Supreme Court's Decision On Patent Trolls
A new Supreme Court decision in TC Heartland v. Kraft Foods Group Brandshas placed limitations on where a patent lawsuit can be filed. This decision has the potential to make it more difficult for "patent trolls." A patent troll is a derogatory term that is used to describe people or companies that misuse patents. Patent Trolls will either obtain patents from bankrupt companies that are liquidating assets or try to prove they came up with the idea first. A patent troll will then instigate lawsuits against companies or hold the patent without planning to use the idea to keep other companies at a standstill. A patent troll can also be known as an intellectual property troll or a patent assertion entity.
The Supreme Court decided that patent infringement lawsuits against domestic corporations need to be filed in the state where that entity is incorporated or in places where it has a regular and established place of business. The entity in this case, TC Heartland, was a company organized under Indiana law and headquartered in Indiana. It was sued by Kraft Foods, which is organized under Delaware law and has its primary place of business in Illinois. Kraft Foods claimed that one of TC Heartland's flavored drink mixes infringed on one of its patents. Kraft Foods sued TC Heartland in a federal court in Delaware. TC Heartland only shipped its products to Delaware. It did not conduct any other business in Delaware and did not have any type of meaningful presence there. The court decided that TC Heartland's selling products in Delaware was not enough for Kraft Foods to sue it for patent infringement in Delaware.
In previous cases, patent owners were filing lawsuits in the Eastern District of Texas, which gained a reputation for being friendly towards plaintiffs and patent owners. Over forty percent of all patent lawsuits were being filed in one of the federal courts in the Eastern District of Texas. In particular, one judge in Texas presided over a quarter of the patent cases nationwide. In fact, this judge handled more patent cases than all of the federal judges in California, New York, and Florida.
As a result of the high court's decision, now more patent cases will likely move to Delaware. This is because Delaware is a jurisdiction where a large amount of companies are incorporated. We will also be seeing more patent lawsuits occurring in areas where there are technology hubs, like in California.
In the past, technology companies in Silicon Valley have been trying to persuade Congress to take action to try and keep patent lawsuits from being filed in Texas. These companies feel like they were too often being targeted by patent trolls who would threaten litigation in order to obtain royalties. These companies are probably happy with this new decision, which may prevent the misuse of the current patent system.
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