Optima Law Group Blog

US SUPREME COURT LIMITS THE POWER OF PATENT TROLLS

A patent troll is an individual or company that obtains patent rights of inventions, not for the purposes of using them, but strictly to sue allegedly infringing companies for monetary compensation. Patent trolls usually obtain patent rights by acquiring patents from bankrupt companies which are then added to their growing portfolios. They do not offer goods or services, or add anything tangible to the economy – their only intent is to seek out and bring lawsuits against potential infringers.

Fortunately, the US Supreme Court recently put restrictions on where patent lawsuits can be filed, which overturned 27 years of patent infringement law. It was found that more than 40% of all patent lawsuits are filed in a court located in Marshall, in the Eastern District of Texas, as they are known to favor plaintiffs bringing infringement suits. The recent US Supreme Court ruling upheld by unanimous decision, requires that all patent lawsuits be filed in the city where the defendant is incorporated or where it “has committed acts of infringement and has a regular and established place of business”. This requirement should make it harder for patent trolls to win cases and settlements, while also significantly reducing the amount of lawsuits brought on by patent trolls in the first place. It also frees the defendant from necessarily having to travel to another state to engage in legal proceedings, which may not be a significant for large companies, but can be costly and detrimental for smaller businesses who usually settle out of court because they cannot afford the large financial burden of litigation.

With this reform, the so-called “Forum Shopping” in patent litigation, should come to an end, although patent trolls will do anything in their power to stay in their favored venue as shown last week when patent troll Uniloc filed a complaint desperately trying to link Google to Texas in order to keep their ongoing case grounded in the widely known plaintiff-favored jurisdiction. Although the new restrictions may not completely eradicate patent trolls and their attempts at bullying companies, it certainly should lower their chances of successful suits and deter them from filing to begin with.

 

If you have any questions about your patent or intellectual property needs, please do not hesitate to reach to us. We would love to hear from you at 858-964-4697 or info@optimalawgroup.com.