Supreme Court Limits Ability of Patent Assertion Entities to Cherry-Pick Courts

The Supreme Court today reversed a lower court finding and dealt a blow to the ability of patent assertion entities to bring cases against companies in friendly federal courts. In the case of TC Heartland v. Kraft, the court unanimously affirmed prior precedents that patent infringement lawsuits can be brought only where defendants are incorporated or doing business.

The American Bankers Association has been closely following the case and filed a friend-of-the-court brief urging the Supreme Court to hear the case and overturn the appellate court ruling, which upheld a much broader understanding of corporate residence that would allow patent assertion entities — often called “patent trolls” — to continue cherry-picking friendly courts for patent cases against faraway defendants, further increasing pressure to settle cases.

In 2015, 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 assertion entities, which hold unused patents, often of dubious quality, and employ them primarily as the basis for collecting licensing fees and threatening of litigation. For more information, contact ABA’s Tom Pinder.