Sorry East Texas: Supreme Court Slams The Door On Patent Jurisdiction Shopping
from the no-more-bulls dept
Another Supreme Court case on patents, and another complete smackdown of the Court of Appeals for the Federal Circuit (CAFC), the court that is supposed to be the “expert” on patent cases. This morning the ruling on the TC Heartland case came out, and it could help put an end to jurisdiction shopping for patent cases. As you’ve probably heard, for years now patent trolls and other aggressive patent litigants have been filing their cases in East Texas, as it’s become a jurisdiction that is ridiculous friendly to patent holders. The towns of Marshall and Tyler, Texas have practically built up industries around the fact that they are “patent friendly” jurisdictions. In the past few years, a second favored jurisdiction has popped up: Delaware, after a few academic studies showed that the courts there may have been even more friendly than East Texas. The TC Heartland case was about a case filed in Delaware, and raised the issue of whether or not this kind of patent forum shopping was okay. CAFC, in its usual CAFC manner, said “sure, that’s great, we love jurisdiction shopping and have since our 1990 ruling in VE Holding v. Johnson Gas. This was kind of ironic, as one of the key justifications given for setting up CAFC in the first place was to put an end to jurisdiction shopping in patent cases.
Either way, CAFC once again blessed the ability of patent holders to sue in plaintiff friendly locations, and the Supreme Court — which has spent the past decade reteaching patent law to CAFC every chance it gets — has done so again. Once again, the decision was unanimous, with the court voting 8 – 0 that trolls can’t just file over and over again in East Texas (Gorsuch, having just joined the court after the case was heard, did not take part). The opinion, written by Justice Thomas, goes through the history of jurisdiction issues related to where one can bring lawsuits, noting that historically, where a company was incorporated was the proper jurisdiction.
While most of the ruling is deep in the weeds about definitions in the law, and whether or not Congress intended to change certain definitions, here’s a simplified version of what happened: some have interpreted patent law to mean that a patent holder can sue an alleged infringer anywhere that a product is sold/available. In the age of the internet, this generally means “anywhere.” Thus, as long as your product was available in Texas or Delaware, trolls could sue in those locations — even if the company was nowhere near those locations. Here, however, the Court has said that the lawsuits are supposed to be filed where the company “resides,” which it says is the state where the company is incorporated. This is a huge win for companies who are targeted by patent trolls. Rather than being dragged across the country to courts like East Texas or Delaware, which have built up large practices and reputations for supporting patent trolls over actual innovators, now cases will need to be filed where the alleged infringer is actually incorporated.
Expect to see the usual whining from patent trolls and their supporters about this — but just remember: if they have a serious case of infringement, they should be fine filing it wherever the defendants actually are. Their concern is not about how this is somehow bad for patent owners. It’s really about how certain courts were biased in their favor and they can no longer take advantage of that. Of course, this might mean that the ice rink in Marshall, Texas needs to find a new sponsor.