Last week, it was widely reported that Apple plans to close its retail stores in the Eastern District of Texas in order to avoid facing patent lawsuits in the district. Given that a single patent lawsuit can easily cost just as much as opening an Apple store (estimated at $8-10 million per store), even if Apple wins the lawsuit, it probably wasn’t a difficult financial decision for Apple: move the stores out of the district and avoid being subject to litigation in a notoriously patent-owner friendly jurisdiction.
But it’s one thing for Apple to close a couple stores in Dallas suburbs. Apple has the financial resources to absorb that cost and the national presence to be able to forgo a store in the Eastern District.
What about a local store located in the Eastern District? (As I covered last week, small business are already frequently targeted by non-practicing entities.) Or a tech startup in Austin, located in the Western District of Texas—a venue already being touted as the next Eastern District?
They likely can’t afford to move. And they usually can’t afford to defend themselves in an expensive patent lawsuit.
As long as the sorts of poor quality patents that NPEs thrive on using continue to be issued—a trend likely to increase, given Director Iancu’s attempts to loosen patent eligibility standards—these problems will continue to exist.
Businesses that can afford to leave patent-friendly jurisdictions will do so, and the communities they leave behind will lose. Businesses that can’t afford to leave will face abusive litigation, and spend money on lawsuits and settlements that could have been invested in their companies. The only winners are the Non-Practicing Entity. A broad term associated with trolls but now disfavored because it includes universities and legitimate technology developers that seek to license technology in advance rather than after a producing company has independently developed it. More exploiting patents that never should have been issued, suing companies in courts that design their rules to attract the Non-Practicing Entity. A broad term associated with trolls but now disfavored because it includes universities and legitimate technology developers that seek to license technology in advance rather than after a producing company has independently developed it. More, and the patent lawyers that get paid to fight those cases.[1. Unsurprisingly, patent lawyer trade associations are currently working hand-in-hand with patent owners to try to make it easier to obtain broad, poor-quality patents.]