Apple to Close East Texas Stores to Thwart Patent Trolls

Too often in recent memory, patent trolls have forced organizations both large and small to make decisions that run counter to their business plans. This is the case with Apple, which recently took the drastic step of announcing its plans to close two of its stores in the Eastern District of Texas. Though they do not say it in so many words, in-the-know observers understand that the closure of these stores is a bid by Apple to protect itself from patent troll litigation.

What Are Patent Trolls?

Sometimes called a Patent Assertion Entity, or PAE, a patent troll is not an inventor or a creator. They don’t manufacture a product or provide a service. Instead, they exist solely to make a profit through patent infringement litigation.

The troll picks up patents at an extremely low cost, usually from an organization that is going through a difficult time and needs to divest itself of assets. The PAE swoops in to buy the patents, then starts looking around for companies that may infringe on the rights of those patents.

Once a potential infringer is identified, the troll sends a letter informing the rival company. They offer a license to the infringer, which may cost hundreds of thousands or even millions of dollars. The infringer has a choice to either pay up or face litigation.

Do the infringement claims have merit? Sometimes yes, and sometimes no. Nonetheless, companies tend to simply pay the licensing fees because it ultimately is cheaper, less time consuming and less disruptive than having to deal with patent litigation, which could drag on for years.

Patent Trolls and the Eastern District of Texas

If they can, patent trolls love to sue for infringement in the Eastern District of Texas. This is because judges and juries in this district have proven to be unusually sympathetic toward the claims of plaintiffs in patent cases. Just a few years ago, a study concluded that approximately 40 percent of all patent infringement cases were filed in this district, with plaintiffs hoping to take advantage of the favorable atmosphere.

However, recent changes to the law state that patent infringement cases must be brought in places where the defendant has “a regular and established place of business.” This means that if a company isn’t operating in this district, then they cannot be sued there.

The Connection Between Apple, Patent Trolls and The Eastern District of Texas

Apple is always the target of patent trolls, and in recent memory, a court decided that the tech-giant should pay VirnetX $440 million in connection with the company’s patents. The Eastern District of Texas remains a hotbed for patent infringement lawsuits, but Apple is headquartered in California. If they don’t have a permanent place of business within the Eastern District, they cannot be sued there.

Currently, Apple has two stores within the district. These will be closed in mid-April, with employees being shifted to a shopping center in Dallas. In its announcement, Apple mentions upgrading the store and streamlining, but this is a clear maneuver to get out from under the favorable conditions for plaintiffs in the Eastern District.

Apple is a huge and incredibly successful company that can well afford to close a couple of stores without it affecting their bottom line too much. They can even afford to pay out some sizable settlements when patent trolls come knocking. However, paying patent trolls and getting mired down in years of litigation likely are not parts of Apple’s business plan, so this contingency becomes necessary.

Protection Against Patent Trolls

Firms both large and small would be wise to look for ways to protect themselves from patent trolls. One of the best ways to do this is with the assistance of experienced intellectual property and business attorney. Their advice may help to ensure that patent trolls don’t succeed when they try to press a meritless lawsuit on an unsuspecting victim.

Schedule a free consultation with the Law Office of Jeff Williams to get gudiance on your intellectual property needs.

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Author: Jeff Williams

Jeff Williams is an experienced mechanical engineer and lawyer that consults closely with clients in a strait forward and clear manner. He brings a particular set of strengths and unique perspectives to the firm.

Jeff received a B.S. in Mechanical Engineering from Arizona State University in 2005. He was an engineer for a number of years at a number of large corporations before pursuing his law degree. He graduated from Texas A&M University School of Law (formerly Texas Wesleyan University School of Law) with a J.D. in 2010. By combining his education and prior work experience into the field of intellectual property law, Jeff has developed key skills to fully assist clients.

2015: Rise of the Patent Troll

January 20, 2016

Patent Troll Litigation on the Rise Despite Efforts to Curb It

Non-patent entities, commonly referred to as NPEs, are known for buying patents and then suing others for infringement. NPEs don’t make or sell anything. Instead, they turn a profit by winning settlements and judgments. It’s methods such as these that have led people to refer to NPEs as “patent trolls.”

Companies and government entities are well aware of the tactics employed by patent trolls. They are seen as such a problem that legislation has been passed that aims to curb their activity. Despite these efforts, a recent report by RPX Corp. demonstrates that NPEs filed more patent litigation lawsuits in 2015 than they did in 2014. A total of 3,604 lawsuits represents a steep rise over the 2,891 similar complaints that were launched in the previous year. This increase comes despite efforts by the American government to curb such activity.

Efforts to Curb Patent Trolls

The 2011 America Invents Act ostensibly provides the government with the power it needs to persuade NPEs away from suing others for infringement. In particular, the Act is meant to minimize the number of infringement lawsuits that are aimed at computer software. The Patent Trial and Appeal Board was instituted as part of the act. It allows participants to circumvent responding to allegations of infringement by focusing on whether or not a patent should have been granted in the first place. Many critics of the U.S. patent system have contended that a majority of infringement lawsuits are moot because the patent was never valid in the first place.

The Patent Trial and Appeal Board is already making progress. More than 4,000 patent challenges have been filed with the board since its inception. Many of these never turn into full-fledged lawsuits thanks to the ability to challenge the validity of the patent at issue.

The U.S. Supreme Court and other courts are also joining in the effort by striking down patents that are invalid. This maneuver is helpful when it comes to preventing NPEs from trying to profit through infringement claims. Nonetheless, the battle is clearly ongoing since the number of NPE lawsuits continues to rise.

Patent Troll Case Study

Still, cases like Alice Corp. v. CLS Bank International show that the U.S. Supreme Court is doing its part to lessen the number of patent troll lawsuits. The court effectively invalidated the patents that were being asserted by the Alice Corp. against CLS Bank. This put an end to yet another specious lawsuit brought by an NPE.

NPE lawsuits waste a great deal of time and resources. Whether the complaints are lodged against companies large or small, it’s necessary for executives to prioritize their response, and that often means having to shift focus from the organization’s reason for existence. It’s a troubling trend that needs to be met with sturdy resistance.

Patent Troll Resolution

If you or your company are being accused of patent infringement, then it is important to enlist the help of a skilled Texas intellectual property attorney. The Law Office of Jeff Williams has the necessary experience and knowledge that can help you protect your rights. Don’t let an NPE lawsuit distract you from your business or erode your company’s profitability. It may very well be that the patent you are accused of infringing is invalid. Let the Law Offices of Jeff Williams provide you with the guidance and insight you need.