Speaker 1: This is Bloomberg Law.
Speaker 2: What does a prosecutor have to prove in order to
Speaker 2: get a rico conviction? Tell us why this Solicitor General
Speaker 2: is sometimes referred to as the tenth Justice.
Speaker 1: Interviews with prominent attorneys in Bloomberg Legal Experts.
Speaker 2: That's Jennifer k for Bloomberg Law. Joining me is former
Speaker 2: federal prosecutor Robert miss.
Speaker 1: And analysis of important legal issues, cases and headlines.
Speaker 2: It's the toughest hurtle for prosecutors proving Trump's intent. Alito
Speaker 2: took on Congress saying Congress has no power to regulate
Speaker 2: the Supreme Court.
Speaker 1: Bloomberg Law with June Grosso from Bloomberg Radio.
Speaker 2: Welcome to a special best of edition of the Bloomberg
Speaker 2: Law Show. Ahead in this hour, the Supreme Court is
Speaker 2: facing a pile of cases from the conservative Fifth Circuit.
Speaker 2: Inside the Supreme Court's second decision allowing Biden's ghost gun regulations,
Speaker 2: and critics call him a patent troll. He prefers modern
Speaker 2: day edison. An outside share of the Supreme Court's biggest
Speaker 2: case is this term will come from the ultra conservative
Speaker 2: Fifth Circuit Court of Appeals, who's far reaching rulings on
Speaker 2: federal regulatory power, guns and social media are proving impossible
Speaker 2: for the Supreme Court to ignore. Here's former US Solicitor
Speaker 2: General Gregory Gar's take on the Fifth Circuit.
Speaker 3: Some people have said it sort of the Supreme Court
Speaker 3: versus the Fifth Circuit. It's interesting, I mean, the Fifth
Speaker 3: Circuit is now the most conservative circuit among the many.
Speaker 3: And you know, the kind of question that all these
Speaker 3: cases present is whether the Fifth Circuit has got out
Speaker 3: ahead of even the US Supreme Court today in terms
Speaker 3: of how conservative it is and whether or not the
Speaker 3: US Supreme Court feels as though it has to rein
Speaker 3: it in a little bit.
Speaker 2: Joining me is Bloomberg New Supreme Court reporter Greg storre
Speaker 2: Greg just how conservative is the Fifth Circuit.
Speaker 4: It's unquestionably the most conservative federal appeals court in the country,
Speaker 4: and it gets an awful lot of care, so we
Speaker 4: notice it even more than other courts. On this court,
Speaker 4: twelve of its full time judges are Republican appointees and
Speaker 4: only four are Democratic appointees. And six of those Republican
Speaker 4: appointees are appointees of Donald Trump. And you know, they
Speaker 4: include some justices who are really trying to make a
Speaker 4: name for themselves with some really far reaching rulings, and
Speaker 4: so it's kind of consistently the place where conservatives go
Speaker 4: when they are looking to push the law in a
Speaker 4: certain direction.
Speaker 2: There have been a lot of stories about the Texas
Speaker 2: judges who've become the go to judges, for example, for
Speaker 2: Republican states that want to sue. Tell us about the
Speaker 2: Trump appointees on the Fifth Circuit, because what seems unusual
Speaker 2: about them is they're not only conservative, but several of
Speaker 2: them made statements before they became judges that staked out
Speaker 2: very conservative positions on issues like abortion and gay marriage. Yeah.
Speaker 4: So there's also one who while on the beat, has
Speaker 4: made some really remarkable statements. That's James ho He's a
Speaker 4: Trump appointee. He's described abortion while on the bench as
Speaker 4: a moral tragedy and written that if there's too much
Speaker 4: money in politics, because there's too much government. And then
Speaker 4: there's some other judges that really drew a lot of
Speaker 4: controversy when they were nominated, a guy like Corey Wilson,
Speaker 4: who had written that gay marriage is a pander to
Speaker 4: liberal interest groups. Another judge, Stuart Kyle Duncan, who has
Speaker 4: written a lot of things in opposition to LGBTQ rights.
Speaker 4: And he was a judge who drew that protest at
Speaker 4: Stanford Law School where protesters shut him down, wouldn't let
Speaker 4: him speak. So he's very much a lightning rod.
Speaker 2: The Fifth Circuit hasn't been faring that well at the
Speaker 2: Supreme Court. To me, it's taken the position the Ninth
Speaker 2: Circuit used to take, where it was the most reversed
Speaker 2: circuit for so many years. So tell us how it's
Speaker 2: done in the past year.
Speaker 4: Not very well. So in the last Supreme Court term,
Speaker 4: in seven of nine cases the Court decided if at
Speaker 4: least partially or largely reversed the Fifth Circuit. Say it's different,
Speaker 4: just to go back to the Ninth Circuit. The way
Speaker 4: it's different is the Ninth Circuit, I had a well
Speaker 4: deserved reputation back in the day, is being very very liberal,
Speaker 4: and the Supreme Court, even when it wasn't as conservative
Speaker 4: as this Court is, would say, no, we're not going
Speaker 4: to let you do that. Ninth Circuit. Here, it's a
Speaker 4: case where the Fifth Circuit is trying to sort of
Speaker 4: go beyond where the Supreme Court has gone. It is
Speaker 4: a conservative Supreme Court, and we have the Fifth Circuit
Speaker 4: trying to push the envelope even beyond where the Supreme
Speaker 4: Court has gone.
Speaker 3: Do.
Speaker 2: Some of their decisions seem like decisions that the Supreme
Speaker 2: Court almost has to take or it will allow the
Speaker 2: law to be, you know, even further out or even
Speaker 2: more conservative than the Court envisioned.
Speaker 4: Yeah. So a number of the cases that Supreme Court
Speaker 4: has this term are cases where the Biden administration is
Speaker 4: appealing and there are cases where the Fifth Circuit struck
Speaker 4: down something that either an administrative agency or Congress did.
Speaker 4: So one example, there is a law that says the
Speaker 4: people subject to a domestic violence restraining order can have
Speaker 4: your Second Amendment rights gun rights taken away. The Fifth
Speaker 4: Circuit said, Nope, that law is unconstitutional. The Biden administration
Speaker 4: came up to the Supreme Court, and really, in that
Speaker 4: sort of situation, the Court almost has to take the case.
Speaker 4: So we're going to now see what the Supreme Court
Speaker 4: thinks about that interpretation of the Second Amendment.
Speaker 2: Yeah, that's guaranteed to be one of the biggest cases
Speaker 2: of the term. And my favorite line from that really
Speaker 2: was the Fifth Circuit saying that while the defendant there,
Speaker 2: Rahimi was quote hardly a model citizen he was entitled
Speaker 2: to Second Amendment protections. And this is a defendant who
Speaker 2: not only had a restraining order against him by his
Speaker 2: former girlfriend, but also shot his gun in public I
Speaker 2: think five times. So not exactly a model defendant for
Speaker 2: a case like this.
Speaker 4: No, And in fact, if you're a Second Amendment advocate,
Speaker 4: a really bad defended to have in a case like this.
Speaker 4: You have both this law that protects again something that
Speaker 4: is pretty commonly understood to be a very very dangerous
Speaker 4: situation to somebody with domestic violence restraining order having access
Speaker 4: to firearms, and you also have somebody who a judge
Speaker 4: found had engaged in all sorts of criminal violent activity.
Speaker 4: And the confluence of those things make it a case where,
Speaker 4: even with this conservative Supreme Court, it's going to be
Speaker 4: pretty hard for them to explain why mister himI is
Speaker 4: somebody who is entitled to keep his Second Amendment right.
Speaker 2: The Supreme Court has several cases that may allow it
Speaker 2: to expand its attempt to rein in the administrative state,
Speaker 2: and a couple come from the Fifth Circuit oral arguments
Speaker 2: in the Consumer Financial Protection Bureau's funding system. The second
Speaker 2: time I think the CFPB has been before the Court
Speaker 2: So tell us about this Fifth Circuit decision.
Speaker 4: Yeah, it is the second time the CFPB has been
Speaker 4: up before the Supreme Court. This case has to do
Speaker 4: with how the bureau gets its money. It gets its
Speaker 4: money through the Federal Reserve system. It doesn't rely on
Speaker 4: the US year congressional appropriations. And that was a part
Speaker 4: of Congress's design and creating this bureau after the two
Speaker 4: thousand and eight financial crisis. They wanted to give the
Speaker 4: CSPB a certain amount of independence, shielded from the political processes.
Speaker 4: And what the Fifth Circuit said was this system violates
Speaker 4: the constitutional provision that says government spending has to be
Speaker 4: done via a congressional appropriation. Now, in the past, courts
Speaker 4: and concluding the Supreme Court have said that provision is
Speaker 4: something that keeps the executive branch from spending money that
Speaker 4: Congress hasn't authorized to be spent. Courts haven't used it
Speaker 4: to restrict Congress and the way they can set up
Speaker 4: an agency. Well, the this Circuit did in this case.
Speaker 4: So it's a novel constitutional approach. There's not a whole
Speaker 4: lot to go by in terms of precedent, and it's
Speaker 4: going to be very interesting to see how the Supreme
Speaker 4: Court deals with that and then what it decides to
Speaker 4: do if it agrees that the system is unconstitutional.
Speaker 2: There's another case, and it's the SEC and its use
Speaker 2: of in house judges. Another issue that's been before the Court,
Speaker 2: and the Fifth Circuit found three different problems with.
Speaker 5: This, three different.
Speaker 4: Three different problems. Two of them are sort of connected,
Speaker 4: and that may be kind of the biggest part of
Speaker 4: the case. The Fifth Circuit said that under the Constitution,
Speaker 4: folks hit with an SEC complaint in many cases have
Speaker 4: a right to a jury trial, meaning the SEC cannot
Speaker 4: bring those cases before an administrative law judge at the agency.
Speaker 4: They have to go into federal court. And then the
Speaker 4: related aspect of the ruling is the Fifth Circuit said,
Speaker 4: and Congress did not give clear enough guidance to the SEC,
Speaker 4: clear enough principles to decide which cases it's going to
Speaker 4: take before the administrative law judge and which case is
Speaker 4: going to go to the Supreme Court. The final issue
Speaker 4: is that the Fifth Circuit said that the job protections
Speaker 4: that the administrative law judge is that the SEC have
Speaker 4: will leave them too insulated from presidential control. That's an
Speaker 4: issue the Supreme Court is considered in slightly different context
Speaker 4: before or so if the Supreme Court wants to rule
Speaker 4: against the SEC it's got kind of a menu of
Speaker 4: ways it can do that.
Speaker 2: Two cases involve free speech, the rights of social media companies,
Speaker 2: and a Fifth Circuit decision that clashes with an Eleventh
Speaker 2: Circuit decision. The Eleventh Circuit probably the second most conservative
Speaker 2: circuit in the country.
Speaker 4: These are laws that were put in the place by
Speaker 4: Republican controlled states Texas and Florida, and they basically dictate
Speaker 4: the social media companies how they to go about managing
Speaker 4: content and removing misinformation, and they have rules about what
Speaker 4: they have to say when they take down a post online.
Speaker 4: And the social media industry trade groups sued and said
Speaker 4: that violates our First Amendment rights. The Fifth Circuit upheld
Speaker 4: the Texas law. The Eleventh Circuit struck down much of
Speaker 4: Florida's law. The eleven Circuit devoted much of its focus
Speaker 4: to a provision that requires a detailed explanation every time
Speaker 4: a social media company makes a content management decision.
Speaker 2: These decisions are not just conservative, but their novel. They
Speaker 2: just seem not wedded to precedent.
Speaker 4: You know, some of them are taking on new issues.
Speaker 4: The appropriations clause issue is one that hasn't really been tested,
Speaker 4: at least not recently, and some of them. You look
Speaker 4: at the gun case, for example, the Rehimi case, when
Speaker 4: the Supreme Court ruled on the right to carry a
Speaker 4: gun in twenty twenty two, the court said, the test
Speaker 4: is going to be history and tradition, and you're suppose, judges,
Speaker 4: you're supposed to look and try to find a historical
Speaker 4: analog for some current regulation. And if you can't find
Speaker 4: an historical analog, that's a pretty good sign that this
Speaker 4: provision is unconstitutional.
Speaker 2: That's Bloomberg New Supreme Court reporter Greg Store. Coming up
Speaker 2: next on the Bloomberg Law Show. It's a Supreme Court
Speaker 2: decision about regulations on ghost guns. But the justices seem
Speaker 2: to be said a strong message to the Fifth Circuit
Speaker 2: and a Texas judge. I'm June Grosso and you're listening
Speaker 2: to Bloomberg.
Speaker 6: This is Bloomberg Law with June Grosso from Bloomberg Radio.
Speaker 2: You're listening to a special best of edition of the
Speaker 2: Bloomberg Law Show. In September, New York City Mayor Eric
Speaker 2: Adams announced that in a search of a private daycare
Speaker 2: in Harlem police recovered drugs, ghost guns and the three
Speaker 2: D printer used to make them.
Speaker 5: Who would have thought that we must add to our
Speaker 5: list of inspections of do we have three D printers
Speaker 5: that can print guns?
Speaker 2: The Biden administration has issued regulations on these ghost guns,
Speaker 2: which are assembled from kits without the usual serial numbers
Speaker 2: and background checks on purchasers, making them a track active
Speaker 2: to teenagers and those with criminal records. The Supreme Court
Speaker 2: has reinstated those regulations, blocking a second nationwide injunction issued
Speaker 2: by Texas Federal Judge Ried O'Connor and okayed by the
Speaker 2: Fifth Circuit. Does this mean the Supreme Court is telling
Speaker 2: the judge and the Fifth Circuit no? Means no? Or
Speaker 2: does it mean something more substantive about ghost gun regulations?
Speaker 2: Joining me? Is Heidi Lee Feldman, a professor at Georgetown Law.
Speaker 2: So let's go back to the August decision where the
Speaker 2: Supreme Court blocked a nationwide injunction by Judge rit O'Connor
Speaker 2: and allowed the government to keep enforcing the regulations on
Speaker 2: ghost guns. Should that have been the end of this
Speaker 2: until the case was fully litigated.
Speaker 7: One would have thought so, And that's certainly Ultimately the
Speaker 7: position the government took it was very peculiar that they
Speaker 7: sought an injunction pending appeal. That is an alteration in
Speaker 7: the procedural posts rush of the case. They didn't give
Speaker 7: any new reason for seeking an injunction while the case
Speaker 7: was pending, and that was I think the really controversial thing.
Speaker 7: Nothing had changed in the facts or the law that
Speaker 7: would be relevant to granting an injunction. So ordinarily, if
Speaker 7: a party did that, the judge would just deny it
Speaker 7: because they had just had an injunction overturned by the
Speaker 7: Supreme Court. Of course, in this case, Judge O'Connor granted
Speaker 7: the injunction and didn't give any new reasons, and the
Speaker 7: court really just put the kebash on that and said no, no.
Speaker 2: Also, the Fifth Circuit upheld his order.
Speaker 7: Yeah. Look, there's several very contested matters that are driving
Speaker 7: this litigation. Ghost gun manufacturers come in and say, we
Speaker 7: object to this ATF rule making, which seems to require
Speaker 7: us to take all sorts of steps that people who
Speaker 7: may firearms have to take. We're arguing we're not firearms manufacturers,
Speaker 7: we're parts suppliers. So that whole dynamic introduces guns into
Speaker 7: the mix. Then we have a federal agency atf which
Speaker 7: has its own long complicated history. Then we have a judiciary,
Speaker 7: certainly O'Connor and the Fifth Circuit that's very keen to
Speaker 7: invalidate agency rulemaking. So I think the Fifth Circuit as
Speaker 7: a whole was very moved by that agenda, and so
Speaker 7: they do uphold O'Connor's order, and so ultimately, of course,
Speaker 7: the Supreme Court is rejecting the Fifth Circuits position as
Speaker 7: well as O'Connor's position on the injunction. But the fact
Speaker 7: that the Supreme Court took that position isn't an indication
Speaker 7: of how they would ultimately rule on the merits as
Speaker 7: much as I think it was a rejection of the
Speaker 7: challenge to the authority of their earlier ruling.
Speaker 2: So the Court's August order was a five to four
Speaker 2: decision where Chief Justice Roberts and Justice amy Cony Barrett
Speaker 2: joined the Court's three liberals. So there were four descents
Speaker 2: in August, but no justice publicly dissented from this order
Speaker 2: that was handed down. Does that mean the justices are
Speaker 2: telling the judge in the Fifth Circuit no means no?
Speaker 2: Or does it mean something more substantive about ghost gun regulations.
Speaker 7: It's very hard to read tea leaves from these orders
Speaker 7: that are issued without opinions, and these are orders that
Speaker 7: relate to not the final merits on the case. So
Speaker 7: I want to sound a note of caution. I think
Speaker 7: that there are justices on the Court who may be
Speaker 7: very unsympathetic to the ATF rulemaking related to ghost guns,
Speaker 7: who realize that you simply cannot operate our system of
Speaker 7: litigating cases case by case and letting different courts reach
Speaker 7: different conclusions if they disagree and see what emerges up
Speaker 7: through the process, and what rit O'Connor and the Fifth
Speaker 7: Circuit wanted to do absolutely disrupts that process. It also
Speaker 7: wastes the Supreme Court's time. I mean, they do not
Speaker 7: want to have to keep issuing redundant interlocutory orders. That's
Speaker 7: just completely inefficient for them. So I think you could
Speaker 7: have justices who may be less sympathetic to the idea
Speaker 7: of letting the ATF rule making stand or more sympathetic
Speaker 7: to relatively unfettered sales of ghost guns, who nevertheless see
Speaker 7: procedural chaos from what the Fifth Circuit and Judge O'Connor did.
Speaker 2: The Fifth Circuit last term lost I think seven out
Speaker 2: of a cases at the Supreme Court, and they have
Speaker 2: a lot of cases before the court this year, and
Speaker 2: many of them are from judges in Texas like rit
Speaker 2: O'Connor that seem to have novels, shall we say, no
Speaker 2: legal reasoning and their decisions.
Speaker 7: I mean, do you think we have to I think
Speaker 7: we have to be as a stronger word than novel.
Speaker 7: Look in sophisticated litigation in federal courts, advocates and courts
Speaker 7: are advancing the law, so there's often something novel in
Speaker 7: what they argue, in what courts hold. That's neither unexpected
Speaker 7: nor unusual. What is problematic is when you have a
Speaker 7: court and the federal judiciary in Texas, the district court
Speaker 7: level is like this, and the fifth Circuit is like this,
Speaker 7: that is receptive to extreme arguments. They're not just creative
Speaker 7: novel they are highly contentious. Now, if you have a
Speaker 7: court that is receptive to that, maybe some of those
Speaker 7: highly contentious and highly extreme arguments will ultimately be vindicated.
Speaker 7: But the more extreme the substance is of a position
Speaker 7: that's being taken, the more cuts. Generally, courts are in
Speaker 7: composing big procedural consequences until those big arguments and positions
Speaker 7: go through the appellate process of review. So I think
Speaker 7: that the Fifth Circuit and the Texas District courts in
Speaker 7: general generate a lot of extreme positions. What we saw
Speaker 7: here was this intersection of extreme positions and willingness first
Speaker 7: to issue a very sweeping injunction on the basis of
Speaker 7: the extreme position nationwide injunction, and then to sort of
Speaker 7: double down on that after the Supreme Court said it
Speaker 7: wasn't appropriate. The combination of extreme positions and aggressiveness about
Speaker 7: imposing consequences before the appellate process has played out thoroughly
Speaker 7: is a way of really throwing a spanner in the
Speaker 7: gears of adjudication, as the Federal Court understands it, and
Speaker 7: they're just not going to tolerate that.
Speaker 2: So frame for us the message the Supreme Court is
Speaker 2: sending to the Fifth Circuit and Judge O'Connor.
Speaker 7: They're saying, don't play games with us about procedure. If
Speaker 7: you have very good reason to believe that we've taken
Speaker 7: a given position, don't pretend we haven't taken that position
Speaker 7: and act contrary to what we already said. I mean,
Speaker 7: in some ways, what they're saying is you cannot pretend
Speaker 7: that we haven't spoken. I mean, in some sense, it
Speaker 7: sounds so simple. When you have a judicial system that's
Speaker 7: founded on the idea of appellet review, lower courts are
Speaker 7: answerable to higher courts in that system. So in some
Speaker 7: sense it's very bizarre for the High Court to have
Speaker 7: to issue an order that I think is basically saying
Speaker 7: you are totally acting way outside of your job. You
Speaker 7: are flouting your role. That's what I think they were saying.
Speaker 2: And we'll see if the Fifth Circuit and Judge O'Connor
Speaker 2: have that message. Thanks so much. That's Professor Heidi Lee
Speaker 2: Feldman of Georgetown Law. A note. Michael Bloomberg, the founder
Speaker 2: and majority owner of Bloomberg LP, the parent company of
Speaker 2: Bloomberg Radio, is a donor to groups that support gun control,
Speaker 2: including every Town for Guns Safety coming up next on
Speaker 2: the Bloomberg Law Show. Critics call him a patent troll.
Speaker 2: He prefers modern day edison. I'm June Grosso. When you're
Speaker 2: listening to Bloomberg, this.
Speaker 6: Is Bloomberg Law with June Grosso from Bloomberg Radio.
Speaker 2: You're listening to a special best of edition of the
Speaker 2: Bloomberg Law Show. Is Lee Rothschild among the most prolific
Speaker 2: inventors of his generation as he sees himself, or is
Speaker 2: he a patent troll as his critics see him. Rothschild
Speaker 2: is listed as the sole inventor of more than one
Speaker 2: hundred and thirty patents, but his network of companies don't
Speaker 2: make any products. He readily admits his entire business model
Speaker 2: is built around monetizing his intellectual property through litigation and licensing,
Speaker 2: and there appears to be more litigation than licensing. Joining
Speaker 2: me is Laurel Culkins, Bloomberg Law reporter who's interviewed and
Speaker 2: written about Rothschild. Laurel tell us what Lee Rothschild has invented?
Speaker 8: Well, first of all, you have to understand that Lee
Speaker 8: Rothschild is in a handful of unique individuals in the country,
Speaker 8: and that he's both a bona fide inventor and a
Speaker 8: patent troll. And if you don't know what patent troll means,
Speaker 8: it's a derogatory flur that high tech companies slap onto
Speaker 8: litigants who show up in court with sometimes basic patents
Speaker 8: for generic technology, and then they try to extract a
Speaker 8: nuisance settlement that's cheaper than the cost of going to trial. Well,
Speaker 8: Rothschild's in a different camp. He is an actual inventor.
Speaker 8: He has one hundred thirty patents solely in his name.
Speaker 8: He started when he was twenty. He's now seventy one,
Speaker 8: and he's invented some wild things. His very first invention
Speaker 8: when he was in his teens was quadrophonic stereo if
Speaker 8: you remember back that far. And the things he's got
Speaker 8: patents on now are like virtual reality exercise machines QR
Speaker 8: codes connected to the Internet. He had a public company
Speaker 8: for a while in the nineties that was all about barcodes.
Speaker 8: He was a pioneer in barcode technology. So he actually
Speaker 8: had the legit patent portfolio, which puts him in a
Speaker 8: different camp. And that's why he has this kind of
Speaker 8: love hate relationship with the term patent troll. He says, yeah,
Speaker 8: classic patent troll is somebody who takes a crappy patent
Speaker 8: and goes and files a newsman's lawsuit, you know, to
Speaker 8: extract a settlement.
Speaker 4: He goes.
Speaker 8: But if you want to put me in the camp
Speaker 8: of legit inventors like the Wright brothers and Alexander Graham
Speaker 8: Bell and Thomas Edison who had groundbreaking inventions but had
Speaker 8: to go to court to defend them with supporting evidence.
Speaker 8: He goes, Yeah, if you want to put me in
Speaker 8: that camp.
Speaker 2: Patent troll, can you explain in a little more depth
Speaker 2: what makes a patent troll?
Speaker 8: Like I said, it's a derogatory slur that high tech
Speaker 8: companies apply to people who own a patent and go
Speaker 8: to defend it in court and say, you're using my
Speaker 8: technology without taking a license, so you've copied my idea
Speaker 8: and you owe me money for it. Well, the problem
Speaker 8: is most patent trolls actually don't have any operations or
Speaker 8: what's called nonpracticing entities, and all they do is litigation.
Speaker 8: They just go around sue people, and sometimes their patents
Speaker 8: are so generic that they're laughable. And that's what's kind
Speaker 8: of funny is Lee Rothschild has some on each side.
Speaker 8: He has some that are very serious, groundbreaking inventions, and
Speaker 8: then he has a couple that have been named soup
Speaker 8: and Patent of the Months by the Electronic Frontier Foundation,
Speaker 8: which mocks him relentlessly.
Speaker 2: He's got a sue and settle model in place.
Speaker 8: Yes, he's very upfront that his business model is all
Speaker 8: about licensing and litigation. He would rather that if a
Speaker 8: company is utilizing one of his protected ideas, a patented idea,
Speaker 8: that they simply come to him and license it or
Speaker 8: even buy the patent. The company that owns Instacart bought
Speaker 8: one of his patents several years ago to improve their
Speaker 8: user experience on their app, and he says he's licensed
Speaker 8: that one, that it was called stupid patent of the month.
Speaker 8: He said he's licensed at least fifty times to major companies,
Speaker 8: so it clearly has the merit somewhere. The thing is,
Speaker 8: most patent trolls, and he follows this model is they
Speaker 8: file a lawsuit and they want damages for past and
Speaker 8: future infringement, they want a royalty whatever, something like that.
Speaker 8: But then they almost immediately send an offer over to
Speaker 8: their target and say, oh, we'll settle for what looks
Speaker 8: like couch money because it's much less than the cost
Speaker 8: of litigation, and yet it's more than enough to pay
Speaker 8: the troll's expenses. We found a couple in Rothschild's name
Speaker 8: and the names of several of his business entities, one
Speaker 8: in particular, where he said, well, this lawsuit, you will
Speaker 8: drop it if you give us seventy five thousand dollars
Speaker 8: and the company said no, so we think you should
Speaker 8: pay our attorney speedes because we don't think you were
Speaker 8: acting properly. And the trialj has looked at that and said, well,
Speaker 8: you know, they didn't exactly defile the temple of justice,
Speaker 8: so I'm not going to make them pay your fees.
Speaker 8: But I'm also not going to make you pay them either.
Speaker 2: But the Federal Circuit Court of Appeals, which handles patent cases,
Speaker 2: had something different to say about him.
Speaker 8: In a particular case involving the ADS Home Security System company,
Speaker 8: they brought forward enough evidence that Rothschild said, Okay, I'm
Speaker 8: going to drop my complaint because I don't think I
Speaker 8: can win an infringement action against you. So ADS got
Speaker 8: real aggressive and said no, we're going to counter see
Speaker 8: you for our attorney speed and he refused to pay,
Speaker 8: and the trial jie said well, now let's just call.
Speaker 6: It to day.
Speaker 8: Nobody pays anybody. And then it went up on appeal
Speaker 8: and the appellate court got real aggressive and said, this
Speaker 8: is a frivolous lawsuit. It's frivolous on a face, it
Speaker 8: never should have been filed and we're going to require
Speaker 8: the rothschild entity to pay ads. It's attorney's seasons. There's
Speaker 8: forty three thousand dollars. So there's clearly a camp of
Speaker 8: detractors out there that don't like this kind of litigation.
Speaker 2: Are the people he's suing deliberately infringing his patents or
Speaker 2: are they working under other patents and so have good
Speaker 2: grounds for fighting these lawsuits? He brings it's both.
Speaker 8: Sometimes the companies are actually stealing your idea. I mean,
Speaker 8: I certainly am not familiar with his entire portfolio, not
Speaker 8: even close, But I know that I cover patents all
Speaker 8: the time, and there are legitimate cases where large technology
Speaker 8: companies have simply taken an idea that they like. They've
Speaker 8: held licensing talks, the talks went nowhere. They took the
Speaker 8: idea and ran with it. So that happens, and inventors
Speaker 8: have legitimate rights to defend themselves. He's filed literally thousands
Speaker 8: of these patent claims, and he's gone after big names.
Speaker 8: He's sued Google, he's too, Roku, Apple, Samsung. I mean,
Speaker 8: do you look up any high tech company and he's
Speaker 8: probably all an action against them. I mean, that may
Speaker 8: be a bit too broad, but it's pretty clear. And
Speaker 8: sometimes patents are in addition to an idea, so it
Speaker 8: becomes kind of a gray zone as to what would
Speaker 8: fly in in front of a jury and what wouldn't.
Speaker 8: And he tends to file his cases in patent friendly jurisdictions.
Speaker 8: There's two primary patent courts in Texas and he files
Speaker 8: in both of them, and they're both notorious for having
Speaker 8: juries that return Whopper awards in favor of the plaintiffs.
Speaker 8: So he's kind of got the choice of courthouse on
Speaker 8: his side when he fils.
Speaker 2: You talk to a professor who said, it's an urban
Speaker 2: myth that Texas is a haven for patent trolls. But
Speaker 2: that's what I've always heard. There have been plenty of
Speaker 2: stories about patent suits in Texas.
Speaker 8: Well. Yeah, I think that. I think Texas, the two
Speaker 8: particular Texas courts in Waco and in Marshall, which is
Speaker 8: in Deep East Texas, they deserve their reputations as patent
Speaker 8: havens trolls for two reasons. First of all, the judges
Speaker 8: are former patent attorneys. They understand patent law very very well.
Speaker 8: The other thing is they get so many patent cases
Speaker 8: that it simply becomes a numbers game. Most litigation in
Speaker 8: the United States, the patent cases included subtle and they
Speaker 8: never go to trial. But if you've got thousands and
Speaker 8: thousands more cases being filed in your court, odds are
Speaker 8: a few of them are going to go to trial.
Speaker 8: And Texas jury's are sort of notorious for punishing people
Speaker 8: who steal from little guys. So if an inventor can
Speaker 8: get their story in front of a jury that you
Speaker 8: so told my idea and it's David versus Goliath, and
Speaker 8: you owe me a lot of times, the Texas jury
Speaker 8: will reward that story. But what's really interesting about Rothschild
Speaker 8: is he's never gone to trial ever. He's filed thousands
Speaker 8: of these lawsuits. In fact, I think we counted he
Speaker 8: has eighty filed since twenty twenty one alone in the US,
Speaker 8: and he's never gone to trial. He settles or drops
Speaker 8: every single one of them, and I find that amazing.
Speaker 2: And he's got a t T to support his litigation
Speaker 2: efforts absolutely.
Speaker 8: His business model is that he works with two different
Speaker 8: groups of people. He has a team of patent researchers
Speaker 8: who are based in India and they are very familiar
Speaker 8: with the patents in the Rothschild into these portfolios, and
Speaker 8: they actively go out and search for potential infringers that
Speaker 8: they can bring actions against in courts. They do it
Speaker 8: in other parts of the world. I just don't only
Speaker 8: following the United States. But the researchers bring potential candidates
Speaker 8: forward and then a team of lawyers that Rosschild employees
Speaker 8: look them over and say that's so potential winner, that
Speaker 8: one's a no go, and they make their choices there.
Speaker 8: Then he has another side, on the invention side. He
Speaker 8: employs a team of patent attorneys in Florida where he
Speaker 8: lives that also work with some in London, where he
Speaker 8: bounces his ideas off of these lawyers and say, I've
Speaker 8: come up with this idea. I've got this invention, should
Speaker 8: we patent that? And they research it to see if
Speaker 8: somebody else has already patented the idea, and then they
Speaker 8: go forward with that. So he has he has lawyers
Speaker 8: on both sides helping him patent his inventions and helping
Speaker 8: him prosecute potential infringers of his inventions. He told me
Speaker 8: he has right now at least two hundred ideas patent
Speaker 8: applications in process, backlogged within his own invention team that
Speaker 8: they just haven't had time to fully finish out and
Speaker 8: send over to the patent office. He says he has
Speaker 8: dozens pending at the patent office waiting to be approved.
Speaker 8: So this guy's busy.
Speaker 2: Coming up next, efforts to solve the problem of patent trolls.
Speaker 2: I'm June Grosso, and you're listening to Bloomberg.
Speaker 6: This is Bloomberg Law with June Grosso from Bloomberg Radio.
Speaker 2: You're listening to a special best of edition of the
Speaker 2: Bloomberg Law Show. I've been talking to Bloomberg Law reporter
Speaker 2: Laurel Culkins about Lee Rothschild, who's it's listed as the
Speaker 2: sole inventor of more than one hundred and thirty patents,
Speaker 2: but his business model is built around litigation, so critics
Speaker 2: call him a patent troll. So why isn't he the
Speaker 2: greatest inventor of all? Timothy has all these ideas and
Speaker 2: all these patents. Why aren't people licensing them or buying them?
Speaker 8: That's a good question. I don't really have an answer
Speaker 8: for you. I know that he says he negotiated more
Speaker 8: than a thousand licenses. The thing about patents is it's
Speaker 8: not always the light bulb or the record player or
Speaker 8: the telephone. Sometimes it's an integrated circuit. Sometimes it's a
Speaker 8: way of connecting things together in a series. So the
Speaker 8: idea is integral to the ultimate consumer product, but the
Speaker 8: patent itself may not be the consumer product. So he
Speaker 8: may actually be in a number of products. That's what
Speaker 8: he claimed, that he's in a number of products. The
Speaker 8: patent that was mocked as being a stupid patent of
Speaker 8: the month, he claims that that's the forerunner of the
Speaker 8: Internet of things, where all these devices are connected to
Speaker 8: the Internet. So he may be in a lot of
Speaker 8: things that we just don't know about.
Speaker 2: And there's no way to really check it because he
Speaker 2: tells you that it's confidential, right exactly.
Speaker 8: He's a private company. He doesn't have to disclose any
Speaker 8: of this. We went into the patent records at the
Speaker 8: patent office and the abstracts are somewhat hard to understand sometimes,
Speaker 8: and they don't always record licensing, you know, Licensing agreements
Speaker 8: don't have to be recorded anywhere that I'm aware of. So, yeah,
Speaker 8: you can't verify what he has to say. But I
Speaker 8: also know that he would not be doing this if
Speaker 8: it wasn't profitable, and I trip over him all the
Speaker 8: time in the courthouse. I mean, I look at the
Speaker 8: filings every day in a couple of these major Texas courthouses,
Speaker 8: and it's rarely a week that goes by that I
Speaker 8: don't see one or two actions from him, or action
Speaker 8: on one or two of his existing cases.
Speaker 2: And yet he says that litigation was not his primary goal,
Speaker 2: but it sure seems like he's made a business out
Speaker 2: of it, right.
Speaker 8: It's because it works, He said, his dearest love is
Speaker 8: in He really likes to invent, and he sort of
Speaker 8: leaves the mechanics of the litigation to others, but he's
Speaker 8: a very strong defender of inventor's rights to protect their ideas,
Speaker 8: So he sort of places himself as a crusader. He
Speaker 8: spends his time personally inventing and thinking things up, and
Speaker 8: then he sort of turns things over to the other
Speaker 8: teams to execute them in terms of protecting the idea
Speaker 8: and licensing the idea. But he said he would love
Speaker 8: nothing more than to see somebody buy one of his
Speaker 8: patents and turn it into a full scale product, just
Speaker 8: right there in front of him. He would love that.
Speaker 2: So he says we've been talking about and hearing about
Speaker 2: patent trolls for I don't know decades. Have they tried
Speaker 2: to do anything to stop this or to curtail this.
Speaker 8: Yes, certain states have come out with laws to try
Speaker 8: to make these kinds of lawsuits more difficult to bring.
Speaker 8: I believe we mentioned in the story a state in
Speaker 8: the Pacific Northwest that has its own, you know, sort
Speaker 8: of patent troll Prevention Act, and one of the high
Speaker 8: tech companies out there that was being threatened with litigation
Speaker 8: by one of the Rothschild entities counter suit him as
Speaker 8: a preemptive strike and said you're violating the Patent Troll Act,
Speaker 8: and it didn't stop them, a different Rosthschild than anyone
Speaker 8: ahead ensued under the patent anyway. So you know, it's
Speaker 8: continuing on both tracks. But there are efforts in Congress too,
Speaker 8: I think for last year they introduced it and then
Speaker 8: this year has been introduced again, but nothing's acted on
Speaker 8: it about ways to narrow patent eligibility so that it's
Speaker 8: not as easy to sue on some of these patents
Speaker 8: that are so broad they're almost laughable, like you know,
Speaker 8: connecting two things together in a circuit. I mean clearly
Speaker 8: that's not it. But you know, it's just some stuff
Speaker 8: that is so basic, like really, that's a patentable idea.
Speaker 2: Thanks so much, Laurel. That's Bloomberg Law Reporter Laurel Culkins,
Speaker 2: And that's it for this edition of the Bloomberg Law Show.
Speaker 2: Remember you can and always get the latest legal news
Speaker 2: by listening to our Bloomberg Law podcasts. You can find
Speaker 2: them on Apple Podcasts, Spotify, and at www dot Bloomberg
Speaker 2: dot com slash podcast Slash Law. This is Bloomberg Law
Speaker 2: on Bloomberg Radio. I'm June Grosso. Stay with us. Today's
Speaker 2: top stories and global business headlines are coming up right
Speaker 2: now