Apple Closing East Texas Retail Stores to Shut Out Patent Trolls

Apple Store Stonebriar Texas Credit: Apple
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The Eastern District of Texas has become a happy hunting ground for patent trolls over the years, and it appears that Apple may have finally decided that it’s had enough of giving them the home field advantage in the many patent fights that the company finds itself the target of.

According to a new report by MacRumors, in the coming months Apple will be shuttering both of its retail stores located in the Eastern District of Texas in order to take away the ability for patent trolls to file lawsuits within that district, which has had a long reputation of being a hotbed of patent litigation due to its extremely plaintiff-friendly rules and large jury awards.

Located in the Eastern District of Texas, the town of Marshall has been referred to as “the patent litigation capital of America.” A 2014 article in Texas Monthly noted that more than 1,500 patent cases get filed in the town annually, more than those filed in the entire state of Delaware, which is the jurisdiction in which most U.S. companies are actually incorporated. Billions of dollars in patent awards have been handed out by juries in the town for well over a decade, and in almost every case the rules of jurisprudence have been much friendlier to plaintiffs, leading many patent trolls to actually set up their “paper corporations” with headquarters in the town. In fact, many estimate that Marshall’s economy has become almost entirely dependent upon the patent litigation business.

If patent cases were distributed evenly among the federal district courts, each one would have received about 33 cases so far this year – a far cry from the 1,387 filings in the Eastern District of Texas.

Electronic Frontier Foundation

A 2015 analysis by the Electronic Frontier Foundation (EFF) outlines the history of patent litigation and how the Eastern District Texas Court rose to such prominence among patent litigators, reaching the point where by 2014 almost half of all patent cases in the United States were being filed in that district. Further, EFF’s analysis revealed that while 71 percent of all patent challenges were granted or partially granted overall in the U.S., in the Eastern District of Texas the exact opposite was the case — 73 percent of all patent challenges summarily denied by the court.

Due to its massive size and high profile, Apple has long been a favoured target of patent trolls, who unsurprisingly have chosen the Eastern District of Texas as their battlefield. Specious patent lawsuits range from claims of Apple Watch exercise monitoring infringement to fast-charging technology to iMessage “point-of-sale” features, and the list goes on ad nauseam. However, despite the frivolity of many of these lawsuits, Apple is frequently forced to pay massive penalties to companies that have done nothing more productive than managing to acquire a piece of paper and file a lawsuit.

So it’s not at all surprising that Apple wants to do everything that it can to avoid fighting legal battles on what has become “home turf” for every patent troll that happens to come along. Although for many years U.S. law allowed plaintiffs to file lawsuits in any U.S. District court — a law which essentially allowed the Eastern District of Texas court to rise to such infamy — a unanimous 2017 Supreme Court Decision changed the game with a ruling that patent owners could only bring lawsuits against companies in districts where the defendant is incorporated or has a regular place of business.

With most major tech companies targeted by patent trolls being incorporated elsewhere, this decision effectively dried up a lot of the patent troll business in Eastern Texas, but Apple remained an easy target in that district due to the second requirement — the company’s two Apple retail stores located in northern suburbs of Dallas meant that it had a “regular place of business” in the Eastern District of Texas, allowing litigation to still be brought against the company in that venue.

Now, it appears that Apple plans to close that loophole by pulling all of its operations out of the district entirely. No established place of business means that litigants will be forced to find another district court in which to file patent suits. This may simply place them in California where Apple is actually incorporated, although technically any other U.S. district in which an Apple office or retail store is located could still serve as a venue — likely meaning patent suits could still be filed just about anywhere else in the U.S. but the Eastern District of Texas.

The two specific stores that will be affected are both located in suburbs of Dallas that happen to be just inside the border of the Eastern District — Apple Willow Bend in Plano, and Apple Stonebriar in Frisco. Sources speaking with MacRumors have indicated that Apple will be opening a new store at the Galleria Dallas shopping mall in Dallas, on the other side of the border, on April 13. Sources also indicate that Apple also plans to ensure that its employees from those retail stores are offered other opportunities, such as transfer to other stores, work from home providing AppleCare support, or receiving a severance package. Apple has not yet publicly announced these plans, and has not yet responded to any requests for comment.

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