Patent trolls under attack as US Supreme Court moves goalposts

Historic Harrison County Courthouse Marshall Texas. Joe Mullin

Apple, Google, Microsoft, Samsung and other heavyweight technology companies are often tangled in patent disputes, but this ruling is not for them specifically.

"The half of patent cases previously filed in East Texas will now have to shift to places like Delaware, California and NY", patent attorney Shawn Hansen said Monday. "For too long patent trolls have relied on a combination of case load back up, high upfront legal costs, favorable rules in courts like the Eastern District and the cost of travel to pressure defending companies to settle court cases the trolls were unlikely to win on the legal merits".

Past year professors Michael Risch of Villanova Law School and Colleen Chien of Santa Clara School of Law looked at the impact that TC Heartland (if the court ruled as it did yesterday) could have on patent owners' choice of venue and found a similarly large shift.

Many Utah businesses may wonder how a simple decision on venue could impact the world of patent enforcement. Generic pharmaceutical companies filed a brief (PDF) decrying an "undue and unhealthy concentration" of patent cases in DE and New Jersey. Local rules there favor quick trials and juries tend to be more sympathetic to plaintiffs.

For the past 27 years, patent owners and accused infringers have operated under a Federal Circuit decision that made venue analysis under 28 U.S.C. § 1400 co-extensive with personal jurisdiction analysis. In 1990, the same question came up through the courts again: should the patent venue rules be interpreted in light of the more general venue law, or should the venue retain its own, more strict, guidelines?

This extremely important decision radically changes where patent lawsuits may be filed, and blows the "Eastern District of Texas" problem out of the water.

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Justice Clarence Thomas wrote the unanimous reversal Monday for the Supreme Court. And it does not address the root cause of patent trolling: the thousands of overbroad and vague software patents that the Patent Office issues every year. 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. Kraft sued Indiana-based TC Heartland, .

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.

The U.S. Supreme Court unanimously decided [PDF] that patent holders can only sue companies for patent infringement where they reside, or where they have an established and regular place of business.

That expansive change allowed for the rise of patent-focused venues such as the Eastern District of Texas where the majority of infringement lawsuits have been filed over the two decades (heat map below). Large numbers of the cases claimed patents on business models with computer applications - triggering complaints that simply moving a business model to a computer platform doesn't warrant a patent. Justice Neil Gorsuch did not participate in the decision.

Kevin McNeely, partner at Browdy and Neimark, explained that the plain meaning of the statutes would lead one to "believe that the term "resides" as used in the patent venue statute should be construed exactly the same as in the general venue statute".

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