How the Calculator Killed Innovation

Mytheos Holt
|
Posted: Sep 01, 2015 12:01 AM
How the Calculator Killed Innovation

In the battle over patent reform, one question that looms bizarrely large is the issue of “venue reform.” That is, one of the many complaints offered by supporters of reform is that particularly litigious patent holders need to be restrained from dragging their targets into random, out-of-the-way courtrooms.

If we were talking about civil rights, this sort of complaint would make historical sense. For a topic as arcane as patents, it’s more than a little baffling. You wouldn’t think the way courts handle the topic would be all that different. Yet it very much is. Indeed, one specific East Texas district court has become infamous for its disproportionately favorable treatment of plaintiffs in patent cases, even going so far as to foreclose constitutional protections to defendants with procedural hurdles.

The town where all this takes place – Marshall, TX – has become quite prosperous as a result of their courtroom’s status as a hanging judge for multibillion dollar companies. Samsung, for instance, built an ice rink in Marshall as a transparent bribe of its citizens. Their good will doesn’t seem to have paid off, however, since Marshall retains its pro-patent reputation, to the point where patent lawsuits filed there have reached a record high. Most of these lawsuits are filed by transparently shady patent “trolls” which seek to either freeload off others’ innovation, or, as in the case of Securus Technologies, which claims to have patented video calling in prisons without any indicator as to why this counts as an invention, to increase their market share by suing their competitors out of business. Nevertheless, despite their bad faith, the trolls win in East Texas.

Given how unlikely a venue Marshall is for these kinds of clash of the titans style litigation efforts, the question naturally becomes, “how did it get to be that way?” And if Marshall seems an unlikely star chamber, then the object that made it so is even more unlikely. In short, Marshall became the go-to venue for patent litigation because of the scientific calculator.

Yes, really.

If you’ve ever spent time in an American high school, you’ve probably been obliged to use such an object, and odds are it will have been developed by a company called Texas Instruments. This company’s calculators are so ubiquitous that the name of one of its most commonly used products – the TI-82 – featured in an Epic Rap Battle History.

However, aside from being the source of the machines that have endured the frustrated clicking of millions of stumped high schoolers every year, Texas Instruments has another claim to fame. It was also the company that introduced the money-making power of intellectual property litigation to Marshall, TX. A 2006 story by the NY Times explains:

THE testing of Marshall as a patent battleground began nearly two decades ago, when Texas Instruments, which has its headquarters in Dallas, embarked on an aggressive strategy to make rivals license its patents. If a company would not capitulate or at least negotiate, a Texas Instruments team of lawyers would drag it to court — increasingly, down the road to the uncluttered courtrooms of Marshall.

This obscure bit of 80’s era aggressive litigation would eventually give birth to East Texas’ near-total monopoly on patent trolling. And in retrospect, it’s not hard to see why. For one thing, its judges are historically impatient with the sort of procedural gamesmanship that favor defendants. The Times’ story details how one judge, Jon Ward, turned East Texas into a “rocket docket” for plaintiffs by following a ruthlessly anti-defendant strategy:

A no-nonsense judge who charms people with his folksy demeanor but who also has a reputation for a fiery temper in the courtroom, Judge Ward began hearing patent cases. As a private lawyer, he had argued a few such cases; as a judge, however, he quickly grew frustrated at the slow pace, paperwork, and delays and motions that were part of a patent docket.

That’s when he adopted what he calls “the Rules.” As any lawyer who has shown up in Judge Ward’s courtroom will testify, the Rules put patent lawsuits on a strict timetable, laying out when key documents must be handed over and setting firm trial dates.

No 100-page motions or lawyer soliloquies are tolerated in Judge Ward’s courtroom. He puts page limits on documents and uses a chess clock to time opening and closing arguments, brusquely interrupting lawyers when it is time for them to wind it up.

However, even a fast trial doesn’t have to be won by plaintiffs, which leads into the main reason why Texas Instruments’ lawsuits created such a winning playbook. It’s in the company name: Texas Instruments. You see, among other things, Marshall is a town with a high population of lawyers, and that’s the main thing that trolls have learned to exploit over the years, says the Times:

Others point to a different reason why plaintiffs may win more often than defendants: plaintiffs, they say, typically hire local Marshall lawyers. Hiring local in Marshall means that you will get a lawyer who not only knows the jurors, but who also probably knows their friends and even personal details like how often they go to church, local lawyers say.

“We had a Fourth of July party and we circulated the jury lists to people there on the boat dock,” said Joy Berry, a local lawyer who advises out-of-town law firms in jury selections. “By the time the party was over, we knew quite a bit about nearly everyone” on a list of potential jurors for coming trials, she said.

In other words, if you’re a patent lawyer from Marshall, going to the right church could put you in the way of a career-defining massive settlement from tech giants including Google, Apple, Facebook, and Samsung. Small wonder that plaintiffs have lawyers chomping at the bit to help them, even when their lawsuits only lead to settlements.

Needless to say that however good this may be for Marshall, though, it’s beyond silly for verdicts that can reach hundreds of millions of dollars in size to ride on the question of whether a company can hire a lawyer who goes to the right barbecue to sweet talk jurors. No one ever said that being a kangaroo court wasn’t profitable, but it’s time the legacy of Texas Instruments was ended for good by legislation. Otherwise, the damage to America’s greatest innovators might just be too high even for a TI-89 to calculate.