Hacker News Reader

Comment by ridgeguy | Hacker News Reader

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.

View on HN

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.

If the location is determined by the plaintiff, the only incentive is to be friendly to plaintiffs, not to produce accurate and reliable judgments.

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.

And filing in Texas is the same for patent prosecution. The plaintiffs know what to expect: interpretations from the bench that heavily favor them.

It's not well developed law when the decisions are so disproportionately weighted towards one side of the courtroom.

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.

Reply on news.ycombinator.com