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The Supreme Court Is Cracking Down on Patent Trolls (fortune.com) 112

The Supreme Court on Monday limited the ability of patent holders to bring infringement lawsuits in courts that have plaintiff friendly reputations, a notable decision that could provide a boost to companies that defend against patent claims. The high court, in an opinion by Justice Clarence Thomas, ruled unanimously that a lower court has been following an incorrect legal standard for almost 30 years that made it possible for patent holders to sue companies in almost any U.S. jurisdiction. From a report: The justices sided 8-0 (PDF) with beverage flavoring company TC Heartland in its legal battle with food and beverage company Kraft Heinz, ruling 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 anywhere a defendant company's products are sold.
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The Supreme Court Is Cracking Down on Patent Trolls

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  • East Texas (Score:4, Funny)

    by 110010001000 ( 697113 ) on Monday May 22, 2017 @11:04AM (#54463483) Homepage Journal
    I thought they always used East Texas because the people there were so intelligent?
    • by v1 ( 525388 )

      ruling that patent infringement suits can be filed only in courts located in the jurisdiction where the targeted company is incorporated.

      "And in other unrelated news, every company incorporated in Texas is now mulling moving their incorporation to 'anywhere other than Texas'..."

      CEO: "Another troll lawsuit? How can we stop this from happening again?"
      Lawyer: " MOVE "

      I guess it's time for Texas to get some Karma payback for letting the trolls piss all over the country while standing in their back yard.

      • by amiga3D ( 567632 )

        Isn't that a "Federal" court? Not to mention the Judge is actually from Florida.

        • The dumbass jurors is what makes the court appealing. Guess where they are from? Texans too stupid to get out of jury duty. Dumbest of the dumb.

          • by Gr8Apes ( 679165 )
            Hey, those jurors are pretty smart - they get paid for going to trial, and apparently not only from the feds.
          • The reason Texas is popular for patent litigation is because of the rules they set up that make it considerably easier for plaintiffs to win.

    • by Megane ( 129182 )
      After all, that's where Sheldon Cooper comes from.
  • by bazmail ( 764941 ) on Monday May 22, 2017 @11:04AM (#54463489)
    How about cracking down on stupid and frivolous patents too?
    • Now you're threatening the livelihood of thousands of patent attorneys around the world - don't you think that those attorneys have their own legal and political maneuvers to counter having their cash cow sacrificed on the altar of logic and reason?

      • by Rakarra ( 112805 )

        Now you're threatening the livelihood of thousands of patent attorneys around the world

        Hey, if it works for coal, then why not other industries?

        • Because lawyers can defend themselves, vigorously and at virtually zero cost.

          • by Rakarra ( 112805 )

            Because lawyers can defend themselves, vigorously and at virtually zero cost.

            And almost any lawyer will tell you that a lawyer representing himself has a fool for a client.

            • Yeah, there's some truth to this but remember that the original saying was:
              "He who represents himself has a fool for a client". So it didn't specifically speak to lawyers representing themselves. It is also possible that this saying is propagated by law bar associations and attorneys to keep their profession in higher regard.

              Moreover, I was referring to the profession defending itself from external challenges. If all the lawyers threw in together, they could surely come up with some "best choices" to be

              • by Rakarra ( 112805 )

                Yeah, there's some truth to this but remember that the original saying was:
                "He who represents himself has a fool for a client". So it didn't specifically speak to lawyers representing themselves. It is also possible that this saying is propagated by law bar associations and attorneys to keep their profession in higher regard.

                I've talked to a number, and I'm married to a lawyer, and I think I have a bit of understanding about why this idea comes up. For the most part, a defendant needs absolutely objective counsel. If you're defending yourself, or launching your own prosecution, you cannot be objective. You're too close to the case, and have too much invested in the outcome. The counsel has to be a voice that can tell you when you need to settle, when an approach you really want will backfire, and how not to let the heat of the

                • Yeah, I've read that. It makes sense to some degree but like with everything else, there are always exceptions to the "rule".

                  My second paragraph still stands. They would be formidable as a group.

    • by Anonymous Coward

      Because all the big players in the tech industry mostly play nice with one another over the legitimacy of the patents they each hold. For example MS receives a payment on each Android cellphone because it is cheaper for it's competitors to pay the small royalty than to spend millions fighting the patent in court. And there is no guarantee that they would win in court and end up having the patent holders increase the royalty payments. Right now behind the scenes the patent user can negotiate the amount they

    • by suutar ( 1860506 ) on Monday May 22, 2017 @12:52PM (#54464371)

      That'd be nice, but that's not what this case was about; the question they were asked to rule on was "is it really okay for them to sue us in Delaware even though we're incorporated in Indiana?" and they said "no, actually, not so much."

      Give it time. Once there's a few contradictory rulings between districts they'll get to start in on bullshit patents (but even then, I expect the most likely approach is going to be "given what we've seen come out of PTO, the court should no longer just blindly assume that the examiner actually did their job with regard to obviousness and/or prior art", which should go a long way to leveling the field between the owner of a junk patent and the defendant).

  • Legal practice (Score:1, Flamebait)

    by MangoCats ( 2757129 )

    How can the Supreme Court "crack down" on something that is a legal, precedented activity? Are they going to actually hand down a ruling that overturns prior decisions of the lower court? (And, yes, East Texas is about as low as it gets in this field.)

    Wouldn't it be easier to just order a sarin gas strike on a certain courthouse in East Texas and get it over with?

    • Re:Legal practice (Score:5, Informative)

      by tepples ( 727027 ) <tepples@gmail . c om> on Monday May 22, 2017 @11:18AM (#54463611) Homepage Journal

      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 anywhere a defendant company's products are sold.

      Are they going to actually hand down a ruling that overturns prior decisions of the lower court?

      I believe the answer is yes.

      • Sorry, that's just too far out of character for the Supreme Court - to actually do something, rather than dodging the question.

        Is hell freezing over? Maybe it's time to start reading the summaries.

        • by tepples ( 727027 )

          The Supreme Court actually does something more often when faced with a circuit split [wikipedia.org].

          • Yep, and something like patent law is not an example where a circuit split might be beneficial.

            Still, what's it been, like 30 years since the Troll explosion?

            My first patent number started with 5 (meaning ~5 million prior patents issued since the inception of the patent office), that was about 25 years ago, and they've issued more than 5 million patents since then. Not even a small percentage are trolls, but the trolls really started working around the same time that patents started issuing so quickly.

        • Sorry, that's just too far out of character for the Supreme Court - to actually do something, rather than dodging the question.

          Most of the cases the general public does not follow but there is always news when the court makes a decision. Some cases in recent memory that are Endrew F. v. Douglas County School District where the court rules unanimous that a school district must offer "individualized education program" to people with disabilities. The court has heard arguments in Microsoft v Baker [scotusblog.com] about class certification in the case of the Xbox disc failures.

        • Are you confused? The Supreme Court overturns lower court decisions all the time...there's absolutely nothing unusual about that.

          • by TWX ( 665546 )

            Other than specific legal issues directly involving the Federal government, basically all cases that end up coming to the attention of the Supreme Court have to come up through either circuit courts or else through state-level courts prior to being considered for appeal at the Supreme Court level. The Supreme Court first gets to decide if there's any reason to hear the appeal (ie, is there something of-merit justifying a further examination or is the lower court ruling sufficient, or are there differing ru

        • by Anonymous Coward

          To add credence to your "Is hell freezing over" question, please note that it was Justice Clarence Thomas who wrote the majority opinion. Since when has that been a thing?

      • Re:Legal practice (Score:4, Insightful)

        by SlaveToTheGrind ( 546262 ) on Monday May 22, 2017 @12:06PM (#54464017)

        Are they going to actually hand down a ruling that overturns prior decisions of the lower court?

        I believe the answer is yes.

        Yes, with respect to the Federal Circuit's VE Holdings decision that allowed venue in other districts.

        Yes, with respect to the district court's decision in the still-pending TC Heartland case that venue was proper outside the state where TC Heartland was incorporated.

        No, with respect to any other case decided under the Federal Circuit's old precedent and not still pending.

        The future of cases currently pending in now-inappropriate districts such as the Eastern District of Texas is a bit murky [patentlyo.com] and will be interesting to watch play out.

    • Re:Legal practice (Score:5, Insightful)

      by UnknowingFool ( 672806 ) on Monday May 22, 2017 @11:38AM (#54463779)

      How can the Supreme Court "crack down" on something that is a legal, precedented activity? Are they going to actually hand down a ruling that overturns prior decisions of the lower court? (And, yes, East Texas is about as low as it gets in this field.)

      Er? The summary says that the lower court has been following the wrong standard for 30 years. And if you clicked on the link, SCOTUS specifically overturned 2 lower courts. I know it's to much to RTFA and the 13 page decision, but did you even look at the summary?

      What does the decision mean? In the case of East Texas, lawsuits must be filed in the state and jurisdiction of the defendant, not where the plaintiff wants to sue. So it will make it harder for patent trolls to file now in East Texas where is it lawsuit friendly if their targets are not in that court's jurisdiction.

      Held: As applied to domestic corporations, “reside[nce]” in 1400(b) refers only to the State of incorporation. The amendments to 1391 did not modify the meaning of 1400(b) as interpreted by Fourco.

      • On the flip side this makes going after GPL infringement even more difficult. The patent holder (developer) will have to retain lawyers and incurs travel expenses wherever the Infringing corporation is located. Few developers have that kind of time and resources
        • On the flip side this makes going after GPL infringement even more difficult. The patent holder (developer) will have to retain lawyers and incurs travel expenses wherever the Infringing corporation is located. Few developers have that kind of time and resources

          I thought this decision was about patents, not copyright. Software licenses are built on copyright, not patents.

        • by mysidia ( 191772 )

          Few developers have that kind of time and resources

          They can probably sue them still in the jurisdiction where the author was located when the software was written.
          Also, i'm wondering if Patent trolls actually move their offices to Eastern Texas.

          Because in the US: the Plaintiff has a choice of forum, the burden is on the party wishing to dismiss a case for FNC: The court must balance convenience against the plaintiff’s choice of forum. In other words, if the plaintiff’s choice of forum was rea

        • by cfalcon ( 779563 )

          Copyright bro, not patent.

        • For copyrights, the relevant statute is 28 U.S. Code 1400(a) [cornell.edu]

          (a) Civil actions, suits, or proceedings arising under any Act of Congress relating to copyrights or exclusive rights in mask works or designs may be instituted in the district in which the defendant or his agent resides or may be found.

    • by mysidia ( 191772 )

      Are they going to actually hand down a ruling that overturns prior decisions of the lower court?

      Well, if they don't, then cases found in plaintiffs favor may get reopened and appealed on the grounds of no jurisdiction.

    • Given the way it is set up in the constitution, gerrymandering is a natural byproduct. The founder fathers appear to have been naive in assuming political parties would not form and that elected representatives would be fair and high minded. It's impossible to have proportionate representation with a winner-takes-all election system. Thus we have gerrymandering attempts by all parties and in all states since the founding.

      And yes, sometimes the gerrymandering is for a high minded principal, such as granting

  • thinks that this will just create more patent infringement friendly jurisdictions, as the wealth gets.... redistributed

    • thinks that this will just create more patent infringement friendly jurisdictions, as the wealth gets.... redistributed

      Yeah. Now it'll be whatever District serves Delaware...

      • by SlaveToTheGrind ( 546262 ) on Monday May 22, 2017 @11:40AM (#54463805)

        Delaware [wikipedia.org] is already a sizeable patent district -- e.g., most pharmaceutical patent cases are filed there, and they had ~10% of all cases filed last year.

        Problem is they're not staffed for this kind of additional volume -- they only had three judges to start with, and then Judge Robinson took senior status this spring. With this sort of flood now looming, it's not clear who's going to want to sign up to replace her.

        • by TheFakeTimCook ( 4641057 ) on Monday May 22, 2017 @11:48AM (#54463863)

          Delaware [wikipedia.org] is already a sizeable patent district -- e.g., most pharmaceutical patent cases are filed there, and they had ~10% of all cases filed last year.

          Problem is they're not staffed for this kind of additional volume -- they only had three judges to start with, and then Judge Robinson took senior status this spring. With this sort of flood now looming, it's not clear who's going to want to sign up to replace her.

          Maybe one of the "Judges" from East Texas can transfer up there, since their caseload is going to be considerably lighter...

      • Why would it be Delaware?
        • by __aaclcg7560 ( 824291 ) on Monday May 22, 2017 @12:00PM (#54463959)

          Why would it be Delaware?

          The majority of the corporations listed on the stock exchanges are incorporated in corporate-friendly Delaware. Businesses not destined for the stock exchanges are often incorporated in Nevada or Wyoming, as those states makes it difficult for plaintiffs to collect assets in a lawsuit judgement.

          • At the state level, yes but at a federal level, federal rules apply. So in the future Nevada, Delaware, or Wyoming will have many more cases.
      • thinks that this will just create more patent infringement friendly jurisdictions, as the wealth gets.... redistributed

        Yeah. Now it'll be whatever District serves Delaware...

        That appears to be the eastern 3rd district. [wikipedia.org]

      • by Anonymous Coward

        Does Delaware have enough bridges for the trolls and enough space for the Samsung Ice Skating Rink?

    • How will they create more patent infringement friendly jurisdictions? It's fairly clear which Federal District Court has what jurisdictions. Sure there might be consolidations and expansions but it's not like it can happen overnight without changing the Dept of Justice.
      • I didn't say it would create new jurisdictions, just new patent troll friendly ones. When cases start getting shifted to Delaware and Nevada courts, you can bet your ass that money will start flowing in those directions to in order to grease the wheels.

    • thinks that this will just create more patent infringement friendly jurisdictions, as the wealth gets.... redistributed

      Yeah, probably something like that.

      Corps. incorporate in a Sate, but do business in potentially all US states. Isn't the legal standard something like, "jurisdiction is determined by where the crime happened."?

      If infringement happened all over (some gadget sold at Best Buy nation-wide), then it is generally the plaintiff's choice as to which jurisdiction to bring the complaint in.

      Right? IANAL, so please correct me.

      • No. Traditionally, corporations are governed by the laws of the states that they're incorporated in, even if they do business in multiple states.

        The reason for this is that states may have conflicting laws which would make it impossible for a corporation to legally be in compliance with the laws of every state that they do business in. Hence, why only the state of incorporation is considered.

        This is why there are so many companies incorporated in Delaware and Nevada. They've got the most corporate friendly

  • by xxxJonBoyxxx ( 565205 ) on Monday May 22, 2017 @11:15AM (#54463575)
    >> patent infringement suits can be filed only in courts located in the jurisdiction where the targeted company is incorporated

    I see a bunch of high-fiving going on in the Delaware legal community (because that's where a lot if not most of targeted companies will be incorporated). Also a lot of high-fiving in corporate legal departments, who asked their companies to (re)incorporate in Delaware to take advantage of its corporate-friendly laws.
    • Same thing for Nevada

    • >> patent infringement suits can be filed only in courts located in the jurisdiction where the targeted company is incorporated I see a bunch of high-fiving going on in the Delaware legal community (because that's where a lot if not most of targeted companies will be incorporated). Also a lot of high-fiving in corporate legal departments, who asked their companies to (re)incorporate in Delaware to take advantage of its corporate-friendly laws.

      "Sorry Delaware legal community" but Patent law is Federal law under and Federal Courts jurisdiction. State laws are of no consequence in the proceedings

      • "Sorry Delaware legal community" but Patent law is Federal law under and Federal Courts jurisdiction.

        Federal Courts, plural. Different district judges are known to rule differently, and rulings of the Court of Appeals for one circuit aren't binding on other circuits unless upheld by the Supreme Court.

    • They're going to have to get some bench strength and fast -- they only had three judges to start with, and then Judge Robinson took senior status this spring. That seat (and any others) may be a bit harder to fill now that the candidates have a sense of what they're signing up for.

  • by Glich ( 4196575 ) on Monday May 22, 2017 @11:19AM (#54463613)
    The whole east Texas crap has been the bane of the tech industry for decades.
  • Venue... (Score:5, Interesting)

    by Anonymous Coward on Monday May 22, 2017 @11:21AM (#54463641)

    I was involved in two patent cases (providing research rather than expert witness); both were in East Texas.

    One was the Novell/Red Hat case on user interfaces, and the other was on the infamous OpenMarket patents.

    One we won (the Novell/Red Hat), and the other lost (the Open Market patents, finally thrown out years later due to the efforts of New Egg.

    I will note that the Novell/Red litigation was helped by the judge coming in from out of district (from the appeals court). So venue clearly mattered greatly. Don't under estimate it.

    The Open Market patents were about as an egregious violation of the patent system as I can imagine. The first of the three (the original one) described the method OpenMarket used for its early shopping cart system based on URL hacking. It was obsolete the day cookies were invented (which have their own set of terrible privacy problems, something we weren't thinking about much in the early 1990's; sigh). So nobody infringed it; by the time of its issuance it was moot, as cookies made it much easier; whether there was prior art isn't clear to me, but probably; I just never found a smoking gun. The second and third patent, continued over a decade, ended up covering about half of computer science and should never have been issued due to prior art.

    Thankfully, the CEO of NewEgg fought in a later case and eventually won, but not after many companies lost and were held up.

    So venue matters, and fixing the patent system to not issue trash sweeping patents matter both.

  • How can the Supreme Court crack down on anything? Technically it interprets existing law based on cases brought before it.
    • How can the Supreme Court crack down on anything? Technically it interprets existing law based on cases brought before it.

      I guess "Loving v. Virginia, 388 U.S. 1 (1967)" and the crackdown against anti-miscegenation laws never happened.

    • by tepples ( 727027 )

      When a case is brought before the Supreme Court, particularly one involving a split among lower courts, the Court may interpret law in such a way as to crack down on lower courts' misinterpretation.

    • How can the Supreme Court crack down on anything? Technically it interprets existing law based on cases brought before it.

      ANSWER: Lazy headline-writing.

  • That Rural East Texas has lost.... (a lot of companies incorporate in Delaware....)
  • If the court cases were incorrectly filed and ruled on for 30 years in the wrong location -- does that mean companies who did not settle can now have them overturned and go back to court in a new location?
    • If the case has closed then my understanding is no, the verdict will not be overturned due to what is now incorrect venue. At the time the case was argued, the venue was correct. That the venue is now different should have no legal bearing on old cases - only current and future cases. I believe the constitutional law that prevents old cases from being reopened in this way is called double jeopardy.

      • Double Jeopardy only applies to criminal law.
        • Other than the misunderstanding about double jeopardy, the poster is correct. If someone wants to overturn a court case from decades ago because of the venue, they'd have to prove that the venue was a factor/problem in the case. Merely wanting a different set of judges is not normally grounds to overturn a ruling unless that set of judges is the issue.
      • At the very least, it appears to have violated the 6th amendment provision for a "speedy and public trial, by an impartial jury of the state and district wherein the crime shall have been committed".

        This ruling would seem to indicate that many of the "closed" cases were decided outside of their proper jurisdiction. If the way that the venue (and thus the jury) was chosen didn't follow the law as it was written at the time (regardless of interpretation at the time), is the ruling still valid?

    • Thanks to a quirk in U.S. intellectual property law, a patent suit can be brought in whatever jurisdiction the plaintiff wants.

      Texas actually considers their patent troll venues as something to draw tech companies to the area: [tyler4tech.com]

      Tyler serves as headquarters to the Eastern District of Texas federal court, a popular venue for patent cases due to its judicial expertise, plaintiff-friendly local rules, speedy dispositions, and principled jurors who understand the value of Intellectual Property (or "IP"). The East Texas area also has an abundance of legal experts specializing in patent and IP litigation.

  • I guess those crooked or biased activist judges in East Texas will have a lot of golfing to do.
  • Problem solved

  • Perhaps this is because the court does not reflect the Executive, at least not yet.

    Our current President gets a good portion of his income from rent-seeking, (licensing the Trump name) and probably considers that to be "good business." Since it's good business, I would expect him to favor that kind of enterprise, and discourage limitations on it.

  • Tragedy (Score:4, Insightful)

    by Xtifr ( 1323 ) on Monday May 22, 2017 @03:31PM (#54465527) Homepage

    This is a tragedy! The entire economy of East Texas is based on accepting bribes from patent holders. What are they going to do now!? :D

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