Judge Rejects Twitter’s Attempt To Move Patent Lawsuit To Californian Court

Internet companies such as Twitter, Google (NASDAQ:GOOG) and Facebook are hit with patent suits regularly, often in inconvenient venues. They would therefore want those lawsuits to be heard in the relatively tech-friendly courthouses of Northern California.

However, it looks like that is not going to happen anytime soon. Twitter raised a novel argument. It asked to move the most recent patent lawsuit against it to move from Virginia to San Francisco. Titter claimed that the plaintiff in this case, Dinesh Agarwal, is a Twitter user himself. He therefore agreed to Twitter’s terms of service. Those terms include a clause that states that all lawsuits must be brought against the Company in San Francisco.

US District Judge Henry Morgan however ruled against Twitter. He concluded that his own court in Alexandria (VA) is the appropriate place to hear the lawsuit. He stated that Twitter’s contract clause referring o where lawsuits must be heard, does not necessarily apply to patent suits.

The judge also did not want to create a precedent. Allowing Twitter to transfer its court case would enable other social networking companies to start similar disputes. This would potentially foster satellite litigation in every patent case involving a social networking market participant.

Twitter move was smart. If the judge had accepted its argument, companies such as Twitter or Facebook would be in a strong position to move their patent disputes to their “home court.”

In this case, Mr. Agarwal is suing in the district he has been living in for the last 25 years. He is therefore not seeking a location foreign to both parties (like East Texas). Interesting enough, Agarwal’s twitter account shows that he has zero tweets. His profile states that he is a patent lawyer as well as an aspiring screenwriter. Agarwal signed up for Twitter in January 2010 mainly for the purpose of determining whether the service infringes his patent. Later that year, he founded VS Technologies, a shell company that hold the disputed patent and he then pursued lawsuit against Twitter.

Agarwal’s patent is based on a “method and system for creating an interactive virtual community of famous people”. As a patent lawyer, Agarwal handled all the paperwork for this patent application himself. He used patents to demand royalty payments from the tech industry. This increasingly common situation is called “patent trolling”

Federal court records show that Twitter has been sued for patent infringement at least four times. In addition to this lawsuit brought by VS Technologies, Twitter is facing an ongoing patent lawsuit filed by Cooper Notification in 2009.

Twitter settled a patent lawsuit brought by TechRadium in 2009. A fourth lawsuit, filed in 2010 by lawyer-controlled patent-holding company Stragent LLC, the lawsuit was dropped without explanation.