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Supreme Court shuts down location loophole for patent suits

The US Supreme Court makes it harder to file in plaintiff-friendly courts like East Texas.
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Shutterstock / trekandshoot

Patent trolls have had it pretty easy lately, especially in East Texas. A 2016 ruling by the US Court of Appeals for the Federal Circuit allowed patent suits anywhere a defendant company's products are sold. The Eastern District of Texas has become a favorite of high-tech patent lawsuits thanks to its rapid litigation timetable and plaintiff-friendly rulings. The US Supreme court today may have put an end to such free-range suit practices, however. The justices involved in the patent case between TC Heartland and Kraft Foods ruled unanimously that patent suits can only be filed in courts located where the target company is headquartered.

It's not just friendly juries or quick turnarounds that made East Texas so attractive. Many in the district require defendants to seek permission before they can file motions to dismiss cases that are based on abstract concepts, like podcasting or computer-based stock trading systems. If the target company can't show good cause for dismissal, the lawsuit will continue, usually with less-than-favorable results for the company being sued.

Technology companies like Apple and Google have been a particular favorite of patent litigators. The companies have even taken to the Supreme Court to recoup losses around frivolous suits as well as limiting where the suits can be filed. The current ruling could help stem the tide of patent litigation filed in East Texas, at least, making it a bit more difficult for trolls to find favorable rulings.

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