Supreme Court closes court-shopping loophole for patent trolls

Things are about to get very quiet in Eastern Texas

The US Supreme Court has issued a ruling that could block patent-holding firms from seeking out friendly courts to hear their infringement claims.

An 8-0 ruling by the nation's top court in the TC Heartland v Kraft Foods [PDF] case held that a company can be sued only in the state where it is incorporated, rather than in any district where the company happens to do business.

The unanimous decision (newcomer Neil Gorsuch did not take part in the hearing) will place stricter limitations on where patent infringement suits can take place, and will bar plaintiffs from seeking out friendly judges more likely to side with patent holders (such as the infamous Eastern District of Texas).

The Supreme Court's ruling overturns a US Circuit Court finding, which held that any place a company fell under jurisdiction could be the venue for a patent hearing. Rather, the Supreme Court says, courts should follow a 1957 ruling that sets the defendant's place of incorporation as the venue for infringement cases to take place.

"We therefore hold that a domestic corporation 'resides' only in its State of incorporation for purposes of the patent venue statute," the court's ruling declares.

While the Heartland v Kraft case itself had pretty much nothing to do with IT or consumer electronics (it concerned flavored drink mixes), the case has been eagerly watched by many in tech due to the impact it will have on how infringement cases can be heard.

The ruling will be a potentially serious blow for many so-called "patent troll" companies that exist merely to file infringement suits and collect royalties on patents they don't otherwise use. With plaintiffs forced to file on the defendant's home turf, the chances of a successful claim (and quick settlement) are reduced.

This will be seen as a clear win for tech companies like Apple and Google who have long supported measures to crack down on patent trolls, who they claim are setting back innovation and costing companies millions in needless patent royalties and legal fees. ®

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