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March 28, 2017

Supreme Court Ruling May End Patent Troll Sanctuary

MARSHALL, Texas—Remember Prenda Law, the group formed by Chicago-based attorneys John Steele, Paul Hansmeier and Paul Duffy? They're the ones who, in 2012, hatched a plan to discover the IP addresses of people who downloaded porn (including some owned by the attorneys themselves) from various websites (including some owned by the attorneys themselves) and threatened those porn watchers with very public lawsuits for allegedly having violated the copyrights on that XXX material, then offered to settle those cases for a few thousand bucks so the viewers wouldn't have their names spread all over court documents and possible the mainstream press. It was a scheme that netted them millions. Well, one of those attorneys is now dead, another is going to prison for a few years, and the third is still facing charges of mail fraud, wire fraud, conspiracy, money laundering and a few others—but here's the thing: Prenda and its related law firms started out by filing their cases in one federal district courthouse in the East Texas town of Marshall. "The court became the most popular forum after District Court Judge T. John Ward took the bench in 1999 and set out to attract patent lawsuits," noted Bloomberg.com reporter Susan Decker. "Ward, who retired in 2011, established local rules that were deemed friendly to patent owners, and the reputation stuck." "Stuck" is barely the term for it. Believe it or not, more than 40 percent of all of the patent/copyright infringement lawsuits in the entire country are filed in that courthouse in Marshall. That's more than the total number of such suits filed in the states of California, New York and Florida combined! But that run of "good luck" for patent trolls (as the Prenda attorneys have been labeled by several federal judges) may be coming to an end, judging by the arguments heard by the Supreme Court yesterday in the case of TC Heartland v. Kraft Foods Group Brands. The case revolves around low-calorie sweeteners manufactured by the Indiana-based TC Heartland, and originally, the company was sued by Kraft in Delaware, another infringement "sweet spot," for allegedly infringing Kraft's sweetener patent. TC Heartland tried to get the lawsuit moved to its home state of Indiana, but the district courts in Delaware refused, citing a 1990 decision, VE Holding Corporation v. Johnson Gas Appliance Company, from the U.S. Court of Appeals for the Federal Circuit, the main circuit charged with handling patent/copyright appeals. That decision said defendants in patent cases may be sued essentially anywhere they do business, just as any other business can. But at least some Supreme Court justices did their homework in the case, and Justice Elena Kagan noted that the VE Holding decision was at odds with high court precedent, notably the case of Fourco Glass Co. v. Transmirra Products Corp., which had set up the rule as to where patent suits may be filed. "The law said that 'any civil action for patent infringement may be brought in the judicial district where the defendant resides,'" reported legal analyst Adam Liptak in The New York Times. "The court said that meant where the defendant was incorporated." "For 30 years, the Federal Circuit has been ignoring our decision," Kagan said during Monday's argument. Needless to say, Kraft's attorney William M. Jay was unhappy with the direction the Supremes appeared to be heading, arguing that if the high court had a problem with where patent suits were being filed, either in Delaware or East Texas, it should address that issue directly, not as a "by the way" aside in the current case. "If you adopt the rule that my friends on the other side are proposing," he said, "you will shift more than half of all cases from the district where they now are into other districts," adding that since Delaware is also the state where many corporations are incorporated, the influx of cases might overwhelm district courts there. More than 40 companies such as ASUS Computer, Crutchfield Corporation, L.L. Bean, Macy's and other mostly tech-oriented companies filed amicus briefs urging the Supreme Court to limit where patent/copyright suits could be filed, and at least some of the justices appeared to take such pleas to heart. The Supreme Court has until the end of June to rule on the case, and if it goes as TC Heartland hopes, that could prove to be a very good thing for adult producers and website owners.

 
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