High Court Rocks 25 Years of Patent-Venue Precedent

That's because the unanimous decision [PDF], which reversed an appeals court ruling, effectively requires plaintiffs in patent cases to bring infringement lawsuits in districts where defendants are incorporated. This ruling hurts those companies since they can no longer file in remote federal courts that have a reputation for friendliness to plaintiffs.

The rocket docket fueling patent litigation in Texas' Eastern District may soon be crashing back to earth, as the U.S. Supreme Court has grounded forum shopping for infringement lawsuits. In 2013, there were more patent cases filed in the Eastern District of Texas than were filed in Los Angeles, Miami, New York, Chicago and Boston combined. Yesterday, the US Supreme Court ruled on a key change that should make it much harder for patent trolls to be successful.

The ruling means that patent litigation will be spread out, in theory, though given the fact that many technology companies are based on the east coast of the United States, it could see a swell of cases move to just a handful of other jurisdictions.

Now, Delaware - where many U.S. companies are incorporated due to friendly business statues - is likely to see a surge in cases.

Nevertheless, the decision to limit where patent trolls can bring patent infringement lawsuits will be a big win for technology companies as well. Local rules there favor quick trials and juries tend to be more sympathetic to plaintiffs. Patent trolls are shell companies that buy patents from inventors then sue companies that unknowingly infringe on the patents in the products they make.


"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", Computer & Communications Industry Association President Ed Black said in a statement.

The Supreme Court's "regular and established place of business" could be as simple as a retail store, said Michael Smith, a patent lawyer with Siebman, Burg, Phillips & Smith in Marshall, Texas who often represents defendants.

The justices ruled unanimously that patent owners must bring lawsuits only in states where the targeted company is incorporated. Since so far they've been able to file suit in almost any jurisdiction, patent trolls had little holding them back from trying to obtain large sums of money from other companies. Who would have thought that the issue of venue in patent litigation could be so significant?

The Supreme Court's ruling overturns a US Circuit Court finding, which held that any place a company fell under jurisdiction could be the venue for a patent hearing. 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. This was enough to convince the Federal Circuit that § 1391 (c) now governs the definition of "resides" in 1400 (b). "The costs of defending patent litigation will be reduced, and the costs of patent trolling activity will be increased". This case would still likely leave approximately 60% of patent cases in these same five districts. Justice Neil M. Gorsuch didn't participate in the case.

Heartland Food Products Group (Heartland FPG), maker of America's number one sweetener, SPLENDA Brand Sweetener, applauds the Supreme Court's decision in the company's case against Kraft Foods.


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