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Patent Trolls Find Fertile Ground in Texas

Posted in the Southeast Texas Record

Posted on September 13th, 2022

By Roger Borgelt

Texas once was the Wild West of lawsuit abuse. Over time, it transformed into a beacon of reform, ending many of the most egregious examples of lawsuit abuse.

But the bad guys have a way of resurfacing, and sure enough, new villains are here, right in our backyard: patent trolls. In recent years, these patent trolls and their army of high-powered lawyers have descended upon Waco, Texas.

Why Waco? It’s where they’ve found a welcoming federal court and judge.

In the internet sense, trolling involves harassment with an intent to harm. In the case of patent trolls, it’s legal harassment and meritless lawsuits that come with the threat of billions in phony damages for false charges of patent infringement.

Patent trolls threaten the real Texas and American job creators and innovators, and it’s not the first time they’ve tried to capitalize on a friendly judge and courtroom in Texas. The Eastern District of Texas was once their preferred venue, landing Texas on the American Tort Reform Association’s Judicial Hellholes list in 2016, noting that 40% of all patent troll cases that year were filed in the Eastern District.

Patent trolls do not research, develop, make, or sell anything related to the patents they argue have been infringed. They are created to file lawsuit after lawsuit, claiming to represent the little guy while they work to line the pockets of some lawyers, hedge funds, and big foreign corporations.

Many trolls are nothing more than shell companies, funded and created by hedge funds or foreign companies. Patent trolls are filing hundreds of cases, creating a spike in courts across Texas, but nothing like the staggering case numbers in the Waco courtroom of Judge Alan Albright, who has rolled out the welcome mat for patent and intellectual property lawsuits.

In 2020, the district saw a tidal wave of new patent infringement cases, a jump of 350 percent over the previous year, according to reporting by Texas Lawbook. Waco is now the go-to court in the U.S. to litigate these patent troll disputes.

These suits squeeze technology companies for big payouts, threatening them with costly, often prolonged lawsuits and awards that are wildly out of line with their claims.

Meritless patent troll lawsuits exact high costs on America’s job creators and true tech innovators. Patent troll lawsuits reduce R&D investment by U.S. companies, slowing innovation and undermining U.S. leadership in technology. But it’s not just the most prominent technology firms under attack. An estimated 60% of patent litigation filed by patent trolls targets businesses with less than $100 million in annual revenues.

These cases are lawsuit abuse to an extreme, hitting some of Texas’ and America’s real innovators and biggest job creators. And they are doing actual harm to our state’s business climate. A study found that these lawsuits were associated with half a trillion dollars of losses to companies targeted from 1990-2010. The median damages awarded in patent litigation have climbed from $1.9 million in 2010 to $10.2 million in 2017.

Patent trolls most recently exploited the pandemic to line their pockets. Patent troll abuse extended into critical healthcare technologies, including ventilators and Covid-19 tests.

We should be finding ways to stop these frivolous patent lawsuits while ensuring legitimate claims still get their day in court.

It’s time for Texans to call out these patent trolls for their destructive and unscrupulous ways. It’s time for increased scrutiny as to why Waco is so friendly to these patent trolls and their lawyers.

As we work to recover our businesses and our economy from this pandemic, we don’t need patent trolls wreaking havoc on our state’s reputation as wide open for business. It’s time to ensure courts like Waco and others are used for justice, not greed.

Roger Borgelt is an attorney and Board Member of Citizens Against Lawsuit Abuse of Central Texas.

SMALL BUSINESS LEADERS TALK ABOUT LAWSUIT ABUSE AND ITS IMPACT ON JOBS

VIA VIDEOS, SOCIAL, MEDIA, AND OTHER ACTIVITIES

While Texas has made progress in reforming its laws that once made the state a testing ground for frivolous lawsuits and abusive legal practices, many small businesses know they are still just one lawsuit away from being put out of business. 

To call attention to this ongoing threat, Texans Against Lawsuit Abuse (TALA) and Citizens Against Lawsuit Abuse (CALA) groups are sharing video testimonials and other information to underscore what questionable lawsuits mean for a small employer – and the role each of us plays in ensuring the courts are used for justice, not greed.

“Small businesses truly are the heart of our community. We are the ones that support the youth sports team, step up in times of crisis, and are deeply invested in our communities. But, it also makes us a target for frivolous and abusive lawsuits, “ said Sarah Sagredo-Hammond, owner of Atlas Electrical, Air Conditioning and Refrigeration and a supporter of Rio Grande Valley Citizens Against Lawsuit Abuse.

Texas lawmakers have made important progress on lawsuit reform over the years.  Once considered the “wild west of lawsuit abuse,” Texas is now a model for common-sense reform.  Those changes have contributed to the state’s job-creating powers and business climate.

The “It Starts With You” videos are a reminder of the importance of those reforms – but also a reminder that questionable lawsuits and legal practices can still threaten an employer, especially a small business.

Bobby Jenkins, president, and CEO of Austin-based ABC Home & Commercial Services is a former chairman of the board of Citizens Against Lawsuit Abuse of Central Texas and has been on the front lines of lawsuit reform.

“While Texas has passed strong lawsuit reforms, it’s important to remain vigilant in the fight against lawsuit abuse,” said Jenkins. “We can all play a role.  We can all be smart legal consumers, serve on juries when possible, and do all that we can ensure our courts are used for justice as intended.”  

Jenkins appears in one of the videos talking about the years-long fight against lawsuit abuse and how small businesses have been helped by decades of reforms passed by Texas lawmakers.

“Defending even a frivolous lawsuit can be costly,” added D’Anne Buquet, executive director of Bay Area Citizens Against Lawsuit Abuse in Corpus Christi.  “For a small business, absorbing high legal expenses can mean not hiring a new employee or putting off the purchase of needed equipment.”

To view the videos, see the TALA YouTube page. For more on TALA and CALA organizations, visit tala.com.

Legal Consumer Guide

Tips and Other Information to Consider Before Hiring a Lawyer

The recent case of a San Antonio lawyer accused of stealing millions of dollars from his clients is a good reminder to us all about the importance of doing your homework when looking for a lawyer to represent you.

One site to check is the State Bar of Texas, which includes background information about Texas-based lawyers.  Check for any disciplinary actions or complaints against the lawyer you are considering hiring.

As with all things, shop around when looking for a lawyer, and talk to more than one lawyer about your case. There may be differing opinions about how to handle your case. And don’t be pressured. Make sure you’ve made your final decision on representation before signing an agreement.

You can see more consumer tips by clicking here.

Time for a Runoff

Texans will soon have the chance to head back to the voting booth for statewide runoff elections on Tuesday, May 24 – and like all elections, it’s important that voters turn out to cast a ballot. But before you head to the polls, be sure to learn where your candidate stands on ongoing efforts to rein in lawsuit abuse.  

Our state was once a poster child for lawsuit abuse, but thanks to the work of Texans across the state and lawmakers in Austin, Texas has enacted important reforms to our legal system and legal practices. Still, we can’t let that progress slip away, and that means ensuring that the candidates we vote for support keeping our civil justice system fair, equitable, and responsible.

Thanks in part to the reforms passed by state lawmakers over the years, the Texas economy is flourishing, jobs have been created, and more doctors are practicing in the state. We can’t afford to allow that to change.

Turnout for this upcoming runoff election has been low during early voting, so we ask that you please take some time to go vote on Tuesday, May 24. And be sure to take some time to research the candidates to find out their positions on lawsuit reform.