Wednesday, September 30, 2009

Everything is bigger & better in Texas (and that includes patent litigation)

According to the LegalMetric research firm, 45% of the patent cases that went before a jury in East Texas were won by the plaintiff- that’s nearly double the national rate of 25%.
These rates may seem coincidental, until you learn that a company doesn't need to have any significant operations in Texas at all. Many small companies and corporate giants are learning that if you want to win a patent suit- take it to Texas.

This is happening to companies with more defined patent boundaries, like pharmaceutical companies, so what can we expect from software companies who have vague patent language and boundaries? Even corporate giants like Microsoft are not immune to excessive verdict rewards doled out in Texas. The company has to pay a small Toronto software firm, i4i, $249 million dollars because of patent infringement with the use of XML language. (You should consider that by 2009 hundreds of XML languages had been designed for software and is used as the default file format for countless companies including Apple.)

Some blame the litigation environment on the jury pool in but I disagree entirely. As we discussed last week, our patent system is in need of reform. Plaintiffs should not be allowed to choose jurisdictions without any rational basis. Such freedom led to an environment where organizations are able to take advantage of poor patent notice to shut out competitors and make a quick buck in the process. Unless something changes the patent environment can only get worse. What are some specific ways to limit jurisdiction eligibility to decrease the abuse of patent litigation?

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