Richard Lloyd

The Supreme Court had another key aspect of US patent law in its sights on Monday as it heard oral arguments in TC Heartland LLC v Kraft Group Food Brands. The case provides the eight justices with the chance to radically overhaul the law concerning venue in patent infringement lawsuits. This currently gives plaintiffs broad scope in deciding where to bring a case.

As anyone with even a cursory interest in patents could tell you, this means that as things stand a large proportion of patent suits are concentrated in the Eastern District of Texas, which because of its handling of issues such as discovery and early case motions, is perceived to be particularly plaintiff friendly. That dominance is such that in 2015 44% of infringement cases were brought in the district, including more than one quarter to just one judge.  

That the Supreme Court justices granted cert in the first place suggests that they’re ready to place limits on plaintiffs’ choice of jurisdiction: they are generally not in the habit of taking cases from the Court of Appeals for the Federal Circuit to congratulate little brother on his decisions.

However, while a number of people I spoke to immediately after arguments still favoured the court upending accepted practice and putting an end to East Texas’s dominance, listening to the arguments on Monday it was hard not to be struck by the possibility that the case might not be as cut and dried as expected. For example, it did not turn into one of those instances in which the justices snipe about non-practising entities and the kind of perceived abuses in US litigation that have led to calls for further patent reform. In fact, NPEs were referenced just once, in passing, while “trolls” were not mentioned at all during the arguments.

The justices also did not obsess over the grip that East Texas has on new patent suits — Justice Breyer even asked TC Heartland’s counsel why it mattered that so many cases were filed there. Instead, they stuck more to the statutory grounds; and here things get very hazy.

Whichever way the decision goes there is, of course, a big policy dimension hanging over things. One of the arguments from Kraft’s lawyer was that Congress should be left to address the issue of venue because the legislature could do it in a way that didn’t simply boil down to the binary decision that the court faces in this case. He also claimed that if the type of reform that the legislature has proposed was signed into law then it would be largely NPE suits that would have to move, not those filed by operating companies. If TC Heartland’s argument were followed, he asserted, both types of plaintiffs would have to take their cases elsewhere.

Should the majority rule in favour of TC Heartland and radically redraw the venue law, then a large part of the patent reform debate will presumably fade further from view. Reducing plaintiffs’ ability to file at will in the Texan towns of Tyler or Marshall has been a big focus of the pro-reform side that has been urging legislators to act over the last five years.

As the prospects of a broad-based bill like the Innovation Act being signed into law have faded, so pro-reformers have switched their attention to trying to pass narrower legislation focused on subjects such as forum selection. While Washington DC adjusts to a new administration and remains weighed down with a long list of legislative priorities, no one expects patent reform to appear back on the agenda any time soon and a ruling for TC Heartland could keep it off the horizon for the foreseeable future.

But if the status quo remains then we can expect the pro-reform lobby to pick back up again. As this blog reported yesterday, Senator Orrin Hatch made the case for the Supreme Court to rule in favour of TC Heartland in an opinion piece for Wired. In it he wrote: “In the unfortunate event the Court upholds the current system, I stand ready to move legislation that will help bring sanity back to patent litigation.”

The prospect of legislation returning to the agenda even led one member of the patent community, who is more sceptical of broad-based new law, to remark to me that they hoped the Court would rule in favour of TC Heartland so that a decision in the other direction could not be used to jump-start the case for a new bill. Either way, there’s a lot riding on this.