Supreme Court Patent Victory


With the latest ruling from the U.S. Supreme Court, patent trolls just lost their advantage of filing patent infringement lawsuits in places where they typically favor the plaintiff.

Heartland, the company which took the case to the highest court in the U.S., said the ruling will limit the ability to "shop" for friendly courts.

Even though the lawsuit was not filed in Texas, the arguments in the case touched on the peculiar fact that the bulk of patent litigation in the United States flows to the Eastern District of Texas, far from the centers of technology and innovation in the United States. Indeed, we know from the briefs that one-quarter of all patent cases nationwide in the last three years have been assigned to a single federal judge in that court sitting in the bustling community of Marshall, Texas. Because the patent law is not modified by the general venue law, "resides" has a narrow meaning-the state of incorporation-which was established in a 1957 Supreme Court case, Thomas said. TC Heartland unsuccessfully tried to get the case moved to IN, where it resides. But tech companies were following the case because of its implications, generally, for litigants shopping around for a more receptive legal venue than the state of incorporation. "I continue to oppose all forms of abusive patent litigation and intend to introduce legislation in the coming months to address other problems with our current patent litigation system". That district has acquired a reputation for patent friendly juries and judges, who helped small towns like Marshall and Tyler keep their restaurants and hotels bustling with out-of-town lawyers and executives attending patent trials. A brief (PDF) signed by 48 Internet companies and retailers asked the Supreme Court to uphold the "restrict patent venue statute" that Congress had approved and to "stop forum shopping". In fact, because any lawsuit will likely need to be filed in a venue in which the accused infringed has the advantage, patent trolls may find it more hard to extort settlements from their victims.

The Supreme Court ruled on Monday that patent infringement cases can only be heard in a court either where the defendant is headquartered or where an act of infringement has occurred and the defendant has a "regular and established place of business".

The ruling will have a major impact on lawsuits from so-called patent trolls - companies that buy up patents and force businesses to pay license fees or face expensive litigation.

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In an 8-0 ruling, the court tightened the rules on where a patent lawsuit can be filed, holding that 28 USC, section 1400 (b) is the sole and exclusive provision governing venue in patent infringement actions. Instead, Justice Thomas's opinion unpicks the statutory language and the case law to once again overrule the Federal Circuit.

"Patent trolls have regularly cherry-picked far-flung and burdensome judicial districts that they believe will be favorable for their case", said North Carolina Attorney General Josh Stein.

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.

In this case, it was a technology company that spurred the ruling, but a legal tussle between TC Heartland LLC and Kraft Heinz Co. Justice Neil Gorsuch did not participate in the decision.