On May 22, 2017, the U.S. Supreme Court issued a unanimous decision in TC Heartland v. Kraft Foods. While the litigants in this case are in the food service industry, the decision has significant impact on patent law regardless of the industry, especially in the technology sector.
For the most part, the decision requires patent owners to sue patent infringers in a district court in the infringer’s state of incorporation or in judicial districts where the infringer has a regular and established place of business and has committed the alleged infringement. This ends forum shopping by patent infringement plaintiffs — mostly patent trolls — that has resulted in over one third of all U.S. patent cases being litigated in the plaintiff-friendly Eastern District of Texas.
This mostly rural part of east Texas, just a stone’s throw from Shreveport, Louisiana, has been overrun by patent lawyers that have turned patent litigation into a cottage industry complete with post office boxes for shell companies with no employees and court rules that press technology company defendants large and small with front-end-loaded costs and a rapid timetable that drove many to settle.
As such, this decision is an important step in thwarting frivolous and predatory patent lawsuits that enrich only patent trolls and the lawyers and financing sources that support them.
However, the U.S. needs additional reforms to its patent system.
At Citrix, we believe in a balanced patent system that fairly compensates inventors of all sizes and in all sectors… from individuals to start-ups to large cap companies… so as to preserve the incentives for innovation. The hallmarks of a balanced system include transparency, rules, procedures and public resources to protect patent quality, and a well-functioning patent secondary market.
Many say that the U.S. is no longer the leader in patent protection. We must adopt policies that strengthen our patent system while eliminating abusive patent suits. Without a properly balanced IP system, we lose a key incentive for entrepreneurs, universities and technology providers to take risk and innovate.