The sleepy town kept busy with $2m-a-day patent cases

 
Marshall, Texas

It's a small town 150 miles to the east of Dallas, with a certain sleepy charm. Its 25,000 inhabitants boast that it was the birthplace of boogie-woogie, played an important role in the Civil War, and was at the centre of the development of the Texas Pacific railroad. But why would I - or anyone else, for that matter - want to spend time in Marshall, Texas?

"You're here for the rocket docket," guessed Geraldine Mauthe, when I popped into the Marshall Conference and Visitor Bureau on my arrival. And she was right - the rocket docket refers to the speedy system (and speedy is relative) for dealing with patent cases which has made this small town's court famous or feared, depending on whether you're a plaintiff or a defendant.

I had come to Marshall as part of a Radio 4 investigation into what has gone wrong with the US patent system. For this town at the centre of the Texas Eastern District is now one of the world's busiest places for patent litigation.

Find out more

Rory's documentary Patently Absurd is on BBC Radio 4 on Tuesday 20 August at 20:00 BST

As Palo Alto and Mountain View are to software engineers, so is Marshall to patent lawyers - a place where you can be sure of plenty of business.

Two of the town's most prominent attorneys, Michael Smith and Sam Baxter, acted as my guides to the place and its premier industry. Mr Smith acts mainly for defendants, Mr Baxter principally for the plaintiffs, but each has built a pretty lucrative business on patent litigation.

As we stood on the main square, looking across at the old courthouse, Mr Smith explained that it all started with a local company, the semiconductor maker Texas Instruments.

"They were looking for a place where they could get patent claims heard. And the federal courts in Dallas were buried under a lot of drug trials."

So they came to Marshall for a speedier hearing. "They filed the cases here for about 10 years and they were very happy with it. And then everyone else followed suit."

The courthouse

It was what the locals call a triple digit day, when temperatures soar above 100F (37.8C), so I was grateful to step into the air conditioned former 1930s garage which houses Mr Baxter's law offices.

Sam Baxter inside his office building Sam Baxter: "The meter's running on every lawyer"

Right next door to the courthouse, this lovingly restored building with its exposed brick walls and wooden floors becomes a hive of activity when a trial is on.

"We have about 50 people working on a case," he explained. "We have a kitchen to feed them all, we have our own graphics people doing all the graphics for the trial - it's sort of a cottage industry. "

And that doesn't come cheap for either side in a patent case. It can cost anything from $6m to $12m for a trial, says Mr Baxter. "If you got that many lawyers in a courtroom and the meter's running on every one of them, it is probably not unusual for the clock to be running at $2m a day in a courtroom."

No wonder, then, that many smaller companies just agree to pay a licensing fee rather than ever get involved in a patent case. But for Marshall, the regular influx of as many as 100 lawyers for one of the big cases has been a boon. The fine old 1900 county courthouse has been restored, and is being used again when the regular state court across the road is occupied.

Many of the town's office buildings are used by dozens of so-called patent trolls - companies that exist merely to litigate and find it useful to have an address - though no meaningful operations - in the district where they seek to bring cases.

County court The restored county court house

One evening I got talking to some locals in a restaurant on the main square, one of just two places you can drink alcohol in Marshall - once you show your driving licence and sign up to be a member of a club. It was boogie-woogie night, and although it was quieter than normal because the judge was out of town and no patent cases were underway, there was a decent crowd.

Just about everyone I met had some involvement with the patent business, mainly as jury members. They were all quite proud of their town and seemed bemused that anyone might think the patent system was not working well for the US. And of course there is an economic benefit.

"It's good for hotels, it's good for restaurants, it's good for lawyers," one man told me.

Start Quote

You've got companies being sued into oblivion”

End Quote Businessman in Marshall

But one of those lawyers, Mr Baxter, said there was more to Marshall's passion for patents than just self-interest. In this part of the country, respect for property rights was very strong - and the argument that many patents were now owned by people who litigate rather than invent products held no sway for him.

"If you bought a piece of property that is real estate, and it turns out that it's got oil or gas underneath, nobody ought to be able to tell you that you can't take advantage of that."

In a state which has built its fortune on oil, the very idea that you could not exploit a piece of property like a patent was "anathema to the free enterprise culture".

On my visit to Marshall, I found only one dissident when it came to the patent industry.

In the town's computer supplies store, I asked the young owner the same question I put to everyone I met here - what makes this town famous? "Slavery? Religious ignorance? Nutbaggery?" were his first guesses, indications perhaps that he didn't quite fit in.

And when I mentioned the patent business, he said he hoped the town was not proud of that - it might be good for business but it wasn't good for the overall economy "because you've got companies being sued into oblivion".

That view of a system which has seen patent litigation soar in recent years is now gaining wider acceptance in Washington DC, where politicians right up to President Obama are talking of reforms. But in Marshall, where a patent is a piece of property to be defended with every means possible, and $2m-a-day lawsuits are fought just about every week, most people hope that reform doesn't arrive any time soon.

Patently Absurd is on BBC Radio 4 on Tuesday 20 August at 20:00 BST, or catch up with iPlayer

 
Rory Cellan-Jones, Technology correspondent Article written by Rory Cellan-Jones Rory Cellan-Jones Technology correspondent

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  • rate this
    +1

    Comment number 11.

    "In this part of the country, respect for property rights was very strong"

    These people are steaming hypocrites - a patent isn't a piece of property, it's a government granted distortion of the market intended to bring about a collective benefit to society as a whole.

    They don't work a lot of the time, but anyone who thinks that patent litigation shows a free market in operation is a fool.

  • rate this
    0

    Comment number 10.

    Not only in USA but in Europe where patents are often country by country, is is often simply prohibitive to seek a patent, let alone defend it.
    There is much to say for the adage protect patents on what you make, and not to prevent others from plying their trade.
    Kodak and Motorola mobile have both been sold for the value of (unused) IP.

  • rate this
    +2

    Comment number 9.

    Just another proof that the US legal system is a corrupt, diseased, broken thing. When I hear how these parasites are destroying and effectively stealing from the companies that are the real innovators, it makes me want to just spray them with a big can of Raid.
    The worst part is that it has that circular logic that creates a system that feeds on itself - truly legalised theft.

  • rate this
    +4

    Comment number 8.

    "$2M a day for lawyers" therein lies your problem.

  • rate this
    +2

    Comment number 7.

    The Patent system is broken. It is so absurd that large companies are taking advantage of everyone, then whine when a little guy figures out how to use it to take advantage of them. Patents need to expire in a timely manner, and only be issued for MAJOR inventions, not monor tinkering. No one should be able to patent any biological function or gene. No one should be able to patent a process.

  • rate this
    +3

    Comment number 6.

    Our small optical company was hit hard by a US Patent Troll last year. We were advised that although the Patent should never have been granted we would have to settle. The patent was granted because the word "Optical Transformer" had been used rather that the word "Lens" so that the obvious Prior Art wouldn't be picked up by the Patent Office. Apparently Texas juries don't side with foreigners!

  • rate this
    -2

    Comment number 5.

    Whenever someone identifies a commodity which other's don't understand the true worth of, they are labelled as a troll, a tout a tax dodger.

    It is the system that allows people to profit - don't blame the profiteerers...

  • rate this
    +2

    Comment number 4.

    Surprised nobody over there has tried to patent the wheel yet...

    It would seem that under US patent laws, the grounds to file a patent depend not on whether you have invented the idea yourself - merely that nobody else has thought to patent that idea before you.

  • rate this
    +2

    Comment number 3.

    I once assisted an inventor. But he couldn't get investment because he didn't have a patent, and he couldn't afford to take out a patent because of the exorbitant costs. So the product never got to market. While I agree that IP needs protection, the whole patent system needs a serious overhaul, as it is stifling innovation.

  • rate this
    +1

    Comment number 2.

    The term 'Nutbaggery', a perjorative, however the guy is right as to what is happening. I seem to remember a guy back in the early 80's patented the idea of there being memory on the same piece of silicon as the microprocessor. Either the guy is rich as Cresus or everyone decided to ignore him or went for a different type of technology and evaded the patent, which I hope they did.

  • rate this
    +2

    Comment number 1.

    The fundamental problem with the USA patent system is the allowance of patents which have an overbroad scope. The examination process needs to be made more rigorous. There is nothing wrong with enforcing your rights against others that may seek to benefit from your intellectual and financial investment.

 

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