Tuesday, May 23rd 2017

Patent Trolls to Lose their "Homefield" Advantage Thanks to Supreme Court

Thanks to a ruling from the Supreme Court, patent trolls could see their designs being thwarted more often than they have until today. Patent trolls stand as a scourge of the industry, ie, companies and even individuals that hold intellectual property with the sole purpose of levying infringement lawsuits against other companies - without producing anything themselves. They're kind of the leeches of the tech and business worlds, without some of the benefits their biological counterparts manage to deliver.
The latest ruling comes as a result of a legal battle between beverage flavoring company TC Heartland LLC and food and beverage company Kraft Heinz Co. Heartland attempted to get the matter transferred to its home state of Indiana, arguing that it has no presence in Delaware and that 98 percent of its sales come from outside of the state. Justices with the US Supreme Court voted 8-0 on Monday that patent infringement lawsuits can only be filed in courts where the defendant is incorporated, overturning a previous ruling by the US Courts of Appeals for the Federal Circuit, which ruled, last year, that patent lawsuits can be held anywhere a defendant's products are sold.

That's quite an interesting sphere of locales, to be sure. Considering that, it's at least strange (not to say suspicious) how 40 percent of all patent suits in the US are filed in East Texas. This happens because East Texas has a history of rulings in favor of the so-called patent-trolls, and history really does tend to inform present and future action. This ruling should put some cold water on some patent troll's endeavors, simply from the added unpredictability of suing in a state that doesn't have a history of ruling in favor of them.

I've taken the liberty of leaving an interesting infographic below for your perusal, as well as the result of a study on patent trolls circa 2013, from the archives of the previous administration.
Sources: TechSpot, Lotempio Law, White House.gov Archives
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34 Comments on Patent Trolls to Lose their "Homefield" Advantage Thanks to Supreme Court

#2
f22a4bandit
Never thought I'd see the day when the East Texas region is brought up in a tech article, especially about patent trolling. That said, East Texas certainly works upon the good ole boy system throughout the region so it makes sense. Hopefully this SCOTUS ruling makes a dent where it matters most - the pockets of the patent trolls.
Posted on Reply
#4
ironwolf
It is said that one can't drive through East Texas without seeing fields full of patent trolls, free range grazing. :laugh:
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#5
jmcslob
I see the good and the bad... Definitely gives big money a major advantage s they have the resources to take products across regions...but progress!!!
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#6
Caring1
So basically this ruling is giving hope to those that want to steal a product or idea, and have the money to back themselves.
Patent owners will lose, this is not a good thing.
And!
I must protest the use of the term, Patent Troll.
The use of that term infers negative connotations on the patent owners, who have legal right to all property under their patent(s).
Posted on Reply
#7
Totally
f22a4bandit
Never thought I'd see the day when the East Texas region is brought up in a tech article, especially about patent trolling. That said, East Texas certainly works upon the good ole boy system throughout the region so it makes sense. Hopefully this SCOTUS ruling makes a dent where it matters most - the pockets of the patent trolls.
Wait what? E.Texas is patent troll mecca. How have you not seen mention of this before?
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#8
silkstone
Totally
Wait what? E.Texas is patent troll mecca. How have you not seen mention of this before?
The districts are well aware of it. There are whole industries and infrastructure projects built around it.
Posted on Reply
#9
DeathtoGnomes
What isnt mentioned in this article is that SCOTUS basically re-affirmed a law from 1957 (
Fourco Glass Co. v. Transmirra Products Corp., 353 U.S. 222 (1957)) stating that any kind of lawsuits are to be filed in the state where the company is based or incorporated.
The Beacon
...the Court held that venue in patent suits exists where the defendant company is incorporated.
Only and act of congress can change the law.

Here is the ruling: www.supremecourt.gov/opinions/16pdf/16-341_8n59.pdf

In the article I read it mention who changed let patent trolls file a lawsuit anywhere. A direct result of our corrupt government and what lobbyists do to damage the system.
Posted on Reply
#10
jmcslob
DeathtoGnomes
What isnt mentioned in this article is that SCOTUS basically re-affirmed a law from 1957 stating that any kind of lawsuits are to be filed in the state where the company is based or incorporated.

Only and act of congress can change the law.

Here is the ruling: www.supremecourt.gov/opinions/16pdf/16-341_8n59.pdf

In the article I read it mention who changed let patent trolls file a lawsuit anywhere. A direct result of our corrupt government and what lobbyists do to damage the system.
I agree but I also think this will lead to even more corruption.. Whoever has the most capital on hand wins everytime.
Posted on Reply
#11
DeathtoGnomes
jmcslob
I agree but I also think this will lead to even more corruption.. Whoever has the most capital on hand wins everytime.
Spoken like you have first hand experience! :cool:

I agree with ya there.
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#12
jmcslob
I can see where it stops the trolls but then it just completely hands off federal patent authority to individual States...
What could possibly go wrong???
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#13
qubit
Overclocked quantum bit
Given what this president is like, I wouldn't be surprised if he gives the power back to the trolls. Think how he's gutted net neutrality for example, a blatant case of corruption.
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#14
bug
I'm not very familiar with the subject, but if you force litigation into defendant's home field, doesn't that mean a greater chance for a decision in favour of the defendant? Because the court knows that ruling against it hurts a local business.

I don't really know how the American justice system works, and having so many lawsuits in a specific area is certainly not right, but is this ruling actually improving the status quo?
Posted on Reply
#15
FordGT90Concept
"I go fast!1!11!1!"
qubit
Given what this president is like, I wouldn't be surprised if he gives the power back to the trolls. Think how he's gutted net neutrality for example, a blatant case of corruption.
That wasn't Trump's choice. FCC votes for its own chairman. Pei came into power because he's the highest ranking Republican on the board. When Republicans took control of Senate, Pei became chairman of the board. Everyone and their dog knew Pei would end the pro-public rules FCC established under Wheeler. Pei always was and remains a shill for providers, especially ones with deep pockets (AT&T, Verizon, Comcast).
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#16
jmcslob
It basically says if you don't have an actual product in the market you cannot claim ownership of IP...
But it also splits patent law by giving individual States jurisdiction..
So if I own a patent and bring a product to market in my state and only my state I won't have a claim if someone else is able to bring it to market in the other states as it is now first come first serve... AKA big money wins... Since whoever has the financial means to bring a product to the market first is the owner.

Edit:
It does stop the trolls from sitting on patents and waiting for someone to bring it to the market and then suing them for IP infringement but it leaves a giant loophole that will give big money the upper hand.
Posted on Reply
#17
FordGT90Concept
"I go fast!1!11!1!"
DeathtoGnomes
Here is the ruling: https://www.supremecourt.gov/opinions/16pdf/16-341_8n59.pdf
Plantiff is in Indiana (limited liability corporation). Defendant is in Delware (C corporation). Plantiff wanted to drag Defendant to Indiana for the patent suit because the Plantiff had no presence in the Defendant's state (Delware).
Clarence Thomas
We therefore hold that a domestic corporation “resides” only in its State of incorporation for purposes of the patent venue statute.
Clarence Thomas
We reverse the Federal Circuit. In Fourco, this Court definitively and unambiguously held that the word “reside[nce]” in §1400(b) has a particular meaning as applied to domestic2 corporations: It refers only to the State of incorporation. Congress has not amended §1400(b) since Fourco, and neither party asks us to reconsider our holding in that case. Accordingly, the only question we must answer is whether Congress changed the meaning of §1400(b) when it amended §1391. When Congress intends to effect a change of that kind, it ordinarily provides a relatively clear indication of its intent in the text of the amended provision. See United States v. Madigan, 300 U. S. 500, 506 (1937) (“[T]he modification by implication of the settled construction of an earlier and different section is not favored”); A. Scalia & B. Garner, Reading Law 331 (2012) (“A clear, authoritative judicial holding on the meaning of a particular provision should not be cast in doubt and subjected to challenge whenever a related though not utterly inconsistent provision is adopted in the same statute or even in an affiliated statute”).
Good to see that Scalia's common sense lives on in Thomas.
Clarence Thomas
This Court was not persuaded then, and the addition of the word “all” to the already comprehensive provision does not suggest that Congress intended for us to reconsider that conclusion.
Finally:
Clarence Thomas
As applied to domestic corporations, “reside[nce]” in §1400(b) refers only to the State of incorporation. Accordingly, we reverse the judgment of the Court of Appeals and remand the case for further proceedings consistent with this opinion.
Corporations have to be sued in the state they are incorporated. If Heartland wants to sue Kraft Heinz, it will have to send its lawyers to Delware to make their case.
bug
I don't really know how the American justice system works, and having so many lawsuits in a specific area is certainly not right, but is this ruling actually improving the status quo?
I believe so. Those trying to file patent suit against a corporation in a different state will have to incur the cost of filing the suit in another state. Additionally, "home field advantage" means the court is more likely to simply dismiss the case so unless there's really strong evidence that a patent infringement occurred and it is damaging to the Plantiff, the patent could outright be declared public domain (patent void). Voiding patents is good for the public.
jmcslob
So if I own a patent and bring a product to market in my state and only my state I won't have a claim if someone else is able to bring it to market in the other states as it is now first come first serve... AKA big money wins... Since whoever has the financial means to bring a product to the market first is the owner.
Yes and no. Big money does win but the reason why anyone files for a patent and sues for violations thereof is to get big money. If Heartland takes their case to Delware, proves that Kraft Heinz violated their patent and, more importantly, proved they were damaged by it (e.g. profits plummet when Kraft Heinz starts selling a product that violates the patent), Kraft Heinz could be ordered to pay a massive amount of money to Heartland that more than pays for the cost of lawsuit. Placing additional cost pressure on the plantiff means they're not going to file frivolous lawsuits. They're only going to file if the facts are on their side.

Remember, if Delaware rules against Heartland, they can always appeal which can leave the jurisdiction of both Plantiff (Indiana) and Defendant (Delaware). More cost, yeah, but more likely to get a fair trial.
Posted on Reply
#18
Totally
jmcslob
It basically says if you don't have an actual product in the market you cannot claim ownership of IP...
But it also splits patent law by giving individual States jurisdiction..
So if I own a patent and bring a product to market in my state and only my state I won't have a claim if someone else is able to bring it to market in the other states as it is now first come first serve... AKA big money wins... Since whoever has the financial means to bring a product to the market first is the owner.

Edit:
It does stop the trolls from sitting on patents and waiting for someone to bring it to the market and then suing them for IP infringement but it leaves a giant loophole that will give big money the upper hand.
Even though, it's way more fair this way, at least I think it is. No one really loses, when you do expand into an intersecting market you'll have a claim, if you don't expand into their market, vice versa, or have no intention of expanding live and let live.
Posted on Reply
#19
jmcslob
I do see the benefit..
As an end consumer this is a win-win..
It's far less expensive for a smaller business to bring a case to state courts...
But...
I definitely see a giant loophole.
I see this becoming a race to the bottom for the usual States...
Texas, Alabama, Connecticut etc... Will adjust their laws to suit big money.
Posted on Reply
#20
DeathtoGnomes
Patent trolls will have to ask the court for a change of venue to their home state to get that home court advantage. Not very likely to happen a lot now.

I wonder how this will affect lawsuits currently in progress. It shouldnt affect legitimate suits.
Posted on Reply
#21
silkstone
jmcslob
I do see the benefit..
As an end consumer this is a win-win..
It's far less expensive for a smaller business to bring a case to state courts...
But...
I definitely see a giant loophole.
I see this becoming a race to the bottom for the usual States...
Texas, Alabama, Connecticut etc... Will adjust their laws to suit big money.
It already suits big money. Look into how much some of the big companies put into infrastructure in East Texas at the moment. Samsung sponsor an outdoor Ice-rink there at the moment. Think about that. An outdoor ice rink in an east Texas town where most of their litigation happens. There are countless other examples of similar 'freebies' from other companies who have a tendency to litigate there.
Posted on Reply
#22
jmcslob
silkstone
It already suits big money. Look into how much some of the big companies put into infrastructure in East Texas at the moment. Samsung sponsor an outdoor Ice-rink there at the moment. Think about that. An outdoor ice rink in an east Texas town where most of their litigation happens. There are countless other examples of similar 'freebies' from other companies who have a tendency to litigate there.
That's what I'm saying...
But now it won't really get past the state that's already too friendly with money...
Posted on Reply
#24
FordGT90Concept
"I go fast!1!11!1!"
silkstone
It already suits big money. Look into how much some of the big companies put into infrastructure in East Texas at the moment. Samsung sponsor an outdoor Ice-rink there at the moment. Think about that. An outdoor ice rink in an east Texas town where most of their litigation happens. There are countless other examples of similar 'freebies' from other companies who have a tendency to litigate there.
It's palm greasing. They litigate there where the judges rule in favor of big money and big money compensates the judges by investing in the area. Legal, but shouldn't be.

If they want to keep doing that, they're going to have to move their headquarters which means no more tax havens. It is very doubtful they'll move.
Posted on Reply
#25
DeathtoGnomes
FordGT90Concept
It's palm greasing. They litigate there where the judges rule in favor of big money and big money compensates the judges by investing in the area. Legal, but shouldn't be.

If they want to keep doing that, they're going to have to move their headquarters which means no more tax havens. It is very doubtful they'll move.
Tax Havens are nice until they get abused by these trolls.
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