformativeness to make it nonsense.

Onto commercial v. non-commercial. Here, at least, Gilstrap admits that using it in a lawsuit is "non-commercial" though he knocks it as "self-serving." Peteski claims that the judge accepted all of Rothman's argument as true at this stage of the legal process, and that it has evidence that Rothman was motivated by profit -- but that's not clear from the ruling. If this were in response to a Motion to Dismiss, it would make sense for the judge to accept one side's arguments as true, and not look at evidence. But this is a ruling on a Motion for Summary Judgment, at which point, the judge can weigh some of the evidence. Still, given his arguments before, he weighs the first prong heavily against Rothman, and (as is often the case) the first prong is considered the most important in a fair use ruling.

From there, we got to the "nature of the work." Again, it seems clear that this should weigh in Rothman's favor. She took a short video clip to show, as she claimed, evidence of Dr. Phil's actions. It's evidence. But Judge Gilstrap says, first, that the "factual v. creative" nature makes it "neutral" -- i.e., favoring neither party, but that because it's "unpublished" that weighs "strongly against fair use." Again, this appears to be misapplying the rules on "unpublished" works. The idea behind that part of the fair use test is to avoid someone revealing something prior to it actually being published and thus undermining the market for it. But that's not the intent at all here. There is no indication that the clip was going to be published at all.

The third factor is "the amount used." And, again, I'm dumbfounded by Gilstrap's reasoning. Remember, this is a 9-second clip that Rothman filmed using her iPhone. Nine seconds of a much larger archive. But... because Dr. Phil's company registered just those nine seconds after Rothman had filed her lawsuit, Gilstrap argues that it's "the entire work."

Neither side disputes that Rothman copied the entire work by recording the nine-second video from The Dr. Phil Show archives.

Of course, this also goes completely against other courts -- such as the 2nd Circuit (which admittedly, Gilstrap's court is not in...) -- which have said the appropriate determination on this prong is whether or not the amount of the work was more than necessary for the use. Here, clearly, the nine seconds was what Rothman felt was necessary to demonstrate some aspect of Dr. Phil's past behavior.

Finally, we get to "the effect on the market." At least on this one, no pretzel logic can convince Gilstrap that this video harms the market for that clip and agrees that it "weighs in favor of fair use." This, despite the fact that Dr. Phil's company tried to argue that because "there is an illicit market for videos showing celebrities, such as Dr. McGraw, in a less than favorable light." The judge properly notes that there's no evidence that Rothman was trying to sell the clip into such a market and gives her this one point for fair use.

But adding it all up, it's pretty clear where Gilstrap has come down on this one, and it's against fair use.

Defendant, by her own admission, took an unpublished work that did not belong to her in violation of confidentiality agreements with Plaintiff “solely” for her personal benefit rather than for commentary, criticism, or public benefit. In light of these circumstances, based on the undisputed facts in the record, and after carefully weighing all the factors discussed above, the Court concludes that summary judgment in favor of Plaintiff is appropriate.

This is craziness. The ability to misuse copyright in such a manner should be horrifying. It certainly appears that the clear intent here -- even just in registering the copyright on just those nine seconds of video, let alone suing over it -- was to burden Rothman for suing Dr. Phil and to try to silence her. This is not the purpose of copyright, and this ruling makes a complete travesty of copyright laws. Even those who tend to support strong copyright should be horrified at this result. Silencing someone trying to prove that her boss falsely imprisoned her is not the purpose of copyright.

Hopefully Rothman appeals, and the appeals court smacks this one down. It's an awful ruling in an awful case.

Filed Under: copyright, dr. phil, fair use, leah rothman, phil mcgraw, rodney gilstrap
Companies: peteski productions

Court Has An Opportunity To Finally End The East Texas Patent Troll Docket

from the shut-it-down dept

It's been nearly ten years since we first wrote about the East Texas district court, based in Marshall, Texas, (and Tyler, Texas) and the fact that patent trolls have been flooding that court with cases. The trolls claimed they liked East Texas because the judges worked quickly and because they "understood" patent issues. The reality, of course, is that East Texas became notorious for a few judges who were insanely pro-patent troll, and ran their cases in a manner that helped out trolls immensely. It's become a cottage industry, leading to some weird situations, such as the time that Tivo (involved in a patent lawsuit at the time) literally bought a bull right in Marshall, Texas. Perhaps no company has "invested" more in winning over folks in Marshall than Samsung, which not only sponsored the local ice rink, but also gives scholarships to high schoolers there, donates to local schools and takes kids on semiconductor factory tours -- all out of the kindness of its corporate heart, no doubt.

The top judge for patent cases in East Texas used to be John Ward, until he "retired" to join his son in a local law practice representing patent trolls. Then the crown went to Judge Rodney Gilstrap, who is handling a ridiculous number of patent cases. In 2014, he was given 968 patent cases -- or 20% of all patent cases filed in the country. Given that, perhaps it's not surprising that he sometimes appears to completely forget about some cases he's handling. This is the same Judge Gilstrap who has never (not once) granted attorneys' fees to a defendant, despite all of the cases he's heard.

If you haven't figured it out by now, something is totally screwed up with the patent system. It's pretty clear that what we've been witnessing for over a decade is what's known as "forum shopping" in which plaintiffs seek out specific courts known to favor them, but with patent trolls and East Texas it's been taken to a new level. And, notably, a few other courts have been trying to get into the business as well, with Delaware leading the charge over the past few years. Normally, forum shopping is frowned upon, but it's been allowed in patent cases for way too long... and there's actually a chance to stop it. In 1990, a ruling by the Court of Appeals for the Federal Circuit (CAFC, the "patent appeals court") in VE Holding v. Johnson Gas basically opened the floodgates for forum shopping in patent cases.

But there's a new case that has the potential to put an end to this forum shopping. In Re: TC Heartland is another patent forum shopping case, in which an Indiana-based company is looking to get a patent case tossed out of a Delaware court over jurisdiction. EFF, together with Public Knowledge and Engine, have asked the court if it can weigh in with an amicus brief, flat out asking the court to overturn the VE Holding case, and to end forum shopping in patent cases.

Congress did not intend for patent owners to be able to sue in any district in the country, no matter how tenuous the links the purported infringer has to the district. Amici ask that this Court restore balance in patent litigation. Amici support Petitioner in asking this Court to grant the petition for mandamus and recognize that VE Holding is no longer good law.

One hopes that CAFC will listen -- or, barring that, that the Supreme Court might weigh in and fix this aspect of patent law, as it's fixed a number of other problems with patent law over the past few years.

Filed Under: cafc, east texas, forum shopping, jurisdiction, patent trolls, patents, rodney gilstrap
Companies: tc heartland

Patent Loving East Texas Judge Clips Wings Of Largest Patent Troll

from the go-away-now dept

Earlier this year, we noted that patent trolls had struck back, filing a ton of new cases this year. The leading patent troll was a firm called eDekka: Like many patent trolls, not much is known about eDekka, but it's represented by Austin Hansley, who just happens to represent all three of the top patent troll lawsuit filers in that graphic above: eDekka, Data Carriers and Wetro Lan (you may recall Wetro Lan, for using an expired bogus patent on a basic firewall to troll lots of companies -- and also for its name (say it out loud)). eDekka, though, topped the list with a ton of lawsuits over US Patent 6,266,674, for "random access information retrieval utilizing user-defined labels."

However, in a surprise move, Judge Rodney Gilstrap, in the Eastern District of Texas, has just tossed out 168 lawsuits filed by eDekka, after noting that the '674 patent is not valid under Section 101 of the Patent Act. As recent Supreme Court rulings have made clear, you can't just take a standard thing that people have done for ages, and "do it on a computer" to get a patent. And that's the key problem that Judge Gilstrap notes in his ruling:

As summarized above, the claimed idea represents routine tasks that could be performed by a human. While the generic requirement of a “data structure” is included, Claim 1 essentially describes the common process of receiving, labeling, and storing information, while Claim 3 encompasses retrieving such information.

And thus, the patent covers nothing more than an "abstract idea," which are not patentable under Section 101.

But... that's not all. In this one single order, Judge Gilstrap says that everyone else who has been sued under this patent shall be considered prevailing parties in their lawsuits and then issued a separate order allowing all of the defendants sued by eDekka to jointly file a brief asking for attorneys' fees:

The Court ORDERS Defendants to file a consolidated brief of not to exceed fifteen (15) pages in support of any and all claims for reasonable attorney fees...

As Joe Mullin notes in his story on this (linked above), this is especially surprising from Judge Gilstrap:

Just the invite is a sign of changing times: in his four years on the bench, Gilstrap has never granted attorneys' fees to a defendant.

Indeed, as we've pointed out just recently, Judge Gilstrap had become something of a patent troll favorite down in East Texas. Perhaps that's changing...

Filed Under: abstract ideas, austin hansley, east texas, labels, patentable subject matter, patents, rodney gilstrap
Companies: data carriers, edekka, wetro lan

East Texas Court Finally Issues Newegg Order Two Years Late; Judge Upset About How Newegg Handled Things

from the might-want-to-look-in-the-mirror dept

Last week we wrote about an incredible situation in East Texas, where Judge Rodney Gilstrap had not issued a ruling in 20 months on a filing by Newegg concerning a ridiculous jury decision. As we had noted, everything about the case was fairly ridiculous. The patent in question, 5,412,730, was ridiculous and never should have been issued in the first place. The troll who owned it, TQP, should never have been allowed to shake down hundreds of companies by claiming that anyone encrypting web traffic infringed. TQP was able to bring in $45 million in settlements from this one bogus patent alone. Newegg brought out the biggest names in encryption to point out that the patent was bogus, and also pointed out that even if the patent was valid, it clearly did not infringe. No matter, the East Texas jury still sided with the troll, because that's East Texas.

Newegg, in response, asked Judge Gilstrap to basically overrule the jury, and issue a "Judgment as a Matter of Law" (JMOL) which is basically the judge saying that the jury got the law wrong in determining its verdict. And then... nothing. As new things happened in related cases, Newegg filed updates with the court, as kind of a nudge. Newegg had vowed to appeal the case, but was procedurally unable to do so until Gilstrap ruled one way or the other on the JMOL. So, eventually, last week it took the somewhat extreme step of filing a Writ of Mandamus with the appeals court, basically asking it to order Judge Gilstrap to do his job and issue an order.

TQP quickly filed a weak and silly opposition to the writ, not addressing the actual issues raised (because what are they going to argue -- that the judge should never rule on the case?). And before Newegg could reply, it appears that someone in Judge Gilstrap's office finally woke up and issued an order, siding with Newegg in the JMOL. In short, after doing nothing for 20 months, leaving everyone hanging on a jury verdict over this bogus patent, and ordering Newegg to pay $2.3 million, the court said, "Oh yeah, jury wrong, no infringement":

The Court concludes that under either Newegg's or TQP's interpretation there was not a showing of substantial evidence that the claim limitation is infringed.

In other words, no infringement, the jury was just wrong, everyone get on with their lives. Seems like this could have happened quite a long time ago, no? At the end of the filing, Judge Gilstrap finally addresses this issue and rather than being apologetic, he appears to be pretty angry at Newegg. As for why this happened? Well, that gets buried in a footnote:

After Newegg’s Petition for Mandamus was docketed in this case, the Court, among other actions, immediately asked the District Clerk to investigate why its systems had failed in this case, both to understand the issue and to, hopefully, determine a way to prevent such an occurrence in future. District Clerk David Maland forwarded his findings to the Court:

I am responding to your inquiry of July 8th as to why defendant Newegg's posttrial motions have not been appearing on the 6 month CJRA pending motion report. Upon inquiry, it was discovered that an order staying Case No. 2:11-cv- 428, a case with a similar number, was inadvertently docketed in the instant case on June 7, 2013 (docket entry #242 - see attached screen shot; erroneous order also attached). A note was made by the docket clerk at that time that the stay order was filed in error, but she neglected to lift the stay flag in the database. The bottom line is that a stay was created when the erroneous order was entered in this case and the stay flag remained in place until it was discovered and removed on July 8, 2015. This prevented any pending motions in this case from showing on your pending CJRA motions report during that time period.

Please accept my deepest apology for this situation. We have advised the deputy clerk in question of her error and have taken curative actions designed to avoid repetition of this kind of error. Please contact me if you have any questions.

So, yes, there's an apology there from the court clerk, but you'd think that the judge might want to issue one as well. But, no, he goes... the other way, scolding Newegg.

The Court is aware that more time has passed since the briefing has been complete on Newegg’s Motion than is optimal. However, although approximately 20 months have passed since the trial in this case, the time at which Newegg’s Motion for JMOL was fully briefed and Newegg’s Supplements were before the Court—the point in time where these matters typically would have been decided—was approximately 12 months ago. While Newegg did file an electronic notice with the Clerk’s office during this time (approximately 8 months ago), this is the sole action that Newegg has taken. Never once in this time has counsel for Newegg directly contacted the Court’s staff inquiring about this matter. How this situation could simultaneously be so prejudicial that a resort to mandamus might be considered while, at the same time, Newegg could not be troubled to pick up a phone and call the Court’s staff is baffling.

Finally, the Court intends to address, by written opinions, the issues that it has carried within a reasonable time. The Court, like most courts, has a busy docket, which periodically may cause more time to pass in a particular case than is optimal. In the future, the Court suggests that the parties themselves would be better served (and costs reduced) if they elected not to shoot first and ask questions later.

This is both misleading and ridiculous. First of all, Newegg repeatedly (four times) had filed additional information with the court, which you'd think should be sufficient to remind the court that it has a pending issue to attend to. And while it is true that Newegg's lawyers did not call the court clerk to find out what's up, Newegg's chief legal officer, Lee Cheng, says that's because basically everyone warned them that the East District Court does not look kindly on parties reaching out to the court in such a manner. Cheng tells me:

I asked my counsel to do everything possible to expedite judgment. Since pretty much the verdict was delivered. I’d specifically inquired whether we could/should call and/or write and/or file a notice on a monthly basis politely reminding the Court that we were awaiting judgment, if for nothing else but to build a record. I was specifically advised by counsel and local counsel (based on his knowledge of local practice) that the Court would likely not look kindly on repeated reminders to issue a judgment. We reminded the Court as frequently as we dared—4 times.

We asked. We asked. We asked. We asked. We were advised strongly to avoid ex parte and/or repetitive (after 4 attempts) requests. Then we filed a very respectful Mandamus petition, almost 15 months after the final briefing on a renewed JMOL motion. Newegg did not attribute any ill intent or will as the cause of delay. Hardly a “shoot(ing)” and not even remotely, under any objective standard, premature.

Separately, Cheng responded to Gilstrap's closing whine that his docket is so busy that this one slipped through the cracks, by noting that there are ways to deal with that:

I would continue to suggest, with utmost respect, that his incredibly busy docket could be lightened if he were to grant venue transfer motions more frequently that are almost certainly supported under binding Supreme Court precedent, and if he and his clerks didn’t have to deal with extra motions seeking permission to file Section 101 challenges to patent validity permitted under Alice.

In other words, maybe it's time for East Texas to give up its reputation as welcoming patent troll lawsuits at every opportunity and send those lawsuits, that are clearly about jurisdiction shopping, to other courts where they can be handled more efficiently.

Filed Under: east texas, encryption, patent trolls, patents, rodney gilstrap, writ of mandamus
Companies: newegg, tqp

Newegg Asks Appeals Court For Help After Waiting Nearly Two Years For East Texas Judge To Actually Rule In Patent Case

from the get-moving-now dept

You may recall that back in November of 2013, we wrote about an absolutely insane ruling by a federal jury in East Texas, arguing that e-commerce vendor Newegg infringed on an absolutely laughable patent, held by a patent troll named TQP, which claimed to cover encryption. Newegg immediately promised to appeal the ruling -- so you may be wondering where that appeal is right now. So is Newegg. Yesterday, the company filed a petition for a Writ of Mandamus basically asking the appeals court to tell the district court to do its damn job and issue a final ruling (either on behalf of Newegg, or against it so it can appeal). Basically, Newegg has been stuck in limbo for nearly two years on this case for no clear reason. The judge in the case, Rodney Gilstrap, has just been sitting on the case, doing absolutely nothing for nearly two years, leaving Newegg unable to appeal.

The now-expired patent in question, 5,412,730, and here's the entirety of the claims:

1. A method for transmitting data comprising a sequence of blocks in encrypted form over a communication link from a transmitter to a receiver comprising, in combination, the steps of:

providing a seed value to both said transmitter and receiver,

generating a first sequence of pseudo-random key values based on said seed value at said transmitter, each new key value in said sequence being produced at a time dependent upon a predetermined characteristic of the data being transmitted over said link,

encrypting the data sent over said link at said transmitter in accordance with said first sequence,

generating a second sequence of pseudo-random key values based on said seed value at said receiver, each new key value in said sequence being produced at a time dependent upon said predetermined characteristic of said data transmitted over said link such that said first and second sequences are identical to one another a new one of said key values in said first and said second sequences being produced each time a predetermined number of said blocks are transmitted over said link, and

decrypting the data sent over said link at said receiver in accordance with said second sequence.

2. The method as set forth in claim 1 further including the step of altering said predetermined number of blocks each time said new key value in said first and said second sequences is produced.

TQP, a company controlled by notorious patent troll Erich Spangenberg (who now claims to have left the patent trolling business), claimed that this covered basically any encryption online and it sued hundreds of companies with most choosing to settle rather than fight -- with a variety of companies paying out over $45 million to settle TQP lawsuits. But, you know, that's not how NewEgg rolls, with its pledge to never settle with patent trolls.

The company went to court fighting this patent, even bringing out some of the biggest guns possible, having Whit Diffie and Ron Rivest appear as expert witnesses, explaining how ridiculous the patent in question was and how everything in the patent was in use in the market well before the "inventor" on this patent, Mike Jones, applied for it. And yet, because it's east Texas, back in November of 2013, the jury sided with the patent troll.

That's the stuff you already know. As mentioned, Newegg promised to appeal, but first it asked Judge Gilstrap to set aside the jury's verdict, as he is able to do. And then... nothing. As you can read in the petition for the Write of Mandamus and the even lengthier appendix to the petition, Newegg is getting pretty damn tired of waiting around. If Gilstrap rejects the company's request, then Newegg will appeal, but without him doing anything, the company is stuck in limbo, unable to actually move forward on appeal.

This Petition involves a case tried in November 2013 that still has not reached any appealable judgment. Although the jury found infringement and awarded $2.3 million in damages to TQP Development, LLC (“TQP”), it is beyond any reasonable debate that Newegg does not infringe the asserted claims, and Newegg sought appropriate post-trial relief on that basis. In the absence of a judgment, however, Newegg has been unduly burdened with an untenable $2.3 million liability on its books for 20 months and counting, which prejudices Newegg’s ability to make business decisions regarding that considerable sum.

Newegg has respectfully encouraged the district court to decide Newegg’s motion for judgment as a matter of law no fewer than four times, and has communicated the prejudice caused by the delay. It is now approaching two years after trial and no action has been taken by the district court on Newegg’s motion. This is several times longer than the time it has taken most other patent cases, tried before the same judge and around the same time, to reach final judgments. With no appealable judgment, and none ostensibly forthcoming, Newegg has no realistic recourse aside from seeking a writ of mandamus.

Newegg further points out that in the very same court, with a different judge, it was ruled that Intuit did not infringe on TQP's patent, despite using the identical encryption system on its site, and making the same arguments as Newegg.

Moreover, in a closely related case brought by TQP asserting the same patent and the same claims against Intuit, Inc., Judge Bryson of this Court (sitting by designation) granted Intuit summary judgment of non-infringement on the same grounds Newegg argued. Judge Bryson’s ruling applied to Intuit’s accused systems that were identical to Newegg’s, was based on testimony from the Newegg trial, and was made under a claim construction slightly broader (and thus more favorable to TQP) than the one given in Newegg’s case. Although Newegg was already entitled to judgment of non-infringement prior to Judge Bryson’s ruling, the force of collateral estoppel from the ruling further vindicates Newegg’s positions. This is not to mention the principles of comity that strongly encourage deference by Judge Gilstrap to Judge Bryson’s prior ruling on the exact same issue.

Newegg's filing goes through the full timeline, in which it has repeatedly asked the court to actually issue a final ruling one way or the other so it can get on with things. And... nothing.

Newegg notes that it's been sitting there with this giant $2.3 million liability that it can't do anything about and it also fears that the longer it waits, the more likely it is that TQP dissolves, leaving Newegg with no way to go after the company for fees and "other relief."

The failure of the district court to act while Newegg’s prejudice compounds cannot be remedied by awaiting the ordinary course of a final judgment and appeal. Nor can Newegg effectively do anything before the district court to avoid further delay. Indeed, Newegg attempted to encourage prompt resolution of this case in the district court no fewer than four times—twice requesting an oral hearing and twice submitting controlling dispositive supplemental authority—but can only do so much at the district court level to move things along. Newegg has been patient but firm, and filed the present Petition only as a last resort when no action from the district court appeared to be forthcoming 20 months after trial.

Newegg’s post-trial appealable judgment has already been delayed up to four times longer than other patent cases that went through trial around the same time as Newegg (November 2013) before the same judge. See, e.g., Hitachi Consumer Elecs. Co. v. Top Victory Elecs. (Taiwan) Co., No. 2:10-cv-260-JRG (5 months from April 2013 trial to appealable judgment); Wi-Lan Inc. v. HTC Corp., No. 2:11-cv-00068-JRG (5.5 months from October 2013 trial to appealable judgment); Cassidian Comms., Inc. v. microDATA GIS, Inc., No. 2:12-cv-00162- JRG (7.5 months from December 2013 trial to appealable judgment); Google Inc. v. Beneficial Innovations, Inc., No. 2:11-cv-00229-JRG (7 months from January 2014 trial to appealable judgment). Even considering the time from the close of post-trial briefing to judgment, the delay in Newegg’s case is still excessive— while Newegg has been waiting 15 months since briefing closed on its JMOL motion, the cases cited in the preceding sentence received judgments only two to five months after post-trial briefing closed. All told, data pulled from Lex Machina shows that Newegg’s case has been pending longer than 98.8% of cases filed before the same judge. Newegg’s case has taken far, far too long to reach an appealable final judgment.

In the filing, Newegg notes that it "makes no assertions" of "bad intent" by Judge Gilstrap. However, in an email from Newegg's Chief Legal Officer, Lee Cheng, you can sense his frustration:

Many have expressed concern and dismay about the rules, practices and rulings of various federal judges in the Eastern District of Texas (“EDTX”) in patent cases, including Judge Gilstrap. There is a common perception that the judges in EDTX adopt rules, engage in practices and issue rulings (or instructions that lead to jury verdicts) that favor plaintiffs, or which encourage or force defendants to settle even meritless cases to avoid the cost and risk of trial in EDTX. Some examples of such rules, practices and rulings are identified in the Petition. Commentators have speculated as to the judges’ motivations. Statistical evidence on patent infringement filings in EDTX generally, and with Judge Gilstrap specifically, seems to support the proposition that the venue and Judge Gilstrap are indeed favorites of the patent plaintiffs’ bar.

While he insists that the company does "not wish to speculate as to the motives or rationale" behind what's happening, "actions speak louder than words."

The facts of this matter are objectively egregious, and we have not received any guidance or reasonably acceptable explanations from Judge Gilstrap for almost 2 years for the incredibly prejudicial and extended delay in providing us with an appealable judgment. We need, and we deserve, justice and judicial relief in this matter now, under these exceptional circumstances.

This really is an incredible story. The whole thing is ridiculous and provides yet another reason why people should raise serious questions about the way in which the district court in East Texas handles its business.

Filed Under: appeal, cafc, east texas, erich spangenberg, patent troll, patents, rodney gilstrap, writ of mandamus
Companies: newegg, tqp