We (MediaFire) were part of the Amici brief submitted to the Supreme Court regarding the eastern district of Texas. [1]
It is a serious issue. Being a Texas company, we have been sued numerous times primarily because we are in Texas and it allows the other defendant's cases to be tried in the Eastern District of Texas.
The patents are always baseless, but it matters little. In almost all cases, the board of directors wants to settle the case quickly instead of fighting it out, even (in many cases) if the CEO or inside counsel wants to fight. It's cheap(ish) to settle and very expensive and time-consuming to fight; in short, it's a big distraction, one that can be solved with money. Since most of the plaintiffs are shell companies run by lawyers, there is little cost to them even if they loose and no value to the defendant if they win.
The exception to all this being Lee Chang at NewEgg who always fights. That works if you have a CEO and board who is willing to spend the time and money to establish a reputation but that is seemingly rare. Newegg also signed onto this Amici. [2]
This problem has been going on for a long time (8 years for us), and while we keep hoping for some reform, Congress is yet to act in a meaningful way.
On a side note, our former patent defense attorney, who clerked for the patent judge in Marshall, TX, left defense a few years ago and became a plaintiff's attorney. His reasoning? Much more profitable.
Congress is no longer an organ capable of representing the people. The only interests capable of being heard in Congress are those represented by lobbyists. Every time I hear someone who is directly involved discuss a grossly unfair legal issue like this, the answer always seems to be "We gave up on Congress a long time ago". These aren't necessarily interests with no money, they're just not interests with the most money.
The only hope for fixing laws that aren't upsetting publicly-listed companies is that the case will get an activist judge who will take an extremely broad reading of the statute and establish that interpretation as precedent. From a strictly legal perspective, in many such cases, it's quite clear that the law forbids the activity, which is what leads to a lot of unsatisfactory rulings.
I like the Constitution as much as the next guy, but we have to be honest with ourselves here and admit that the legislative arm is really not functioning anymore; they cannot fix the major problems that threaten innovation and small business. That whole branch needs to be rethought.
Maybe it is just a matter of dividing into 300 states so that there can be more local representation (fewer constituents per rep).
The reason lobbyists are so effective is that they can influence a large number of representatives all in one place. An actual constituent can call his congressman, but that's a lot smaller influence.
IMHO one solution to this is to keep them all in their home states and vote on issues remotely. Keep all communication public, and exclude influence from anyone outside their home state. This would force them to get their input from the people who elected them.
On another note, every state should ban election advertising from anyone outside the state. There is little reason to allow outsiders to influence state elections. Hey, if you're going to get upset that maybe the russians influenced a US election, why not be upset when some national organization (including political parties) tries to influence a state election?
That is a key question. But how is it not outside interference in an election? OTOH, what if a candidate did some bad things in another state and someone just wanted to let you know? But the main thing is to eliminate corporate interference, and the notion of first amendment rights being applicable to corporations is long story. If we revoke the notion of corporate personhood that would help quite a bit.
I agree with your concern, but I hope you can see the value in trying to find a workable solution along these lines.
EDIT: changed "reasonable solution" to "workable solution" because we don't want politics involved finding "compromise".
Corporate personhood is deeply entrenched in legal tradition. It's not a simple matter to reverse or extract that. See the Dictionary Act, Section 1 of the U.S. Code, which clearly defines incorporated entities as persons for legal purposes. [0] [Disclaimer: IANAL and surely do not fully understand the implications and background here]
I don't think artificial restrictions on political involvement are the right way to go about a resolution. That ultimately just forces participants underground.
Instead, we need an updated electoral process that allows full engagement from all interested parties and still has a desirable outcome for the everyman, small innovators and entrepreneurs.
IMO the biggest problem over the last century has been the consolidation of credible information sources into a handful of media conglomerates. The internet is helping reverse that, at least partially, though it's at risk too with Facebook and Google controlling the vast majority of the traffic.
>> I don't think artificial restrictions on political involvement are the right way to go about a resolution. That ultimately just forces participants underground.
I don't see any justification for someone in Florida funding a campaign for a senator in Michigan or California.
Even if it is interference, why should that be banned?
If I live in a reliably blue or red state, it doesn't much matter what I do at election time. I'll go and play my role and cast my vote but as an individual, I can't change the outcome of my state. I can pool my money with others to buy campaign advertising in a swing state that might legitimately change the outcome. If the Senators and Representatives are going to the nation's capital and passing laws that effect everyone, in every state, we should have a way to influence results outside of our own state of residence.
>> I can pool my money with others to buy campaign advertising in a swing state that might legitimately change the outcome.
Oh. I'm not talking about presidential elections. That is a different story. But I'd say it is wrong for you to contribute to a group buying campaign advertising in another state for their congresspersons or senators. And that includes influence from national party organizations. Only people who live in a state should be doing that stuff (if any).
> But I'd say it is wrong for you to contribute to a group buying campaign advertising in another state for their congresspersons or senators.
Eh, maybe there's a decent argument for that when it comes to their state reps or governors. But the federal government is a national government, and elections for the Senate or House are no less national than those to elect members of the Electoral College.
If I live in Ohio but the junior Senator from New York has been talking about introducing federal legislation that will have an effect on me, I have a legitimate reason for wanting to influence the decision of the people in the state of New York.
> Since most of the plaintiffs are shell companies run by lawyers, there is little cost to them even if they loose and no value to the defendant if they win.
Would having to deposit some kind of money up front before the case is accepted be a solution to this? Then you cannot spam-sue everybody, and if you lose you cannot just claim bankruptcy to escape having to repay the defendants' costs.
The problem is really Non-Practicing Entities (NPE) who are doing the trolling. I think you have to change the laws to eliminate the ability for an NPE to buy up patents for the sole purpose of suing. It would help greatly if Judges were a bit more decerning about the cases they accept too.
I've been looking to build a new HTPC. Most parts I want are cheaper through Amazon (with prime) compared to Newegg and in the end I could save about $50 getting all the cheaper parts through Amazon. I'll happily give Newegg an extra $50 when I do pull the plug. Now if Amazon would join the troll battle...
You jest, but after my company was put out of business by a legal threat from a Fortune 100, I really do wish I had taken advantage of the ability to run it anonymously (collecting payment via something like bitcoin). Doing it above board didn't really get me anything valuable, and it made it easy for my enemies to locate and shut me down.
These threats are regularly frivolous and unfair, but big companies have a habit of bullying smaller players with legal force. There is no way to win; either you spend millions on something with no value (a legal defense), or you comply/settle and get the aggressor to agree to back off. If you try to fight, you end up doing both when you go bankrupt 5 years into the proceedings.
I only caught snippets of Judge Gorsuch's confirmation hearing, but it was awesome to hear him decry the evils of law school and the "ethics rules" that lawyers have installed for themselves, which he explicitly calls out as a money-making scheme responsible for over $10B+ in excess legal spending each year (somewhere around the 2.5 hour mark on the second day).
Don't underestimate how valuable the right to be sued is. If other people have no recourse if dealing with you goes badly, they'll naturally be reluctant to trust you.
That might be true if your market is other businesses. The courts are largely closed to normal consumers though, because of cost and the perception that justice is for sale. I doubt many mainstream consumers consider "can I sue this company if things go south" when making a purchase.
Personally, being in a UK, I consider "do I have enforceable consumer protection rights" when buying products online. That broadly amounts to "do they have a business address in the UK, contact info, are they active in promoting their business, perhaps do they have a physical shop", etc etc. I'd seriously avoid shopping where I couldn't contact the owners, unless I was doing something illegal (and therefore where I couldn't rely on my consumer rights) in the first place.
That's part of the tradeoff that you accept when you operate anonymously. Of course it will turn some people off, and as a consumer, that's a perfectly reasonable position to take. But as a business owner, until you have enough money sitting around to tolerate a lawsuit ($5M-$10M), if you're in a market that is willing to tolerate it, it could be a very reasonable tradeoff.
I really doubt that many businesses would make it to $5M sitting in the bank without ever allowing anyone to know who they are - or slipping up and getting caught. I can't think of who would spend money with such a business if there were any alternative, in countries with well-developed consumer protection systems.
Heh, clearly not the best description, gotta stop HNing at 4am. ;)
His main point was that legal costs are out of control. One of the mentioned factors was that in the U.S., law school is 3 years, unlike most international law schools which are 2, and how it's sad that most law school graduates are unable to afford their own services. He discusses how the attorneys' self-imposed ethical rules contribute to the expense and prevent things that would improve the accessibility of legal services.
I'll post a transcript of his answer when I get back to my workstation. On phone now.
Here's the transcript of his entire response to the question posed by Senator Cornyn according to C-SPAN's closed captioning (which is the only place I could find it recorded; lines and capitalization quickly corrected, please excuse any errors):
> I really appreciate this opportunity to be talking about
> these things. Because I -- these I care about and can talk
> about as a judge. I wrote that article in conjunction with
> some input from a lot of wonderful people, so I can't take
> total credit for it. And I thanked them. My point there was
> three fold. Starting with the fact that too few people can
> get to court with legitimate grievances today. That's a
> fact. Too few people can get lawyers to help them with their
> problem. I teach young folks law, who leave law school
> unable to afford their own services. Think about that.
> think about that. And hundreds of thousands of dollars in
> debt. How do they go be "Main Street" lawyers? How do they
> help people who need legal services? And I pointed to three
> potential sources of problems where we lawyers maybe should
> look internally rather than blame others for the problem.
> there is plenty of blame to go around. I'm not a big blame
> guy. I am a look inside guy. What do I see in my profession.
> three thing I pointed to, first, our own ethical rules. It
> is a very unusual profession where we're allowed to regulate
> ourselves. It is quite an extraordinary privilegefvilege
> privilege, usually the legislature. Lawyers regulate
> themselves. And do all of our rules help clients or do some
> of them help us more than they help our clients? And i
> point to some that for instance in regarding the
> unauthorized practice of law, why is it you have to be a
> lawyer to help parents with disabled children and
> administrative proceedings to seek relief under idea? Was it
> an example I pointed to. Why is it that every time certain
> companies that provide online legal services for basic
> things get sued every time they move into a new state? Why
> is it I can go to walmart and get my hair, teeth, eyes,
> taken care of, but I can't get a landlord tenant contract
> drawn up. Those are all results of our ethical rules. I'm
> not sure whether they're worth the price that we pay for
> them. It is estimated I heard I can't verify it that our
> ethical rules result in $10 billion a year surplus to
> lawyers and clients every year. That was one. Number two
> was our own rules and procedure which yield cases like the
> one we talked about, took 25 years to resolve. That's
> wrong. That's wrong. Should be able to resolve cases in
> less time than it takes from my law clerks to be born,
> raised and get through law school. And the third thing i
> pointed to was our legal educational system. Where we have
> three years of post graduate education for everybody who
> wants to -- who have anything to do with lawyering. The
> best lawyer in the country in this history came from your
> state, senator durbin, he didn't ever go to law school. And
> he always said the best way to become a lawyer, read the
> books. Still true. And other countries around the world
> don't have three years of post graduate legal education.
> this is where justice scalia and I -- a disagreement, he
> thought three years was necessary for everybody. I'm not
> convinced. In england where I studied, you could become a
> lawyer through three years of an undergraduate degree or one
> year as a post graduate degree followed by a lot of on the
> job practical training. I wonder whether all that debt is
> worth it. Whether it induces people to pick jobs they have
> to pick to pay their debt ranger than serve the people they
> like to serve. Those are the problems I talk about in that
> article.
How does it look on mobile? On my device, it goes into an something like an iframe with its own horizontal scrolling. [0] Does it stretch the page on some devices?
Unfortunately, it seems like the edit window on that comment has expired. If it's obnoxious, I can ping dang and see if he can fix it.
Apparently there are TWO judges in the district, BOTH of whose own sons are lawyers in the same district. And BOTH sons handle a lot of the patent litigation, in front of their own fathers, the judges. Pretty incredible. Watch the video starting at about 5 minutes to see it.
It ought to be automatic grounds for an appeal. On the other hand, then you have to afford not only the trial, but also the appeal, before you can get the baseless lawsuit to go away...
Finland, northern Europe. I'm fairly sure it would be the same in Sweden or Germany.
The principle that a judge may not rule on a case where his close relative is an attorney seems to fairly universal. I don't understand how that could be accepted in Texas.
This is such a widely known situation in legal circles.
The United States District Court for the Eastern District of Texas described by the NYT is known as the "rocket docket" and the go-to forum for patent trolls.
A friend who is a patent litigator in a major US IP law practice, recently was moved to TX to be near the Court's location. Relocation driven by the disproportionate economic activity surrounding that jurisdiction.
Hope the Supremes will do something to mitigate the disproportionate influence of the Eastern District Court in patent matters.
The counterargument being that having a high concentration of cases in a given area means that the law is well developed and there will be few surprises when bringing a suit.
It's the reason that a lot of businesses are incorporated in either Deleware or Nevada.
Yes. A well developed legal field is completely why lots of companies incorporate in Deleware. It's got nothing to do with highly favourable tax regimes. I'm sure it's the same reason Ireland and Luxembourg are so favourable.
Anecdata: the well-developed legal field is the prime reason why my corporate attorney always pushes his clients to incorporate in Delaware. He and his firm know what to expect throughout the process, and can offer much more reliable advice than when you incorporate elsewhere or in your home state (even California).
Delaware residents certainly have a favorable tax situation, with zero sales tax and very low property taxes, but that's mostly because they get tons of income from the franchise taxes applied to corporations registering there.
And if you're a first-time founder getting your first Delaware franchise tax bill, you're not going to consider the process favorable by any means.
A key difference with Delaware is that the people choosing to incorporate there typically don't know which side of the law suit they will end up on. The location of incorporation mainly matters for when shareholders sue the company which means they are effectively suing the other shareholders.
Delaware basically operates like a tax haven. It allows companies to avoid taxes in other states by shift royalty profits to Delaware. It is also extremely popular as a location of shell corporations because of secrecy laws. To form a company in Delaware you are barely required to give any information.
I'm not denying that there are also network effects but if you got ride of the tax benefits and secrecy those network effects would go too.
Quotes in the article suggest that the justices want to consider only legislative intent, and not deal with the issue of forum shopping or of East Texas in particular.
This may technically be legally correct, but it is a serious mistake. East Texas has a reputation for unfairness, and that reputation is undermining the credibility of the US legal system as a whole.
>that reputation is undermining the credibility of the US legal system as a whole.
Once someone studies the impact of wealth on outcome of court cases, such as the difference between hiring a good lawyer and getting a public defender, is there anyone who still thinks of the US legal system as credible? I think of it as a pay to win system with a monopoly on violence that is a threat to anyone caught up in it. I've seen poor people completely destroyed for far lesser crimes that what rich people are allowed to walk with. Once you count in stacking charges to force plea deals, and the rate at which plea deals happen, how can anyone defend seeing any credibility left in the system?
Huh. If you block IP addresses from this part of Texas, can you claim to not to business there, and thus cannot be tried there?
Edit: Actually... Could you have one company make the product, and one company resell the product, and pick where the first company does business to be advantageous to themselves during patent litigation? Or can the reseller be sued for patent infringement?
Not a lawyer, but I know you can force resellers to destroy patent infringing inventory. Not the same as being sued for damages, but ends your business model anyway.
Was hoping for a cameo appearance of Lee Cheng, the (edit: former) Chief Legal Officer for Newegg. He's a force to be reckoned with when it comes to patent trolls in East Texas.
> That decision said defendants in patent cases, as in other cases, may be sued essentially anywhere they do business.
If this is the case, it seems like it would make sense to simply stop doing commerce in hostile jurisdictions. It might constitute a short term loss for some vendors, but it might kill the cottage industry of plaintiff-slanted patent hearings.
I've been mulling over putting in a TOS clause in my product prohibiting its use within the jurisdiction of the Eastern District of Texas. And if I'm understanding this right, not only would it be impossible to sue me there, it would also be possible to bring both criminal and civil complaints against any East Texas patent trolls accessing my site for violation of the CFAA.
I am certainly no lawyer but I suspect it wouldn't work just based on the fact that if it did it would be standard procedure for tech companies. For a lot of companies, losing business in that one region would be worth the trade (again.. if it actually worked to shield you from patent trolls).
It's not the defendent's place f business it's the plaintiff's. People will actually do things like arrange the sale of an item in <your district of choice> in order to qualify. But that's not really necessary anymore because doing commerce online is usually enough.
It is actually the defendants place of business that matters, but doing business for jurisdiction purposes is pretty widely defined. If you sell your stuff to Amazon and Amazon sells it nationwide, you are going to be subject to nationwide jurisdiction.
You can control your downstream distribution channels, if that's what it takes. First sale is probably the only real commerce you have to control. But eliminating retailers like Amazon would be a big loss for most producers.
> a few companies urged the justices to retain the current rules, saying there was a value in letting cases be considered by courts that have developed expertise in patent matters.
Fair enough, let's have an IQ and competency test for Judge T. John Ward and see if this claim by various corporations that he is truly the century's most brilliant jurist on the topic of IP or not.
> Delaware today regularly tops lists of domestic and foreign tax havens because it allows companies to lower their taxes in another state — for instance, the state in which they actually do business or have their headquarters — by shifting royalties and similar revenues to holding companies in Delaware, where they are not taxed. In tax circles, the arrangement is known as “the Delaware loophole.” https://mobile.nytimes.com/2012/07/01/business/how-delaware-...
The case is a good example of why popular reporting about how the Supreme Court works often misses the mark. The case really isn't about patent trolls--the policy question of balancing patent rights versus other consideration is squarely in Congress's wheelhouse. Instead, this is a dispute about what Congress has already said. Specifically, what it has said about "venue" in patent cases.
"Venue" is the idea that several courts may have the power to hear a case (i.e. they have jurisdiction over the case and over the defendant), but that for various reasons we may want to funnel the litigation to particular courts. Venue rules are set forth in federal law.
28 U.S.C. 1400(b) states: "Any civil action for patent infringement may be brought in the judicial district where the defendant resides, or where the defendant has committed acts of infringement and has a regular and established place of business." That's a venue provision specific to patent cases. It tends to limit where venue is proper (i.e. where lawsuits can be brought), because ordinarily "residency" for a corporation is defined pretty narrowly.
There is also a more general venue provision, 28 U.S.C. 1391(a)-(c), which provides for venue in, among other places, wherever a corporate defendant is subject to personal jurisdiction. That tends to permit venue in more places, because corporations can be subject to personal jurisdiction almost everywhere they have a substantial business presence (under the theory that if you do business somewhere, you can't complain about being taken to court there).
The Supreme Court held in 1957, in Fourco Glass v. Transmirra Products, that in patent cases, only section 1400 applies, not the more general venue provision in section 1391. That is, until the Federal Circuit determined that subsequent amendments to section 1391 had the effect of making the more general venue provision of section 1391 applicable to patent cases too.
Now, whatever you think of patent trolls, you kind of have to handicap the case in favor of Kraft (the party arguing for broader venue). The text of the current version of section 1391 is pretty clear: an action may be filed in "a judicial district in which any defendant resides," where the "residency" of corporate defendants is defined as "any judicial district in which such defendant is subject to the court’s personal jurisdiction with respect to the civil action in question," for "all venue purposes."
Kraft argued at the Supreme Court the definition of "residency" in 1391(c) applies "for all venue purposes," including for purposes of section 1400. Thus, even if section 1400 is the exclusive venue provision in patent cases, it incorporate's 1391(c)'s broad definition of where a corporate defendant "resides."
Undoubtedly, many pages will be spent arguing about the effect of one reading of the statutory text versus the other vis-à-vis patent trolls. Some justices will care about that, because they view statutory interpretation through the lens of policy decisions. Others will not care. Not because they do or do not like patent trolls, but because to them statutory interpretation is a matter of what the words on the page say, not policymaking.
On a facsimile reading of the text, it's pretty clear that Kraft has the upper hand. However, there are two wrinkles.
First, the elephant in the room is patent trolls and East Texas. It's pretty much the only reason that anyone cares about the case, and SCOTUS did explicitly ask Kraft if it should matter. The response was that Congress can do a better job.
The more important wrinkle, though, is that the law was amended and an intervening case (VE Holding), not held by the SCOTUS (and thus not binding precedent to SCOTUS) more or less overturns Fourco in its interpretation of the relevant text. This opens up room for unclear interpretation of the text, at which point legislative intent comes into play--and the legislative intent isn't exactly helpful. Kraft argues that the changes to the law in 2011 were meant to clarify the definitions of residency based on the ALI report--but the ALI report also recommended deleting 1400(b) (which is causing the confusion), which Congress did not do.
In the oral arguments, TC Heartland doesn't seem to me to have defended its interpretation well. It basically requires holding that VE Holding was bad case law and overturning 30 years of assumed precedent--which SCOTUS tends to be reluctant to do. On the other hand, TC Heartland did make a fairly compelling case that adopting its interpretation wouldn't bring down the end of the world for the judicial system. Kraft also seems to have slipped up in their defense--but, having the better prior case, it's not so problematic.
Basically, what it comes down to is if East Texas is worth influencing the decision process. There is ample judicial cover for deciding the case in either direction, although the narrow-venue case is somewhat more tortured.
> The Supreme Court held in 1957, in Fourco Glass v. Transmirra Products, that in patent cases, only section 1400 applies, not the more general venue provision in section 1391. That is, until the Federal Circuit determined that subsequent amendments to section 1391 had the effect of making the more general venue provision of section 1391 applicable to patent cases too.
What you're leaving out is that the amendment to the relevant part of 1391 was only from:
> (c) A corporation may be sued in any judicial district in which it is incorporated or licensed to do business or is doing business, and such judicial district shall be regarded as the residence of such corporation for venue purposes.
to:
> (c) For purposes of venue under this chapter, a defendant that is a corporation shall be deemed to reside in any judicial district in which it is subject to personal jurisdiction at the time the action is commenced.
It seems highly improbable that this minor wording change was intended to affect whether or not it applied to section 1400, and the Federal Circuit didn't find any evidence that Congress intended it to. Thus, even if the original Supreme Court interpretation was 'wrong' from a textualist perspective, the Federal Circuit was still bound by it and should have followed it, rather than using some blustery argument to decide that they could treat the new text "as a matter of first impression" - basically an excuse to "ignore our decision", as Justice Kagan put it. My guess is that the Federal Circuit was just as motivated by policy desires in doing so as you blame the Supreme Court for being; at least, this would fit very neatly into the usual pattern of the Federal Circuit consistently making IP-friendly rulings and the Supreme Court frequently overruling them.
As you allude to, 1391 has since been amended further, but again not in a way that suggests Congress intended a functional change wrt this question.
Petitioners brief does a great job by making it seem like moving the words from the end to the beginning was the only change. But note that Congress changed it from "for venue purposes" to "for purposes of venue under this chapter." Now it's "for all venue purposes." The latter suggests at least a clarification about the intended scope of the residency definition.
Isn't it a general principle that, if two provisions are contradictory, the more specific one counts?
I also don't think it's quite fair to characterise anything but textual originalism as "interpretation through the lens of policy decisions". In this case one could, for example, argue that that an interpretation which renders parts of the law completely useless (1391 in this case) is illegitimate, at least if the act that created the ambiguity could have also eliminated it. it would also seem proper to err on the side of the earlier legislation simply as a mechanism to encourage better legislation.
I wouldn't even agree, but it's usually the conservative argument that judges shouldn't try to fix laws when they're poorly drafted (c.f. the last Obamacare case at SC).
You hit on what I think is the best argument in Petitioner's favor, which is that the Federal Circuit's reading of 1391 makes section 1400 superfluous.
It would surely be nice to have a central decision tree which would make the accidental supersession of 1400 by the novel 1394 obvious before an action to make it law.
I don't think it was accidental. "Residency" is a term of art used throughout the United States Code. A provision that gives broad definition to that term, "for all venue purposes" (rather than "for purposes of this section") probably was intended to have ripple effects on other sections.
How about moving the specialized court to the US Patent Office area (not same building), and have both the 'anywhere' and the 'incorporated' part solved? The specialism is around the corner, the government can set up the court basics and scale to demand. Incorporated Delaware isn't overloaded. And finding the best court to go to for trolls disappears.
So if I'm starting a new company today, what's the best place to incorporate to avoid patent trolls, both in the US and/or globally? What other strategies are there to avoid patent trolls (e.g. never do business in the state of Texas?).
some people ITT have said incorporating in Ireland (etc) will prevent you from getting sued. I'm not sure that I buy that. AFAICT, It may make it a little bit harder, but if you refuse to defend your company in the US the default judgement means that you'd be unable to sell your product in the US.
What this article fails to emphasize and report on is the amount of settlement payments and related legal expenses produced by cases filed with the EDT court.
I wouldn't be surprised if they would dwarf whatever remedies are awarded by the court to the plaintiffs.
It is a serious issue. Being a Texas company, we have been sued numerous times primarily because we are in Texas and it allows the other defendant's cases to be tried in the Eastern District of Texas.
The patents are always baseless, but it matters little. In almost all cases, the board of directors wants to settle the case quickly instead of fighting it out, even (in many cases) if the CEO or inside counsel wants to fight. It's cheap(ish) to settle and very expensive and time-consuming to fight; in short, it's a big distraction, one that can be solved with money. Since most of the plaintiffs are shell companies run by lawyers, there is little cost to them even if they loose and no value to the defendant if they win.
The exception to all this being Lee Chang at NewEgg who always fights. That works if you have a CEO and board who is willing to spend the time and money to establish a reputation but that is seemingly rare. Newegg also signed onto this Amici. [2]
This problem has been going on for a long time (8 years for us), and while we keep hoping for some reform, Congress is yet to act in a meaningful way.
On a side note, our former patent defense attorney, who clerked for the patent judge in Marshall, TX, left defense a few years ago and became a plaintiff's attorney. His reasoning? Much more profitable.
[1] http://www.scotusblog.com/wp-content/uploads/2017/02/16-341-...
[2] https://blog.newegg.com/lee-cheng-holds-reddit-ama-explains-...