Patent trolls under attack as US supreme court moves goalposts

23 May 2017

Image: JUN3/Shutterstock

The number of patent disputes in the US is soaring in 2017, though that could all change after a new ruling from the country’s highest court.

Patent litigation is a booming business, which makes sense, given the relentless race to patent devices, processes and anything that could, one day, provide a cash flow.

This is particularly true in the technology space and, with the plethora of patents and the need for collaboration to build pretty much anything in this field, it’s inevitable that ‘ownership’ worries emerge.

While the US appears to be the current home of this legal world, east Texas is the epicentre.

Yearly rise

In 2015, a report from Unified Patents showed that a surge in patent lawsuits was being driven by non-practising entities (NPEs). These companies are known as patent trolls, and make their money almost entirely from patent licensing, representing two-thirds of all cases in US district courts at the time.

In the first quarter of 2017, the trend marked a continual rise. The total number of patent suits filed in district courts in Q1 2017 is similar to the total seen in the year previous, though NPEs made up an even larger proportion than before.

The eastern district of Texas saw more cases than any other district court, and more NPE cases than all other districts combined. This is thought to be because of the high success rate these patent trolls have in the district, garnering wins that other areas would, perhaps, rule as losses.

But that might soon change.

Moving house

The US supreme court has now tightened rules for where patent lawsuits can be filed. The court found, emphatically, that patent suits can be filed only in courts located in the jurisdiction where the targeted company is incorporated.

The ruling means that patent litigation will be spread out, in theory; however, given the fact that many technology companies are based on the east coast of the US, it could see a swell of cases move to just a handful of other jurisdictions.

Heartland, the company that took the case to the highest court in the US, said the ruling will limit the ability to “shop” for friendly courts.

“Individuals and businesses in the US have been unfairly required for decades to defend patent suits in far-off locales, adding cost, complexity and unpredictably [sic] to the intellectual property marketplace,” said Ted Gelov, chief executive of the company.

Given the sheer number of disputes surrounding the likes of Apple and Google, this ruling will go down well in certain Silicon Valley quarters.

Gordon Hunt was a journalist with Silicon Republic