By Deborah Lohse
This press release originally appeared on SCU News
Let’s say you’re a Silicon Valley startup being accused of infringing the patents of a company based in New York. Before Monday, chances were good that if a case was filed, it would end up not in California or New York, but in the Eastern District of Texas.
The Supreme Court thought that made no sense and decided Monday to reverse a 1990 Federal Circuit ruling that had allowed lots of patent holders to essentially pick whichever court jurisdiction nationwide they believed to be most advantageous to their side of the case. For many so-called “patent trolls”—who buy patents in hopes of squeezing money from alleged infringers—the jurisdiction of choice was the Eastern District of Texas.
But the Supreme Court, in a unanimous decision Monday, ruled that instead, trolls or others alleging patent infringement need to do so where the alleged infringer is headquartered or incorporated.
That’s the outcome argued by the plaintiffs in the case, TC Heartland v. Kraft Foods. It’s also the one urged by SCU Professors Brian Love and Colleen Chien, who were among the four leaders of an amicus brief signed by 61 law and economics professors. The group denounced the “rampant forum shopping” that was happening, and urged the Supreme Court to remedy the “dubious interpretation” that allowed it.
The TC Heartland decision is a major patent-law decision for Chien and Love, who have both made a significant mark on the field—and the case.
Chien has spent years quantifying the impact of patent assertion entities (PAEs)—also known as trolls—on small businesses. She also co-authored a study that was cited by both sides in the TC Heartland case. The study, forthcoming in the Maryland Law Review, quantified how drastically case distributions would change should the Supreme Court change the law. She found that changing the Texas loophole would give relief to 68 percent of small- and medium-sized businesses on the receiving end of patent lawsuits filed there. It also showed that not only PAEs would have to refile, but so would others alleging patent infringement.
Love, an intellectual-property expert and co-director of the High Tech Law Institute, co-authored a study analyzing the reasons PAEs and others flock to this district, which ran in the Stanford Technology Law Review and was cited by Senator Orrin Hatch, a senior member of the Judiciary Committee, in an op-ed in WIRED urging the Supreme Court to decide as it did.
Chien isn’t sure the Supreme Court’s Monday decision will be the end of the matter, however.
“The old law was clearly plaintiff-friendly and encouraged trolls,” she said. “But now, the rules are going to be seen by powerful constituents such as pharmaceutical companies and universities as overly friendly to defendants.” If they lobby their lawmakers to make it easier to fight such cases in their own home districts, more changes will be afoot.
