New Patent Litigation Ruling

Today, the Supreme Court made a decision that will make rules and policies for “location requirements” more strict in patent litigation.  The article below speculates that that could mean that cases will be pushed back “to their natural home”, which is often Silicon Valley.  Learn more about how current and future patent cases could be affected in the article.

Supreme Court ruling on patent litigation could push more cases to Silicon Valley

May 22, 2017, 2:55 PM PDT

By Shawn Shinneman – Staff Writer Dallas Business Journal

A U.S. Supreme Court ruling Monday tightened the location requirements for U.S. patent litigation. It’s a move that likely will end the Eastern District of Texas’ long reign as the country’s most prolific host of the cases as it increases the chances for patent lawsuits to be fought in California courtrooms.

The high court ruled unanimously in favor of TC Heartland, which had asked for a relocation to Indiana of a patent infringement case brought by Kraft Foods in Delaware.

Plaintiffs have long taken advantage of rules that have effectively allowed them to have their pick when it came to venue. Over time, as the Eastern District of Texas gained a reputation as both efficient and plaintiff-friendly, the cases funneled to the area in droves.

By 2015, 44 percent of all patent cases were held in the district, one of four in Texas that’s east of Dallas. The number dipped to 36 percent a year ago, but still the district saw more than 1,600 patent cases throughout the year. The cases have brought an economic boon to Texas towns like Tyler and Marshall.

“It’s going to send cases back to their natural home, and for most cases that is not the Eastern District of Texas,” said Sarah Guske, a patent lawyer with Baker Botts, via Bloomberg. “It does change the dynamics.”

The number of patent cases overall has boomed in the last decade, as so-called “patent trolls” have targeted major tech companies with suits worth hundreds of millions of dollars.

The trend produced an Obama-backed law that made it tougher on them in 2016, resulting in a significant drop off of “bulk filers” In the latter part of the year. A change of venue rules is seen by some as another step toward limiting the influence of patent trolls.

In an op-ed for the Silicon Valley Business Journal that was written as the high court was set to hear TC Heartland vs. Kraft Foods, lawyers Brian Kwok and Nicole Johnson wrote that a win in favor of TC Heartland would most likely lead to more patent cases being heard in the Northern District of California.

“Because of its Silicon Valley location, some believe that the Northern District of California is more adept at understanding factual disputes involving high-tech industries, and has demonstrated that it is more willing to invalidate patents under the Supreme Court’s 2014 Alice v. CLS Bank International decision, which sharply curtailed the ability to assert certain types of software and business method patents, among others,” the Palo Alto-based lawyers with the firm Haynes and Boone wrote. ( Read their full column by clicking here.)

One of those who sees more patent troll cases coming to the area is Andrew Valentine, a partner with the firm DLA Piper. “Silicon Valley and Northern California are home to hundreds of high technology companies, frequent targets of patent litigation initiated in other venues,” Valentine said in a statement.

With the court’s action, “it is expected that patent litigation filings will increase significantly in the Northern District of California as many companies are incorporated or headquartered here,” Valentine said. “As the original adopter of Patent Local Rules, the Northern District of California bench is very familiar with patent litigation and well-suited to absorb an increased number of patent lawsuits.”

— Silicon Valley Business Journal editors contributed to this report.