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Bad News for Patent Trolls: Forum Shopping Is Finally Over

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By William Vogeler, Esq. on May 23, 2017 4:05 PM

After a ruling by the U.S. Supreme Court in TC Heartland v. Kraft, patent trolls will have a harder time proving their cases. That's because now patent claims will have to be made in a defendant's home state -- not in a forum-friendly jurisdiction that trolls have used to litigate claims on patents they purchased just to sue.

"Forum shopping in patent litigation is over," said patent lawyer Shawn G. Hansen. "Half of the patent cases previously filed in East Texas will now have to shift to places like Delaware, California and New York."

No Texas Trolling

Patent lawyers virtually everywhere, including attorneys for 32 amicus curiae in the case, said the trolls were making their money by forum-shopping in Texas. The Supreme Court didn't seem especially interested in that argument at a hearing in March, but the decision shows they were definitely listening.

On the face of the case, Texas trolling didn't have anything to do with it. The dispute was about whether venue for an unincorporated company in a patent case is in Delaware or Indiana.

Kraft sued TC Heartland for infringing its patents on "liquid water enhancers" in Delaware, but the defendant asked the court to move the case to its home state of Indiana. The judge rejected the request, saying the company had shipped products to Delaware.

After one failed appeal, TC Heartland returned to the U.S. Circuit Court of Appeals for the Federal Circuit and then to the U.S. Supreme Court with a different argument. Venue should be only "where the defendant resides."

The Amicus Rush

That argument brought on the amicus rush by internet retailers. They said that venue is too often based on mere allegations of doing business in a plaintiff-friendly forum -- which is Texas 40% of the time.

"In the most popular patent district, the Eastern District of Texas, the patent holder wins 72% of all jury trials," they said in their brief.

Justice Clarence Thomas, writing for the court, decided that wasn't right after all. A domestic corporation, the court said, resides only in the state of incorporation.

While the court's ruling makes patent trolling harder, another branch of the federal government is also considering rules to reduce nuisance infringement litigation.

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