SoylentNews is people
SoylentNews
The Register reports
The US Supreme Court has issued a ruling that could block patent-holding firms from seeking out friendly courts to hear their infringement claims.
An 8-0 ruling by the nation's top court in the TC Heartland v Kraft Foods [PDF] case held that a company can be sued only in the state where it is incorporated, rather than in any district where the company happens to do business.
The unanimous decision (newcomer Neil Gorsuch did not take part in the hearing) will place stricter limitations on where patent infringement suits can take place, and will bar plaintiffs from seeking out friendly judges more likely to side with patent holders.
TechDirt adds
Another Supreme Court case on patents, and another complete smackdown of the Court of Appeals for the Federal Circuit (CAFC), the court that is supposed to be the "expert" on patent cases. [...] As you've probably heard, for years now patent trolls and other aggressive patent litigants have been filing their cases in East Texas, as it's become a jurisdiction that is ridiculous friendly to patent holders. The towns of Marshall and Tyler, Texas have practically built up industries around the fact that they are "patent friendly" jurisdictions. In the past few years, a second favored jurisdiction has popped up: Delaware, after a few academic studies showed that the courts there may have been even more friendly than East Texas. The TC Heartland case was about a case filed in Delaware, and raised the issue of whether or not this kind of patent forum shopping was okay.
CAFC, in its usual CAFC manner, said "sure, that's great, we love jurisdiction shopping and have since our 1990 ruling in VE Holding v. Johnson Gas". This was kind of ironic, as one of the key justifications given for setting up CAFC in the first place was to put an end to jurisdiction shopping in patent cases.
(Score: 4, Informative) by DannyB on Wednesday May 24 2017, @01:23PM (2 children)
If a company can only be sued in the state it is incorporated in, I predict a mass exodus of major high tech companies incorporated in East Texas will re-incorporate elsewhere. Expect a flood. A tsunami.
On a more serious note (did you think the previous sentence was serious?), Delaware? Correct me if I'm wrong, but the reason companies incorporate in the microscopic, tiny hands sized state of Delaware is because it is bankruptcy friendly. If you are incorporated in Delaware and go bankrupt, you can expect to get wonderful treatment that is unfavorable to your creditors. See SCO vs IBM. And IMO the bankruptcy system there, maybe elsewhere, stinks to the high heavens.
Now if Delaware is patent friendly to plaintiffs, this may be a sudden disincentive to incorporate in Delaware. Which is more likely, that you will need bankruptcy protection, or that you will be sued for patent infringement for a method and system of using ink and paper documents in the process of conducting business?
The lower I set my standards the more accomplishments I have.
(Score: 3, Interesting) by NotSanguine on Wednesday May 24 2017, @03:30PM
IANAL, but having worked for a law firm that does IP litigation, I've been to East Texas in support of legal teams. There are office buildings near the courthouse which are fully leased, but generally unoccupied.
The tiny offices there (all you have to do is walk around these buildings and it's clear that it's rare for anyone to be there) sit empty until the patent trolls^W^W NPEs [techtarget.com] find a corporation with deep pockets that they can attempt to exploit, sucking money and resources that could be used to innovate, create new businesses and grow the economy.
Why are these folks in East Texas? Because the courts there have generally been friendly to marginal and/or frivolous IP litigation. It's brought lots of money into an area that's generally pretty nice (if you like small towns), but doesn't have strong economic engines.
I, for one, welcome our new IP litigation overlords in (hopefully) more diverse places which don't have a vested interest in promoting such litigation.
No, no, you're not thinking; you're just being logical. --Niels Bohr
(Score: 3, Informative) by AthanasiusKircher on Wednesday May 24 2017, @04:37PM
Well, that's one reason corporations choose Delaware. But in general, there's a lot of reasons why corporations choose Delaware, not least of which is because there's such a long history now of corporations in Delaware that corporate law there is significantly more developed (with a lot more precedent) than other places. Thus, corporations have a much better sense of what they can "get away with" there, rather than taking a chance with a lower court judge or jury in some random other place which might be willing to award ridiculous damages or something, since there's no governing precedent.
But there are other advantages. You might just see the State of Delaware's helpful official brochure [delaware.gov] on "Why Corporations Choose Delaware."