When Enough is Enough

Unlike us here at TLR, most people don’t think about tort reform or the legal system on a daily basis (or even a monthly basis, for that matter). That is until lawsuit abuse flares up to impact something in their daily lives.

Enter Apple and the Eastern District of Texas.

Reports from industry publications recently sounded the alarm that Apple had announced plans to close its Plano and Frisco stores in April and open a new store at the Dallas Galleria. Apple has offered new jobs to the employees who are affected by the store closure.

This is huge news for a company with a broad footprint in Texas. According to TechCrunch, “Apple today employs 1,000 people in the Dallas-Fort Worth area, which has been an increase of 33 percent in the past five years. The company also recently invested almost $30 million in its Dallas area stores.”

All of this begs the question, why go to the trouble of closing two busy stores in one of the fastest growing counties in the nation, creating a massive inconvenience for countless loyal customers who regularly frequent them and the employees who count on them for their livelihoods?

The answer is simpler than you think. The Plano and Frisco stores fall squarely within the U.S. District Court Eastern District of Texas, a notorious haven for patent trolls. Coincidentally, the new store at the Galleria falls outside the Eastern District’s boundaries. Apple is forced to make this expensive move because of abusive patent-troll litigation in a particular federal judicial district.

Patent lawsuits are a federal issue, and under federal law, those cases can be filed in districts where the defendant has a “regular and established place of business.” That means that simply by having retail stores in the Eastern District of Texas, Apple was making itself vulnerable to abusive, costly and time-consuming patent lawsuits.

The Dallas Morning News editorial board put it this way, “Patent trolls build their entire business model around exploiting patent infringement laws and devising creative interpretations of intellectual property regulations to assert a claim to a patent. The mere act of defending or settling claims costs companies, the economy and consumers billions of dollars in what amount to legalized shakedowns… Our problem with trolling is that it goes beyond the time-honored practice of lawyers seeking the best place to litigate. Trolling siphons wealth and opportunity from those who create it and turns the court into a lottery ticket and the jurisdiction into the equivalent of a speed trap. The threat of a patent troll tying up entrepreneurs or companies in court chills innovation.”

Abusive lawsuits affect our lives every single day in countless ways, large and small. In this case, rather than continue to expose itself to unnecessary litigation risk, Apple removed itself from the situation. In some cases, companies build the cost of litigation into the cost of their products and services—the Tort Tax, which we’ve discussed before in this blog.

This is yet another clear example of why the laws our state and nation enact must be written to ensure they don’t open up new avenues for abuse. And it is why the judges we elect at the state level and who are appointed at the federal level must remain committed to impartially applying those laws as written.