Unrelated Supreme Court Decision Deals a Blow to Patent Trolls

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AP file
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24 May, 2017

The Supreme Court on Monday placed tight limits on where patent lawsuits may be filed - a unanimous decision that was a blow to so-called patent trolls, or companies that buy patents not to use them but to demand royalties and sue for damages. More than 40 percent of all patent cases have traditionally been filed in the Texas district, according to The New York Times-becoming a well-known example of "forum shopping" in legal circles.

Larus noted that just previous year in the Eastern District of Texas, U.S. District Judge J. Rodney Gilstrap "was assigned more than a thousand new patent cases - amounting to almost 25 percent of the nation's total". "This decision will limit venue-shopping in patent litigation and facilitate an equitable litigation landscape in the USA", said Bill O'Connor, Heartland Vice President and General Counsel.

TC Heartland had unsuccessfully tried to have the case moved to Indiana.

"The decision should cause a significant increase in patent cases filed in DE because so many companies are incorporated there". Summary judgments allow defendants to ask the court to rule that a plaintiff's case is invalid, without going to trial. Some are legitimate cases of patent infringement, though there are many people who have called for patent reform in the wake of companies making a living by acquiring patents for the sole goal of suing other outfits for royalties and damages. "The Supreme Court's decision changes that system for the better", said Ted Gelov, Heartland FPG CEO. A federal appeals court had upheld that, but the Supreme Court remanded with clear instructions. "Now patent suits can only be filed in courts located in the jurisdiction where the defendant company is incorporated", reports Michelle Meyers for CNET.

Most Idaho business owners were probably unaware that this decision had been issued, or if they were they likely paid it little mind.

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The court ruled (PDF) that a law authorizing patent suits to be filed in the judicial district where the defendant "resides" was not supplanted by amendments to a general federal law on venue. The case stems from Kraft Foods' initial allegation that TC Heartland infringed on its patent for a flavored water mix. Courts in other states won't be as friendly to patent trolls, so this seemingly unrelated Supreme Court decision may have the side effect of reducing frivolous patent lawsuits. If a patent troll can make the litigation so painful for a tech company that it would rather pay to get rid of the suit, then the troll has won.

The court overturned a previous ruling from 2016 that confirmed the right to court-shop in patent cases, saying that specific venue rules in the Patent Act related to the case stand above the more general ones set out in a federal venue law when it comes to determining jurisdiction. "The costs of defending patent litigation will be reduced, and the costs of patent trolling activity will be increased". The federal circuit specializes in patent and intellectual property protection appeals.

EFF attorney Vera Ranieri said today's ruling was a good result for defendants that have been getting roped in to patent disputes in faraway venues for years now.

Such changes could potentially dissuade some cases from being launched in the first place, said Illinois Institute of Technology Chicago-Kent College of Law professor Greg Reilly, who has studied the issue of patent venue. Justice Neil Gorsuch did not participate in the decision.


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