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. That Washington-based patent court ruled last year that patent lawsuits can be held anywhere a defendant’s products are sold.
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.
As Reuters highlights, Kraft filed a dispute against Heartland in a Delaware federal court. 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. The aforementioned appeals court last year denied the request for transfer.
Heartland CEO Ted Gelov said that individuals and businesses in the US have been unfairly required for decades to defend patent suits in far off locales which adds cost, complexity and unpredictably to the intellectual property marketplace.
The decision is viewed as a major blow to patent trolls – companies and individuals that generate revenue by obtaining collections of patents and levying infringement lawsuits against other companies rather than actually producing products or services themselves.
As you likely know, this is a major concern in the technology industry.
In addition to fielding what many consider to be bogus lawsuits, tech-based defendants also have to contend with the fact that patent trolls get to “shop” for courts that are “friendly” to their stance.
One hotbed for patent trolls is East Texas as evident by the fact that more than 40 percent of all patent suits in the US are filed in that region. Today’s ruling should make it harder for patent trolls to go after companies and may even dissuade firms from filing suits in the first place, thus allowing tech companies to focus on what really matters: innovation.