(Chuck Muth) – Last week the FBI arrested almost every single top official in the Texas town of Crystal City, including the mayor, the city manager and all but one city councilman.
They, along with the ringleader accused of running an illegal gambling operation known as “Mr. T,” were hauled off to the hoosegow on charges ranging from bribery to conspiracy to smuggling illegal immigrants.
Meanwhile another Texas city on the other side of the state is perpetuating what I consider another form of corruption. But in this case, unbelievably, it’s all perfectly legal.
On the Tyler4Tech.com webpage headlined “IP Friendly,” we learn the city absolutely adores predatory creatures known as “patent trolls” and welcomes them with open arms.
A “patent troll” is an individual, company or law firm that obtains the rights to a nondescript patent and then threatens to sue companies they claim are infringing on the patent they didn’t even invent unless the company pays a “fee.”
Many companies end up paying the extortion rather than risk the expense – often in the millions – and time involved in actually fighting the lawsuit.
Here, let me give you some examples…
- Whataburger has been threatened with lawsuits for putting calorie information on its website and offering Wi-Fi to customers.
- Unified Messaging Solutions sued airlines, banks, and even Walgreens over an alleged patent on using email attachments.
- Mack’s Prairie Wings, a hunting supply store, was sued by a patent troll claiming a patent on online shopping carts…even though the patent was filed before online shopping even existed.
- NewEgg.com is a medium-sized online retailer that was sued by patent trolls for the exact same thing.
- Ditto.com, an e-commerce site for prescription glasses and sunglasses, has been sued by a much larger competitor that bought a patent when they learned about Ditto for the sole purpose of putting them out of business.
- Capstone Photography was sued by a patent troll that argued that the company’s website infringed on his patent because it allowed customers to search the website for their photos.
- HyVee, a grocery chain in Iowa, has been sued for infringing on a digital coupon patent issued years after the implementation of digital couponing.
- DietGoal Innovations, LLC claimed they owned the patent on digital representations – you and I would call them “online menus” – against 76 companies ranging from Chipotle to Comcast.
- As for Tyler4Tech, they bill themselves as “a consortium of Tyler, Texas’ local civic, education and private enterprise leaders, companies and organizations.”
So while it’s not an official government operation, it’s nonetheless a gaggle of prominent city fathers. And at least three members of the organization’s Executive Committee – including its chairman! – are known patent trolls themselves.
The website explains…
“Tyler serves as headquarters to the Eastern District of Texas federal court, a popular venue for patent cases due to its judicial expertise, plaintiff-friendly local rules, speedy dispositions, and principled jurors who understand the value of Intellectual Property.”
Translation: Don’t gamble suing in a jurisdiction where you’re less likely to win. Sue in our city where we have folks already pretty much in the bag for you.
Indeed, the website goes on to reaffirm that Tyler “has a network of local attorneys skilled in patent litigation,” as well as jurors who “show a propensity for understanding the true value of Intellectual Property and have awarded IP owners appropriately.”
By “propensity for understanding” they mean willing to sock it to companies that patent trolls sue with huge monetary awards. In fact, they even provide examples!
- l4i v. Microsoft $200 million
- VirnetX v. Microsoft $105.8 million
- Mirror Worlds v. Apple $208.5 million
- Fractus v. Samsung $23 million
- VirnetX v. Apple $368.2 million
- Ericsson v. D-Link, Gateway, Dell, Toshiba, Belkin, Netgear, $8 million
- Retractable Technologies v. Becton Dickerson $114 million
I believe the Yiddish term for this is chutzpah.
The bottom line is this: Congress needs to step in and stop this sort of legal corruption.
It’s not only wrong to extort companies with dubious sue-or-settle demands, but when a company opts to stand up for itself it shouldn’t be required to play against a stacked deck in an obscure little east Texas town nowhere near where the company is located.
As Tyler’s own home-grown advertising demonstrates, venue reform must be part of legislative efforts to reign in the abuses of patent trolls.
Mr. Muth is President of Citizen Outreach and Publisher of Nevada News & Views