5 ms·

Going forward, I can't see any tech companies making the mistake of incorporating in the state of Texas. Better safe than sorry.

lightedman 9y ago
Plenty didn't incorporate in East Teas (my home area) and still sued and won anyways. This ruling wouldn't really stop them from incorporating or not. Just going to make them think twice about actual jurisdiction. Many companies won't have lawyers that know of or understand this case, and as such some companies will try taking advantage of that fact. Notice - we had to go all the way back to the 50s to resolve this case, and since the earlier 90s is when out-of-true-jurisdiction cases started happening. It took almost 30 years to stop that. What really needs to happen is anyone's guess. Every system someone comes up with will likely have a flaw to be exploited.
raverbashing 9y ago
Especially on the East of Texas
ascorbic 9y ago
I'd imagine this will lead to defendant-friendly patent laws becoming one of the selling points that states use to try to lure tech companies to relocate.
- ambulancechaser 9y ago
  these suits are filed in federal district courts as far as I can tell. State law won't be controlling on the issues there.
nickpsecurity 9y ago
Yeah, I further encourage not selling anything to people in that court's area of influence except maybe through a specific corporation designed to do just that. Make sure it constantly transfers its money out, too. Reason being there's a lot of money to be made selling in Texas, Austin is a tech hub, and University of Texas does some of the best work w/ top-notch researchers. So, can't leave entirely missing the benefits but certainly hedge against the risks.
- jdmichal 9y ago
  Austin isn't in the Eastern district, but the Western. None of Texas' major cities are in the Eastern district. https://en.wikipedia.org/wiki/United_States_federal_judicial_district https://en.wikipedia.org/wiki/United_States_federal_judicial... https://en.wikipedia.org/wiki/United_States_District_Court_for_the_Eastern_District_of_Texas https://en.wikipedia.org/wiki/United_States_District_Court_f...
  - nickpsecurity 9y ago
    I was wondering about that. Thanks for the info. :)
stcredzero 9y ago
Otherwise Texas policy seems to be pro-corporation. No corporate franchise tax until you make at least $100k, and you can form a corporation to do whatever you want. I know of one Texas corporation that did business for years in a Schrodinger's cat-like state, where it only kind of existed because they were in the process of finding a new board. Technically, the corporation existed, but wouldn't have been a valid entity to do business with, but most people would only check that the company existed. I'm not sure why it was done, but I suspect those guys got out of paying the franchise tax this way. (No, it wasn't my company!)
- arbuge 9y ago
  >> No corporate franchise tax until you make at least $100k, Actually that limit is $1.11m. https://comptroller.texas.gov/taxes/franchise/ https://comptroller.texas.gov/taxes/franchise/
  - tyingq 9y ago
    Note that it's revenue. You still owe franchise tax even if you're losing money.
    - njharman 9y ago
      Which is good incentive to make some, money that is.
      - tyingq 9y ago
        It's also an incentive not to incorporate/operate low margin businesses in Texas.
        adventured 9y ago
        They have a clause to lessen that problem "Franchise tax is based on a taxable entity’s margin." https://comptroller.texas.gov/taxes/publications/98-806.php https://comptroller.texas.gov/taxes/publications/98-806.php
Splendor 9y ago
Reading this story made me curious as to why software companies haven't made an effort to exclude sales in that area. It seems like that would at least get you out of that jurisdiction.
- omginternets 9y ago
  Because, to a certain extent, it's cutting off your nose to spite your face. When you're an early-stage, cash-strapped business entity, doing business in TX probably seems like an acceptable risk.
- PatentTroll 9y ago
  Also probably wouldn't work - see the "stream of commerce" idea discussed above

lightedman 9y ago

Plenty didn't incorporate in East Teas (my home area) and still sued and won anyways. This ruling wouldn't really stop them from incorporating or not. Just going to make them think twice about actual jurisdiction. Many companies won't have lawyers that know of or understand this case, and as such some companies will try taking advantage of that fact. Notice - we had to go all the way back to the 50s to resolve this case, and since the earlier 90s is when out-of-true-jurisdiction cases started happening. It took almost 30 years to stop that. What really needs to happen is anyone's guess. Every system someone comes up with will likely have a flaw to be exploited.

raverbashing 9y ago

Especially on the East of Texas

ascorbic 9y ago

I'd imagine this will lead to defendant-friendly patent laws becoming one of the selling points that states use to try to lure tech companies to relocate.

ambulancechaser 9y ago
these suits are filed in federal district courts as far as I can tell. State law won't be controlling on the issues there.

nickpsecurity 9y ago

Yeah, I further encourage not selling anything to people in that court's area of influence except maybe through a specific corporation designed to do just that. Make sure it constantly transfers its money out, too. Reason being there's a lot of money to be made selling in Texas, Austin is a tech hub, and University of Texas does some of the best work w/ top-notch researchers. So, can't leave entirely missing the benefits but certainly hedge against the risks.

jdmichal 9y ago
Austin isn't in the Eastern district, but the Western. None of Texas' major cities are in the Eastern district. https://en.wikipedia.org/wiki/United_States_federal_judicial_district https://en.wikipedia.org/wiki/United_States_federal_judicial... https://en.wikipedia.org/wiki/United_States_District_Court_for_the_Eastern_District_of_Texas https://en.wikipedia.org/wiki/United_States_District_Court_f...
- nickpsecurity 9y ago
  I was wondering about that. Thanks for the info. :)

stcredzero 9y ago

Otherwise Texas policy seems to be pro-corporation. No corporate franchise tax until you make at least $100k, and you can form a corporation to do whatever you want. I know of one Texas corporation that did business for years in a Schrodinger's cat-like state, where it only kind of existed because they were in the process of finding a new board. Technically, the corporation existed, but wouldn't have been a valid entity to do business with, but most people would only check that the company existed. I'm not sure why it was done, but I suspect those guys got out of paying the franchise tax this way. (No, it wasn't my company!)

arbuge 9y ago
>> No corporate franchise tax until you make at least $100k, Actually that limit is $1.11m. https://comptroller.texas.gov/taxes/franchise/ https://comptroller.texas.gov/taxes/franchise/
- tyingq 9y ago
  Note that it's revenue. You still owe franchise tax even if you're losing money.
  - njharman 9y ago
    Which is good incentive to make some, money that is.
    - tyingq 9y ago
      It's also an incentive not to incorporate/operate low margin businesses in Texas.
      - adventured 9y ago
        They have a clause to lessen that problem "Franchise tax is based on a taxable entity’s margin." https://comptroller.texas.gov/taxes/publications/98-806.php https://comptroller.texas.gov/taxes/publications/98-806.php

Splendor 9y ago

Reading this story made me curious as to why software companies haven't made an effort to exclude sales in that area. It seems like that would at least get you out of that jurisdiction.

omginternets 9y ago
Because, to a certain extent, it's cutting off your nose to spite your face. When you're an early-stage, cash-strapped business entity, doing business in TX probably seems like an acceptable risk.
PatentTroll 9y ago
Also probably wouldn't work - see the "stream of commerce" idea discussed above