Patent attorneys still adjusting to Supreme Court ruling

A year has passed since the U.S. Supreme Court’s TC Heartland ruling and the patent world has changed.

Lawyers representing patent holding companies had developed a pretty straightforward strategy for trying cases in the U.S., targeting a bevy of technology companies with infringement claims in districts with favorable litigation rules that encouraged defendants to settle.

But the TC Heartland decision disrupted that game plan by giving plaintiffs more limited options for deciding where to file complaints. TC Heartland LLC v. Kraft Foods Group Brands LLC, 137 S. Ct. 1514 (2017).

The Supreme Court ruled the defendant being sued must have a physical presence in the district where the case is filed. Attorneys say filings in the Eastern District of Texas have plummeted in the wake of the decision and attorneys in California have benefited as some of those case have migrated to the Northern and Central District courts, along with the District of Delaware, where many companies are incorporated.

“We have seen a decrease in litigation in some of the locations historically viewed as plaintiff-friendly jurisdictions,” said Brian C. Kwok, a partner with Haynes and Boone LLP who represents defendants.

Kwok said the trend of cases leaving the Eastern District of Texas “is industry-wide and it relates to all patent cases.”

Ben M. Davidson, a partner with Davidson Law Group who represents clients on both sides of patent disputes, said he’s been reading articles about Texas intellectual property lawyers branching out into other types of litigation to backfill for lost work.

“I have no personal knowledge of that, but it doesn’t surprise me at all,” he said. “No question this is just an incredible change in the way patent litigation is done.”

One exception to the TC Heartland ruling is foreign companies with no official presence in the U.S. can still be sued in any jurisdiction, meaning the Eastern District of Texas will likely remain a hotbed for those cases.

Kwok said there’s also an open question of how long a company has to be out of a jurisdiction before it is officially considered to no longer have an “established place of business” there. The only guidance is it must be “a reasonable amount of time,” but that has yet to be defined.

“The issue of reasonable time will come to a crux,” Kwok explained. “It’s a significant question because we had a record number of brick and mortar stores closing in 2016 and 2017.”

Davidson said it’s not all good news for big tech companies because the changes have made it more difficult for them to enforce their own patent portfolios. Having infringing products shipped into a jurisdiction where the plaintiff was operating used to be sufficient grounds to file a lawsuit there, but that is no longer an option.

“A competitor may be selling infringing products into your backyard, and you want to sue them here,” he said. “Before TC Heartland, you’d be able to do that.”

Davidson said the Supreme Court’s decision ended an era for plaintiffs’ lawyers, and it’s time to start looking at other areas of the patent law regime.

He contended changes to the Patent Trial and Appeal Board and other patent law changes over the years have weakened the rights of patent holders.

He said the significant drop in seemingly frivolous filings following TC Heartland should provide an ideal moment to strengthen those rights again.

“Every single successful patent application becomes a case litigated in the patent office,” he said.