Supreme Court to Hear Key Patent Troll Case

The Supreme Court said today that it would hear the case of TC Heartland v. Kraft, which the American Bankers Association is watching closely due to its implications for banks that face litigation from patent trolls. The case hinges on whether patent trolls — entities that hold patents, often of dubious quality, but use them primarily as the basis for threats of litigation — can bring cases in any federal court district or must bring them only where defendants are incorporated or doing business. ABA and other trade groups submitted a joint friend-of-the-court brief encouraging the Supreme Court to hear the case.

Last year, 40 percent of patent suits were filed in just one of 94 federal judicial districts: the Eastern District of Texas, known for its friendliness to patent trolls. The appellate court’s decision in TC Heartland upholds a broad understanding of corporate residence — rejected by the Supreme Court in a different case — that would allow patent trolls to continue cherry-picking friendly courts for patent cases against faraway defendants, further increasing pressure to settle cases.