Patent trolls — entities or individuals who buy up patents with the sole intent of suing someone who invents something similar — were issued travel restrictions yesterday by the Supreme Court that are expected to reduce the amount of nuisance litigation.
“In a unanimous decision in the case TC Heartland v. Kraft Food Group Brands, the high court overturned a longstanding precedent that gave plaintiffs in patent cases latitude over where they filed their cases. Now patent suits can only be filed in courts located in the jurisdiction where the defendant company is incorporated,” reports Michelle Meyers for CNET.
“The 13-page ruling, which sided with beverage company TC Heartland over Kraft, is terse and technical, explaining how the specific venue rules in the Patent Act trump the more general ones set out in a federal venue law. But its impact on companies, particularly those in the tech sector, will be significant,” writes Jeff John Roberts for Fortune.
“Kraft alleged that Heartland’s liquid water enhancers infringed on Kraft’s MiO liquid water enhancer. Kraft sued in Delaware, the judicial district with the second-highest number of patent lawsuits. Heartland was turned down by the courts when it attempted to get the case shifted to Indiana,” reports Robert Barnes for the Washington Post.
The ruling, written by written by Justice Clarence Thomas, “was a blow … to companies that buy patents not to use them but to demand royalties and sue for damages,” reports Adam Liptak for the New York Times. “Such companies have often sued in remote federal courts that have a reputation for friendliness to plaintiffs. More than 40% of patent lawsuits, for instance, are filed in a federal court in East Texas.”
“In recent years, a single judge based in Marshall, Tex., oversaw about a quarter of all patent cases nationwide, more than the number handled by all federal judges in California, Florida and New York combined,” Liptak continues.
“The Electronic Frontier Foundation once belittled Marshall, Texas by claiming it’s “probably more well-known as the birthplace of George Foreman than for any technological industry,” writes Chris Welch for The Verge. “Now, Delaware — where many U.S. companies are incorporated due to friendly business statues — is likely to see a surge in cases. 4,250 patent cases were filed nationwide in 2016, according to Lex Machina.”
“The ruling matched what Computer & Communications Industry Association requested in the amicus brief it filed arguing that the court should narrowly interpret the patent venue statute to prevent forum shopping. This decision prevents a small business that’s headquartered and incorporated in Indiana from being dragged into court in Texas or Delaware,” writes Heather Greenfield for the Washington, D.C.-based trade group’s Web site.
“This Supreme Court ruling can help curb decades of misuse of the patent system by restricting a common tactic used by patent trolls — forum shopping. For too long patent trolls have relied on a combination of case load back up, high upfront legal costs, [and] favorable rules in courts like the Eastern District,” says CCIA president Ed Black in a statement.
“As 17 states noted in an amicus brief supporting Heartland, the Eastern District of Texas is popular because ‘local practices and rules depart from national norms in ways attractive for incentivizing settlement for less than the cost of litigating the early stages of patent cases...,’” points out the Wall Street Journal in an editorial applauding the court. “Translation: Plaintiffs can’t lose in Marshall.”
In his decision, the WSJ points out, “[Justice] Thomas overturned the Federal Circuit’s 1990 ruling and harked back to the Supreme Court’s 1957 Fourco Glass decision that “definitively and unambiguously held that the word ‘residence’” in the 1948 law “refers only to the State of incorporation.
“Antonin Scalia must be smiling upstairs at the Court’s return to the plain meaning of the statutory text,” the WSJ concludes.
Meanwhile, the EFF’s coverage this morning features a graphic of a pathetic patent troll standing in front of the Supreme Court building — spiked cub in one hand, briefcase in another — with pages flying willy-nilly through air. But fear not for the troll’s future prospects. There are still opportunities galore in social media.