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Issa Says Heartland Decision is Victory Against Patent Trolls

Issa Says Heartland Decision is Victory Against Patent Trolls

The dispute erupted out of tension between the 1957 case Fourco Glass Co. v. Transmirra Products Corp., in which the Supreme Court said companies must sue infringers where they "reside", and a 1990 decision by the Federal Circuit that has let litigants bring lawsuits anywhere they spot infringement. These are called "non-practicing entities", or "patent trolls", because their main source of revenue comes from suing companies and hoping they settle rather than duking it out in court. In the past, many plaintiffs filed their suits in states or districts that are historically friendly to patent holders - such as Texas and Maryland. What's more, a judge in Marshall handled almost a quarter of all patent cases across the country, more than the number overseen by federal judges in New York, California, and Florida combined, according to The New York Times.

These are companies that make their money nearly entirely from patent licensing, representing two-thirds of all cases in United States district courts at the time, they became known as patent trolls. The main difference is that most cases would shift out of the Eastern District of Texas, but two other districts would see a potentially commensurate uptick in filings - the Northern District of California and the District of Delaware. $302.4 million in damages over use of its patented Internet security technology without permission. That district has acquired a reputation for patent friendly juries and judges, who helped small towns like Marshall and Tyler keep their restaurants and hotels bustling with out-of-town lawyers and executives attending patent trials.

The U.S. Supreme Court issued a ruling Monday that may have effectively ended a 15-year intellectual property litigation boom in East Texas. Having recited that rule, the court needs only to note that Congress has never amended Section 1400 (b) since the decision in Fourco and that "t$3 he current version of § 1391 does not contain any indication that Congress meant to alter the meaning of § 1400 (b) as interpreted in Fourco". Kraft sued in DE, the judicial district with the second-highest number of patent lawsuits.

Apple and Samsung have been battling over patents since 2012, and a question about how much money could be owed for infringing design patents made it all the way to the Supreme Court in October 2016.

A group of 41 companies and seven associations - including Adobe, HP, NetApp, Oracle, Red Hat, and SAP - filed a brief together, stating they are "all too familiar with the effects of forum shopping in patent cases".

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Yet Boston University School of Law economist James Bessen wrote in the Harvard Business Review in 2014 that "the economic burden of today's patent lawsuits is, in fact, historically unprecedented".

On Monday, The U.S. Supreme Court on Monday put strict limits on where patent infringement lawsuits can be filed.

In TC Heartland v. Kraft Foods Group Brands, the Supreme Court ruled that defendants should face patent litigation in the state in which they're incorporated. If a patent troll can make the litigation so painful for a tech company that it would rather pay to get rid of the suit, then the troll has won. The Federal Circuit denied Heartland's transfer by relying on the 1990 ruling.

In this case, it was a technology company that spurred the ruling, but a legal tussle between TC Heartland LLC and Kraft Heinz Co. Justice Neil M. Gorsuch didn't participate in the case.

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