According to Cynthia Rigsby, partner at Foley & Lardner, the decision was a "staggering blow" to NPEs and practitioners that had "built their business models around exacting settlement leverage over domestic corporations by forcing them to litigate in perceived plaintiff-friendly venues", such as the US District Court for the Eastern District of Texas. The unanimous 8-0 ruling (the newly appointed Judge Gorsuch did not take part in the case) significantly narrows the choice for many patent owners on where they can bring an infringement lawsuit.
"The Federal Circuit's permissive venue rule has fundamentally shaped the landscape of patent litigation in ways that harm the patent system, by enabling extensive forum shopping and forum selling, supporting opportunistic patent litigation by patent trolls", attorney Mark Lemley wrote in a friend of the court filing, with 60 other legal experts, in behalf of TC Heartland.
Following this major ruling, many patent infringement cases will likely unfold in California and MA, which serve as massive tech hubs, as well as DE, which is home for many companies. Courts in other states won't be as friendly to patent trolls, so this seemingly unrelated Supreme Court decision may have the side effect of reducing frivolous patent lawsuits. And it does not address the root cause of patent trolling: the thousands of overbroad and vague software patents that the Patent Office issues every year. He noted Apple Inc AAPL.O , a frequent target for East Texas patent lawsuits, has stores in Plano and Frisco, two Dallas suburbs that fall within the district. Dell, Oracle, Intel and Adobe had all filed briefs in support of Heartland. Summary judgments allow defendants to ask the court to rule that a plaintiff's case is invalid, without going to trial.
In his decision, the WSJ points out, "[Justice] Thomas overturned the Federal Circuit's 1990 ruling and harked back to the Supreme Court's 1957 Fourco Glass decision that "definitively and unambiguously held that the word "residence" in the 1948 law "refers only to the State of incorporation.
Intellectual property partner John O'Quinn of Kirkland & Ellis called the decision "seismic" in a statement emailed to the ABA Journal, and said it could lead to more infringement being filed in DE, where many corporations choose to incorporate.
Tech companies and app developers everywhere are breathing a sigh of relief after Monday's major Supreme Court ruling on a topic that's close to their hearts: Patents.
Patent trolls obtain patents not for the objective of producing an invention or a technology but to license and enforce the patents. And although that particular case didn't involve the Eastern District of Texas, the issue in the center of the case-forum shopping-does. The decision will "otherwise funnel cases towards defendants' home jurisdictions", O'Quinn said. Until the Supreme Court's ruling this week, patent lawsuits could be heard all across the country, giving companies the opportunity to seek out courts where the odds were tilted in their favor.
The justices ruled unanimously on Monday that such lawsuits can be filed only in states where defendants are incorporated. In 1990, however, the Federal Circuit held that venue in patent cases should follow general venue rules, reasoning that congressional amendments to the general venue statute had superseded Fourco.