High Court Curbs Locations of Patent Suits

This week the U.S. Supreme Court tightened rules for where patent lawsuits can be filed. The decision is expected to make it harder for so-called patent trolls to launch cases in friendly courts.

Patent troll refers to plaintiffs who generate revenue by suing over patents instead of making products.

The justices ruled 8-0 that patent infringement suits can be filed only in courts located in the jurisdiction where the targeted company is incorporated. Justice Neil Gorsuch did not participate in the decision.

The decision overturned a ruling last year by the U.S. Court of Appeals for the Federal Circuit, a Washington-based patent court, that said patent suits are fair game wherever the company being sued sells its products.

The ruling is likely to lessen the steady flow of patent litigation filed in a single federal court district in rural East Texas because of its reputation for having rules and juries that favor plaintiffs bringing infringement suits.

More than 40 percent of all patent lawsuits are filed in East Texas. Of those, 90 percent are brought by patent trolls, according to a Stanford Law School journal.

More than 4,500 patent suits were filed in 2016, down from a peak of 2013, when more than 6,100 cases were filed, according to analytics firm Lex Machina.

Source: Reuters, Bloomberg