Tech companies and app developers everywhere felt relieved after Monday's major Supreme Court ruling on patents, or rather, patent lawsuits, of which an increasing number, according to analysts, were bogus and threatened start-ups and inventions before they had a chance to succeed.
On 22 May 2017, the US Supreme Court overturned nearly 30 years of venue practice under Federal Circuit precedent.
The ruling could end up having a significant effect on which companies and innovations thrived and which got sued into oblivion.
In the case in question, TC Heartland vs Kraft Foods, Kraft had sued Heartland over a type of product called a ''liquid water enhancer,'' which was essentially a package of flavouring that one could dump into a bottle of water to change its color and taste. Kraft claimed that Heartland had stolen its idea, but the case with started as a straightforward patent infringement suit, went on to gain national significance as it called into question where cases like these could be tried.
Until the ruling this week, patent lawsuits could be heard all across the country, which gave companies the opportunity to seek out courts where the odds favoured them.
Consequently, a few federal courts had become the favoured destination of patent trolls, with the Eastern District of Texas, deciding a huge number of patent cases. The court had gained notoriety for hearing a lot of patent infringement cases and also for handing accusers big wins. According to a 2015 study by PricewaterhouseCoopers, the court was far more likely to decide in a patent plaintiff's favour than other courts.
In TC Heartland LLC vs Kraft Foods Group Brands LLC, No 16-341, slip op (US 22 May 2017), the Supreme Court reversed the Federal Circuit and held that ''a domestic corporation 'resides' only in its state of incorporation for purposes of the patent venue statute.''
A domestic corporation could therefore, only be sued for patent infringement in the state where it was incorporated, or where there had been an act of patent infringement and where the corporation had a regular and established place of business.