WASHINGTON – The Supreme Court's May 22 decision to reduce the states in which patent owners are allowed to file infringement lawsuits is expected to reduce 1,000 cases per year in Eastern Texas and increase cases in the District of Delaware by 500, Unified Patents has predicted.
Following the TC Heartland v. Kraft Foods Brand Group LLC case in which sweetener maker TC Heartland was victorious, the Supreme Court reversed a federal court rule that allowed patent holders to file lawsuits wherever the defendant made sales. This rule has been criticized for promoting forum shopping, which would result in a large amount of patent cases in a few jurisdictions, like the Eastern District of Texas.
“We therefore hold that a domestic corporation ‘resides’ only in its state of incorporation for purposes of the patent venue statute,” Justice Clarence Thomas wrote in the court decision.
Unified Patents, an organization which aims to reduce non-practicing entity patents, projected surprising findings after extensive venue research. It found that the recent Supreme Court decision will not only cause a major shift in cases in eastern Texas and Delaware, but also may cause the Northern District of California to pick up 300 more cases per year and increase filings in the Southern District of New York and the Northern District of Texas.
"The results of TC Heartland are likely to change venues dramatically for patent disputes," Shawn Ambwani, the COO of Unified Patents, told The Record. "For companies that wanted to file in forums that were convenient for them, litigation will probably be problematic. Now, they have to file where the defendant resides or has operated. So before, the venue was essentially anywhere in the U.S."
Although many are relieved that forum shopping will drop, many patent cases filed by smaller companies may be in trouble.
"Ninety percent of all litigation in the Eastern District of Texas was done by nonpracticing entities," Ambwani said. "And I think a lot of people settled and filed there because they thought they had a better chance of getting a settlement. I think it's going to be harder for them to get the settlements that they wanted before. Although, I think for the larger companies, it doesn't really make a difference."
Since the highest court has enforced this order, a chance that patent filing location rules will loosen is bleak.
"It's a Supreme Court decision, so unless Congress changes the laws on venue for patent disputes, I don't see this changing any time soon," Ambwani said.