TC HEARTLAND v. KRAFT: IS THE PATENT PARTY OVER IN MARSHALL, TX?

TC HEARTLAND v. KRAFT: IS THE PATENT PARTY OVER IN MARSHALL, TX?

After 30 years of legal precedent, the United States Supreme Court has changed patent litigation significantly by reversing a key ruling of the Court of Appeals for the Federal Circuit. On May 22nd, 2017, the Supreme Court unanimously ruled that corporations could only be sued for patent infringement in the state where they “reside,” which for purposes of the patent venue statute now means the state of incorporation.

Before Monday’s decision, a patent holder could sue a defendant company in any location where the company would be subject to personal jurisdiction. In short, this would mean a plaintiff could sue a company if there was a slight stream of commerce with the infringing product in that district. With today’s access to trade and commerce, this allowed plaintiffs to sue essentially anywhere they wanted since there was almost certainly some sort of commerce in any district.

More often than not, this translated to patent plaintiffs filing suit in the Eastern District of Texas—Marshall Division, which processed a legendary volume of the nation’s patent infringement docket. The impact of this ruling will be felt almost immediately in this jurisdiction, which developed a cottage industry friendly to patent litigation. This has been a hotspot for patent litigation over the last decade—and probably dreaded by most patent defendants. The area is known in the intellectual property community to be friendly to plaintiffs and has hosted approximately a 1/3 or more of the entire patent litigation cases across the country. Plaintiffs loved the District because of perceived friendly juries, because courts rarely transferred out of the District, and due to the rarity of summary judgments.

Now, patent plaintiffs will face benches and juries in a more diverse spectrum across the country. We predict that the Courts in heavy population and industrial centers will have higher patent litigation volumes—California, Texas (outside of the just the Eastern District), Chicago, and New York.

Some critics quickly pointed out that this decision will simply shift the hotspot from Texas to defendant friendly jurisdictions, or places of frequent incorporation, like Delaware. Many companies are headquartered in Delaware and patent holders will be forced to sue in that state, so it undoubtedly will also experience heavier litigation volumes. Only time will tell if companies will respond to this decision by moving the location of their headquarters to other states.

The SCOTUS opinion can be found SCOTUS_ (Heartland v. Kraft).

The attorneys of Buche & Associates, P.C. have handled federal patent litigation claims across the country and defended such allegations in District Courts, Appellate Courts and the U.S. Supreme Court. If you have a question about intellectual property litigation, you may contact jbuche@buchelaw.com.

Article by Jorge Zamora, JD candidate, University of Houston, and John Buche, J.D. ©2017 Buche & Associates, P.C. www.buchelaw.com