Ruling deals a blow to East Texas

Business travelers are the mainstay of the hospitality business, and the U.S. Supreme Court just dealt a blow to East Texas hoteliers and restaurateurs.

The number of out-oftown attorneys and paralegals trekking to Tyler and Marshall will likely plummet now that the court has limited where patent trolls can use the judiciary to extort money from major corporations.

While there are legitimate disputes over patents, there is an entire class of company that does nothing but buy patents and then sues companies for infringing on them. Sometimes the patent is for something that is so common sense there really shouldn’t be a patent covering it.

Companies that bring these suits are called patent trolls.

For a decade, the Federal Eastern District of Texas, which includes Tyler, Texarkana and Marshall, has been the venue of choice for patent trolls. More than 40 percent of patent cases are filed in the district, and one judge oversaw about a quarter of all cases nationwide.

The patent holders don’t choose East Texas because they live there,

nor are the defendant companies based in East Texas. The plaintiffs choose the district because the judges move through the cases quickly and the juries consistently rule against big companies.

The plaintiffs get away with it because the products with the intellectual property in question are sold in the district. So every month, dozens of attorneys and paralegals make the trip to East Texas to argue the cases they couldn’t settle out of court. But no more. Maybe. Justice Clarence Thomas, writing for a unanimous court, declared that these cases should be brought where the defendant corporation is based, or where they have a business presence. That can either be Delaware, where many firms are incorporated, or where the company has operations.

“This narrows where plaintiffs can file lawsuits for patent infringement, and it seems clear that more patent cases will be filed in Delaware,” said John Keville, managing partner of the Houston office of Winston & Strawn and a longtime patent litigation lawyer.

That has defendants excited, because they are convinced they’ll get a fairer hearing where, to put this delicately, the juries may not be so easily swayed by the David versus Goliath narrative that permeates many of these cases.

That’s also why plaintiffs’ lawyers will fight hard to keep Marshall’s Sweet Sabine’s diner in business.

“Patent suits can be filed ... where the defendant has committed acts of infringement and has a regular and established place of business,” Keville added. “The venue fights will not disappear but will now be fought on what is enough presence.”

There also is little clarity on whether reducing the number of cases fought in East Texas will lead to fewer abusive patent lawsuits.

One thing does seem certain: Dallas and Houston patent lawyers will be spending less time in the Piney Woods.

Chris Tomlinson is the Chronicle’s business columnist. chris.tomlinson@chron. com twitter.com/cltomlinson www.houstonchronicle.com/ author/chris-tomlinson