Supreme Court tightens patent suit rules in blow to 'patent trolls'

TC Heartland will help ensure that patent infringement cases brought against Idaho businesses will be decided on their merits in an even-handed way, enabling those businesses to avoid being held hostage through the forum-shopping preferences of plaintiffs. This time, it asked the justices to reconsider a Federal Circuit ruling that said it had to pay Apple $120 million for infringing Apple's smartphone patents.

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. The Federal Circuit can't win even when it decides that patent litigation should follow the well-developed rules of mainstream civil procedure! It restores and upholds patent venue protections which US businesses had enjoyed for almost a century between 1897 and 1990. Patent trolls are known to file their suits in friendly courts with a reputation for favoring plaintiffs bringing the action, and the vast majority of those end up being filed in Texas.

In its decision, the court reversed a 1990 decision by the U.S. Court of Appeals for the Federal Circuit that allowed patent infringement cases to be filed away from the defendant's home state. The primary focus in selecting a forum must now be on where the defendant resides or has a regular and established place of business. "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 narrow definition of "resides" requires patent suits filed under that prong of the venue statute to be filed in the state where the company is incorporated, according to the opinion by Justice Clarence Thomas.

A district court had ruled that a case could be brought in any district to which a defendant is subject to jurisdiction. Nevertheless, in 1988, Congress amended the general venue statute to add the language "f$3 or the purposes of venue under this chapter" before the beginning of the above-quoted language.

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Heartland said the ruling will limit the ability to "shop" for friendly courts.

This time, the question went to the Federal Circuit, which didn't exist in the days of Fourco. Thus, in VE Holding Corp. v. Johnson Gas Appliance Co. The Federal Circuit hewed to its precedent previous year in blocking removal of the case to in, the home of TC Heartland. Kraft said that Heartland had basically stolen its idea.

This led to a kind of clustering, where a small handful of federal courts became responsible for deciding a huge number of patent cases.

As with many things patent-related in the USA there is a DC angle to this. Thomas backed up his "relatively clear indication" standard with a lengthy quote from a treatise on "Reading Law", co-written by Thomas' late colleague Antonin Scalia, which explains that a "clear, authoritative judicial holding on the meaning of a particular provision should not be cast in doubt" simply because Congress has adopted some "related though not utterly inconsistent provision". The current version of §1391 does not contain any indication that Congress meant to alter the meaning of §1400 (b) as interpreted in Fourco. Well, for one thing we should now see a flood of cases out of East Texas.

The U.S. Supreme Court is making it easier for companies to defend themselves against patent infringement lawsuits.

(Copyright © 2015. All Rights Reserved.)
 
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