Conflict of interest is one of the most pernicious problems in our society. When I talk to people about it I get this blank stare, which really confuses me.
It's not breaking fiduciary duty to the company if the company is wholly owned and in the interest of the owner. Or the transaction is in the interest of all the owners. It comes under transfer mispricing (transfer pricing manipulation) where transactions are not at arms length which it would not be if the same owner wholly owned both. It's not a highly policed area so it's legal insofar as people do usually get away with it. I think there will be crackdowns on it eventually, courts are more apt to pierce the corporate veil for solo-owned companies.
I think there are many changes coming down the pipeline as governments start running out of money. Capital gains tax normalization, capital gains tax treated as income every year instead of at a 'event' when you sell. An effective wealth tax by taxing a percentage of property value. Once those are in place I think they'll crack down on the creative use of corporations to minimize tax.
Not exactly unscrupulous if he wasn't charging insane rents to himself. His business would have to pay rent or mortgage for office space in any case. And the income his other business would get from the rent is taxable as well. At a certain point, he either has to break a law in an egregious manner and hope he does not get caught, or he has to pay taxes. That's the system we put in place when we start setting up income and corporate taxes to prop up a massive federal government.
Society only functions so long as most people don't know these 'exploits'. Short of a rather intrusive totalitarian state I'm not sure how it would be possible to effectively police against such exploits. What's new is sharing information on exploits is much easier than it used to be and people feel less moral aversion to using them.
> I had a boss once that owned the building to the business and charged rent to ensure zero profit.
This is common and legal structure designed to, among other things, reduce taxes owed. It only becomes a problem if the business has shareholders who are not participating in the scheme to shift money to the land company.
Not for the same motivations, but a lot of legal cannabis businesses do (or did) something nearly similar to get around not being able to use the banking system:
Buy the building or even lease it with a sublet clause using a separate entity, and then lease/sublease the space to the cannabis business with the lease fee being, for example, "90% of gross revenue". I'm not sure on the details of how operating funds were pushed back in.
I guess I agree, but people seem to understand that corruption is bad. Many people don't seem concerned with conflict of interest. It's baffling to me.
I remember having discussions with people as long ago as the early 2000's about it. I don't remember the specific instance, but I remember thinking "am I the only one who cares about this??"
Doesn't Texas also have the big patent troll magnet district? Seems like there's an issue down there with courts operating as entrepreneurial ventures.
That's not a fair characterization of the Western or Eastern districts. Those districts actually hold claim construction hearings before a motion to dismiss. Whereas other courts will dismiss a patent for being non-patentable without having ever construed its terms, which is nonsensical. Yes, trolls go there because they will get a judge that wants to litigate a patent case, versus about any other district where there is a good likelihood you get a judge that will do anything to not have to deal with the substance of a patent case.
Perhaps because there have been dozens of articles discussing this, the US federal court system has intervened, even the Chief Justice of the Supreme Court investigated and agreed that what was happening there was improper, and not just "judge who actually wants to do work, not avoid responsibility" like you claim without any particular substantiation.
Whether or not they fairly distribute cases within the district has no bearing on the district's rules as to how patent cases proceeds, so I don't think you are really responding to the point I've made, and in not doing so, you are evidencing the kind of reflexive downvoting I'm talking about. "I read there are problems with the courts" Okay? It doesn't seem like you actually read my post given your response.
>and not just "judge who actually wants to do work, not avoid responsibility" like you claim without any particular substantiation.
Are you a patent litigator? It's not a secret in the patent litigation field that many judges are acrimonious to patent cases. I'm not sure what you want me to provide for you as evidence aside from my own personal experience. Also, this is easily inferred by the fact that many litigants, including defendants, are happy to stay in those two districts. I've seen it myself. Generally in my experience, the defendants that want to leave those districts are usually the largest tech companies who seek to move the case to their more-friendly local districts, which is just another form of judge shopping. I'm not sure why that form of judge shopping is comforting to you. Sometimes these defendants win their transfer motions, sometimes they lose. Certainly US federal patent jurisdiction laws/rules and jurisdiction laws/rules in general are made to avoid the need to bring a case against a defendant in front of their friendly local judge. Once again, I would appreciate a substantive reply to these points. Anyway, here's an article about why patent owners aren't litigating their cases when district court judges are holding motions to dismiss before markman hearings, and that many judges are acrimonious to patent cases: https://ipwatchdog.com/2021/11/04/patent-litigation-in-the-u...
Do you have any argument as to why a motion to dismiss should be heard before a markman hearing occurs? That'd be substantive.
It's certainly fallacious to say that all the cases brought in those districts are by trolls. The districts are friendly to patent litigation in general, that's why the trolls go there.
What rules or conduct do you suppose specifically make the districts friendly to trolls in particular? This should be easy for you to answer given the numerous articles you've read about the "interventions" made.
Alright, I'll bite. Your opinion and perspective is one that you don't support with actual evidence, just a claim - "judges are acrimonious to patent cases". Actually, the evidence you do cite is an "IP advocacy group" that basically appears to be one attorney who has practiced patent law his career, who posts some stats that show, shockingly enough, that court cases went down about 20% at the start of COVID, and decides that that's proof that patentholders are frustrated with the bench.
But even he contradicts you:
> The precipitous decline in patent cases commenced beginning in 2016 is likely due to a capitulation by many patent owners who finally started to come to terms with the fact that many legacy patents were simply not going to survive the Federal Circuit’s restrictive interpretation of the Alice/Mayo framework regarding patent eligibility.
That doesn't sound like "judges hate patent law".
> Also, this is easily inferred by the fact that many litigants, including defendants, are happy to stay in those two districts.
You realize that, actually, many defendants are NOT happy to stay in those districts, and that that district routinely denies motions to change venue, motions which are repeatedly successfully challenged in Federal Circuit:
> The decision (In re Fedex Corporate Services (In re Fedex), No. 2022-156, slip op. at 9 (Fed. Cir. Oct. 19, 2022)) is the next in an increasingly long line of mandamus decisions in which the Federal Circuit has reversed or remanded decisions from Texas district courts on this issue, and suggests that the Federal Circuit will continue to carefully scrutinize these decisions on transfer motions going forward.
> Sometimes these defendants win their transfer motions, sometimes they lose.
In fact, overwhelmingly, they lose. Since 2017, over 350 motions to transfer venue, based on the plaintiff not being able to show a presence in the Eastern District were filed, motions which were denied 92% of the time by a single judge.
> Out-of-town companies began renting empty offices, in the hopes of appearing to have East Texas ties.
Businesses knew this was problematic, so were doing things like this.
The thing is, at this point, your contention that there is nothing wrong with how the Eastern District operates - a contention that is not tenable with multiple investigations that have resulted in multiple changes to how the District handles patent cases, and dozens of explorations.
> Academic literature has generally adopted a dim view of granting
plaintiffs the ability to select their judge. The legal system apparently
shares the same disdain; there are many examples of attorneys being
sanctioned because their actions were construed as an attempt to
manipulate the system to receive a more favorable judge. Previous
scholarship discusses the perniciousness of judge shopping for the legal
system and argues that judge shopping is one of the advantages that courts
can dangle before potential plaintiffs in an effort to compete for their
litigation business.
> Generally in my experience, the defendants that want to leave those districts are usually the largest tech companies who seek to move the case to their more-friendly local districts, which is just another form of judge shopping.
That depends. It can be, certainly - and that is equally problematic. But if it's to get the case in a district that has a nexus for at least one of the two entities (i.e. not an empty ...
Please, your first response to me was full of sneer and snark. Don't cry about it now. I don't see any response to my points about markman hearings and the motion to dismiss deadlines, just more and more about how litigants shouldn't select judges (but it is somehow okay for big tech companies to do it!) when the western district has already changed its case assignment rules...
>I would want further information. I've never seen anything substantive that claims that such procedural matters are the chief concern of people who have an issue with the Eastern District. Usually, it's things like the above.
You don't know what you are talking about because you don't litigate patents and you just consume pearl clutching media from anti-patent sources. Patent plaintiffs go to those jurisdictions for that reason, Albright isn't particularly friendly to Plaintiffs, but you don't realize that, you just think they chose them because.... you can't explain why. Albright was a big law patent partner, working almost exclusively for the defense. It'd be nice if you could actually get on point here.
Do you have any evidence that shows Albright produces plaintiff-favorable outcomes? No, just pearl clutching.
you are probably thinking of Nacogdoches County, Texas. The population there is largely rural, but the County seat court has national scale cases on patents.. more info welcome.. vague recall is that there was one particular Judge for a long while, but it was so obvious what was going on that the Judge was moved.. now there are others?
After this though, as an adjacent commenter posted, Alan Albright, a judge in Waco, took on the responsibility of being a patent troll because he could direct all the tech company cases to him due to Austin being in the western district.
Basically, a single judge in Waco (the only one in that district) made himself known as friendly to patent trolls. So, at one time, he was hearing something near 40% of patent cases in the nation.
Sort of. Eastern District of Texas for quite a while was the busiest district for patent litigation, but it wasn't particularly a patent troll magnet. It was a patent litigation magnet in general.
You tended to hear more about the troll cases because "patent troll sues tech company" is way more likely to come up on tech sites than something like "wastewater control valve maker sues other wastewater valve maker over patent".
> Van Deelen tried to submit the letter to court in his effort to disqualify Jones from the bankruptcy case involving his lost investment. In a court hearing, a Kirkland partner argued that the letter was unsubstantiated and moved to exclude it as evidence. U.S. Bankruptcy Judge Marvin Isgur, Jones’s former law partner and a court colleague, sided with Kirkland. He denied Van Deelen’s request. Jones later signed an order to permanently seal the letter from public view.
Amazing when the person who is supposed to help and be impartial to deal with matters involving another judge turns out to be a former partner and also involved in the grift and then silenced him.
32 comments
[ 3.1 ms ] story [ 91.6 ms ] threadGift link: https://www.wsj.com/finance/bankruptcy-court-houston-jones-f...
/s
It's like life is a realtime monopoly game I'm learning tactics all the time.
To be clear, I assume the company wasn't wholly owned by him, correct? Because if it was, it wouldn't be a conflict of interest.
I think there are many changes coming down the pipeline as governments start running out of money. Capital gains tax normalization, capital gains tax treated as income every year instead of at a 'event' when you sell. An effective wealth tax by taxing a percentage of property value. Once those are in place I think they'll crack down on the creative use of corporations to minimize tax.
This is common and legal structure designed to, among other things, reduce taxes owed. It only becomes a problem if the business has shareholders who are not participating in the scheme to shift money to the land company.
Buy the building or even lease it with a sublet clause using a separate entity, and then lease/sublease the space to the cannabis business with the lease fee being, for example, "90% of gross revenue". I'm not sure on the details of how operating funds were pushed back in.
I remember having discussions with people as long ago as the early 2000's about it. I don't remember the specific instance, but I remember thinking "am I the only one who cares about this??"
>and not just "judge who actually wants to do work, not avoid responsibility" like you claim without any particular substantiation.
Are you a patent litigator? It's not a secret in the patent litigation field that many judges are acrimonious to patent cases. I'm not sure what you want me to provide for you as evidence aside from my own personal experience. Also, this is easily inferred by the fact that many litigants, including defendants, are happy to stay in those two districts. I've seen it myself. Generally in my experience, the defendants that want to leave those districts are usually the largest tech companies who seek to move the case to their more-friendly local districts, which is just another form of judge shopping. I'm not sure why that form of judge shopping is comforting to you. Sometimes these defendants win their transfer motions, sometimes they lose. Certainly US federal patent jurisdiction laws/rules and jurisdiction laws/rules in general are made to avoid the need to bring a case against a defendant in front of their friendly local judge. Once again, I would appreciate a substantive reply to these points. Anyway, here's an article about why patent owners aren't litigating their cases when district court judges are holding motions to dismiss before markman hearings, and that many judges are acrimonious to patent cases: https://ipwatchdog.com/2021/11/04/patent-litigation-in-the-u...
Do you have any argument as to why a motion to dismiss should be heard before a markman hearing occurs? That'd be substantive.
It's certainly fallacious to say that all the cases brought in those districts are by trolls. The districts are friendly to patent litigation in general, that's why the trolls go there.
What rules or conduct do you suppose specifically make the districts friendly to trolls in particular? This should be easy for you to answer given the numerous articles you've read about the "interventions" made.
But even he contradicts you:
> The precipitous decline in patent cases commenced beginning in 2016 is likely due to a capitulation by many patent owners who finally started to come to terms with the fact that many legacy patents were simply not going to survive the Federal Circuit’s restrictive interpretation of the Alice/Mayo framework regarding patent eligibility.
That doesn't sound like "judges hate patent law".
> Also, this is easily inferred by the fact that many litigants, including defendants, are happy to stay in those two districts.
You realize that, actually, many defendants are NOT happy to stay in those districts, and that that district routinely denies motions to change venue, motions which are repeatedly successfully challenged in Federal Circuit:
> The decision (In re Fedex Corporate Services (In re Fedex), No. 2022-156, slip op. at 9 (Fed. Cir. Oct. 19, 2022)) is the next in an increasingly long line of mandamus decisions in which the Federal Circuit has reversed or remanded decisions from Texas district courts on this issue, and suggests that the Federal Circuit will continue to carefully scrutinize these decisions on transfer motions going forward.
> Sometimes these defendants win their transfer motions, sometimes they lose.
In fact, overwhelmingly, they lose. Since 2017, over 350 motions to transfer venue, based on the plaintiff not being able to show a presence in the Eastern District were filed, motions which were denied 92% of the time by a single judge.
> Out-of-town companies began renting empty offices, in the hopes of appearing to have East Texas ties.
Source: https://www.dallasnews.com/business/technology/2017/05/23/ho... suits-shaped-a-small-east-texas-town-before-supreme-court-s-ruling/
Businesses knew this was problematic, so were doing things like this.
The thing is, at this point, your contention that there is nothing wrong with how the Eastern District operates - a contention that is not tenable with multiple investigations that have resulted in multiple changes to how the District handles patent cases, and dozens of explorations.
> Academic literature has generally adopted a dim view of granting plaintiffs the ability to select their judge. The legal system apparently shares the same disdain; there are many examples of attorneys being sanctioned because their actions were construed as an attempt to manipulate the system to receive a more favorable judge. Previous scholarship discusses the perniciousness of judge shopping for the legal system and argues that judge shopping is one of the advantages that courts can dangle before potential plaintiffs in an effort to compete for their litigation business.
> https://digitalcommons.wcl.american.edu/facsch_lawrev/489/
> Generally in my experience, the defendants that want to leave those districts are usually the largest tech companies who seek to move the case to their more-friendly local districts, which is just another form of judge shopping.
That depends. It can be, certainly - and that is equally problematic. But if it's to get the case in a district that has a nexus for at least one of the two entities (i.e. not an empty ...
>I would want further information. I've never seen anything substantive that claims that such procedural matters are the chief concern of people who have an issue with the Eastern District. Usually, it's things like the above.
You don't know what you are talking about because you don't litigate patents and you just consume pearl clutching media from anti-patent sources. Patent plaintiffs go to those jurisdictions for that reason, Albright isn't particularly friendly to Plaintiffs, but you don't realize that, you just think they chose them because.... you can't explain why. Albright was a big law patent partner, working almost exclusively for the defense. It'd be nice if you could actually get on point here.
Do you have any evidence that shows Albright produces plaintiff-favorable outcomes? No, just pearl clutching.
https://www.eff.org/deeplinks/2015/08/deep-dive-why-we-need-...
However, it was finally neutered by the TC heartland Supreme Court ruling in May 2017:
https://www.abajournal.com/news/article/patent_lawsuits_drop...
https://en.wikipedia.org/wiki/TC_Heartland_LLC_v._Kraft_Food...
After this though, as an adjacent commenter posted, Alan Albright, a judge in Waco, took on the responsibility of being a patent troll because he could direct all the tech company cases to him due to Austin being in the western district.
Basically, a single judge in Waco (the only one in that district) made himself known as friendly to patent trolls. So, at one time, he was hearing something near 40% of patent cases in the nation.
You tended to hear more about the troll cases because "patent troll sues tech company" is way more likely to come up on tech sites than something like "wastewater control valve maker sues other wastewater valve maker over patent".
Amazing when the person who is supposed to help and be impartial to deal with matters involving another judge turns out to be a former partner and also involved in the grift and then silenced him.
Always works out that way in these stories.