State of Patent Infringement in TX

February 18, 2016

Changes on the Horizon for Texas Patent Infringement Cases

East Texas is a hub of patent litigation. It has attained this status thanks to the speed with which such cases were often ushered through the courts, which is thought to favor plaintiffs. Patent holders also liked to file suit here because judges were less likely to rule on summary judgment, preferring to allow juries to decide whether or not defendants had infringed patents. This favorable climate led many patent holding companies to set up shop in East Texas. However, the tide may be turning.

 

Recent Patent Infringement Court Cases

One case was recently decided in a Tyler, Texas courtroom in which patent holding company VirnetX prevailed over tech giant Apple. VirnetX claimed that Apple infringed its patents for technology that is used in Apple's FaceTime app as well as its VPN On Demand service. The trial has been ongoing since 2010, and this is not the first time that VirnetX has been awarded multiple millions of dollars in a judicial decision. This time, the judge declared that VirnetX should receive $625 million. A previous ruling in 2012 gave the holding company $368 million. That verdict was overturned on appeal, leading to the new trial.

A similar case involving Samsung and Imperium IP Holdings reached a decision in which the plaintiff received $7 million. Imperium argued that Samsung was infringing three of its patents. They have another case against Apple involving the same technology that is still pending.
 

The Patent Troll Problem

The problem with these scenarios is that VirnetX and Imperium are patent trolls. Instead of designing or manufacturing anything, VirnetX specializes in scooping up patents which they assert against large companies with deep pockets. The technology that VirnetX claims Apple infringes was created and patented by Science Applications International Corporation. For years, VirnetX has stated that they will be marketing the technology. However, they don't seem to be moving toward this. They simply sue larger companies instead.

Most companies avoid litigation. It's divisive, expensive and risky. That's not the case with patent trolls. They've been claiming patent infringement and winning big in the courts for so long that they don't hesitate to file suit. Some of the companies they target don't make much effort to defend themselves. The hint of litigation is enough to have them paying licensing fees.

This occurs often in Texas and elsewhere. Patent trolls, or lawyers who represent them, send vague, unsubstantiated demand letters that allege infringement. The letters hint at litigation that can be avoided with a licensing fee. Smaller companies don't have the knowledge to recognize that these letters could be refuted by a patent attorney.
 

Texas Patent Law Changes

Texas law changed in September 2015 when it became a crime to send bad faith demand letters. Essentially, this means that patent trolls can be prosecuted for sending vague, baseless demand letters. The Attorney General now has power to bring charges against the companies that send such letters, making it less likely to occur in the future.

These changes may make the recent VirnetX v. Apple case a rare thing. Patent trolls are likely to be more wary when it comes to going after large corporations if they believe that the Attorney General will be coming after them. However, smaller business owners and individuals will remain more vulnerable.

Contact Texas patent attorney Jeff Williams to learn more about how to protect yourself from patent trolls and all other intellectual property needs.
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