The Supreme Court is making it easier for companies to defend themselves against patent infringement lawsuits in a case hailed by North Carolina’s attorney general. Red Hat and SAS are among firms that have waged a long legal battle against so-called “patent trolls.”
Red Hat, which had filed a brief in the case, welcomed the decision.
“We at Red Hat are pleased at the Supreme Court’s decision today on patent venue,” Rob Tiller, vice president and assistant general counsel at Red Hat, told WRAL TechWire in a statement.
“As we and others noted in a friend of the court brief, in recent years there has been rampant forum shopping in patent cases, which has put innovative companies like ours at a disadvantage. The new case will reduce forum shopping and help assure a level playing field.”
North Carolina Attorney General Josh Stein also is happy with the decision.
“Patent trolls have regularly cherry-picked far-flung and burdensome judicial districts that they believe will be favorable for their case,” Stein said.
“This can come at great expense and disadvantage to information technology businesses. I was proud to join a bipartisan effort to stop this drain on resources for many innovative North Carolina businesses. This ruling will help these businesses and their employees focus on innovating and creating, not on defending against abusive litigation tactics.”
SAS did not respond to a request for comment.
However, in another patent troll-related case, SAS has won a hearing before the Supreme Court in a case dating back to 2012.
The case overview
The justices ruled unanimously on Monday that such lawsuits can be filed only in states where defendants are incorporated. The issue is important to many companies that complained about patent owners choosing more favorable courts in other parts of the country to file lawsuits.
The case involved an appeal from TC Heartland, an Indiana-based food sweetener company sued by Kraft Foods in Delaware. Lower courts refused to transfer the case to Indiana.
But the Supreme Court’s ruling will have the biggest impact on federal courts in eastern Texas, where more than 40 percent of patent lawsuits are now filed. Local rules there favor quick trials and juries tend to be more sympathetic to plaintiffs.
The ruling will have a major impact on lawsuits from so-called patent trolls — companies that buy up patents and force businesses to pay license fees or face expensive litigation. Many of those cases now may have a tougher time getting to trial or result in jury verdicts that are less generous.
Red Hat and SAS both have sought to stop patent trolls, and SAS lobbied directly for protection in North Carolina’s General Assembly.
Stein noted that y North Carolina had joined a bipartisan coalition of 17 state Attorneys General in an amicus brief on the case. Texas, Arizona, Colorado, Connecticut, Hawaii, Illinois, Iowa, Maine, Maryland, Michigan, Nebraska, Ohio, South Carolina, Vermont, Virginia and Wisconsin also were involved.
Writing for the high court, Justice Clarence Thomas relied on a 1957 Supreme Court case that said patent cases can be brought only where the defendant company is incorporated. He said the federal appeals court in Washington that handles patent appeals was wrong to say that Congress had changed those rules.
The ruling is a “seismic decision” that will affect patent litigation around the country, said John O’Quinn, a Washington, D.C., lawyer specializing in patent law. He said it may lead to a surge in patent cases in Delaware, where many companies are incorporated due to favorable state law.
Justice Neil Gorsuch did not take part in the case.