Sunday, October 30, 2016

Rent Seeking in East Texas

In 2013, there were "just over 6000 patent suits filed in federal courts across the country. One in four of those cases were filed in the Eastern District of Texas." How does a "largely rural district court" attract "a huge volume of high-tech patent ligitation"? The answer, in short, is rent seeking.  For the past decade, this federal court has consistently imposed policies that heavily favored the prosecution.  The result is the attraction of "patent trolls" or "kangaroo courts" designed to benefit the prosecutors in patent infringement cases at the expense of the defendant.  For example, the court system will expedite case protocol in order to litigate the "over 190 lawsuits filed in a single day." Rent seeking is evident as this rural district court has implemented laws that heavily favor the prosecuting attorneys in an attempt to make the defendant settle or risk paying heavier fees.

That being said, according to one of the previously mentioned reports, the district court and the attorneys that profit are doubling down on their rent seeking tactics by "retaining the services of Levick Strategic Communications" who have successfully lobbied the federal government in the interest of multiple groups over the past years.  If the attorneys and patent trolls interests are protected, the federal government will overlook much needed patent reform and continue to allow this system to flourish.  Naturally, the next logical step of this post is to put ourselves into the mind of George Stigler.  Using his cynical theory of economic regulation, it could be argued that the East Texas Bar Association and district court implemented these prosecution-favoring efforts originally in order to protect the small inventor from larger firms who could dwarf them with more resources and man-power. This could appropriately cover up the interests of prosecuting lawyers and patent trolls who would want the system shifted in their favor. Now that these groups are lobbying in order to slow down patent reform, it appears that their interests are solely "operating primarily for [their] benefit" (Stigler, 1) with no regard for the welfare of the public in accordance with Stigler's assertions.

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