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Patents >> Supreme Court Seeks to Curb the Worst Abuses of the Patent System

May 24, 2018

Congress, commentators and a wide variety of industry leaders have long noted that the patent system was broken. Besieged by a tide of weak patents and baseless patent troll litigations, these stakeholders argued that the current patent climate incentivized the weaponization of patent rights, thereby raising operational and legal costs and stifling innovation.

In 2017, the Supreme Court responded by taking aim at some of the worst abuses of the patent system in two landmark cases. The first, TC Heartland v. Kraft Foods, addressed the issue of venue. Hoping to limit the aggressive forum shopping of plaintiffs – which often led to an outsized number of cases in plaintiff-friendly places like the Eastern District of Texas – the Supreme Court held that venue is only proper in a patent case in the state where the defendant is incorporated or where it has a regular and established place of business. In narrowing the proper avenues for bringing suit, the Court reduced any home-field advantage for patent trolls.

In Impression Products v. Lexmark Int’l, the Supreme Court rejected Lexmark’s efforts to prohibit purchasers of printer ink cartridges from refilling and reselling them. The Supreme Court found these restrictions to be a violation of the “first sale” doctrine, which protects downstream users of a product by exhausting a patent owner’s rights in a product after it is first sold, thereby narrowing the field of legitimate patent defendants, and giving peace of mind to retailers and consumers.

A series of other decisions also made life more difficult for patent plaintiffs. In Life Technologies v. Promega, the Supreme Court weakened the rules prohibiting patent infringement overseas, and in Helsinn Healthcare v. Teva Pharmaceuticals and University of Maryland v. Presens, the Federal Circuit made it easier to invalidate patents by showing that the invention at issue was previously on sale or that it would have been obvious to someone working in that field.

These cases have helped curb the most abusive patent litigation tactics and seemingly forced many patent trolls to reconsider their tactics. Indeed, 2017 had the fewest number of new patent filings in nearly a decade. In addition, the number of cases in the Eastern District of Texas has sharply decreased, and these cases have been redistributed to less plaintiff-friendly districts in Delaware and California, altering the balance of power in patent litigations. It is clear that the Supreme Court is listening carefully to claims about abusive patent litigation tactics and is prepared to intervene to correct distortions in patent law that hurt consumers and stifle innovation. Whether it continues this trend will be the patent story to watch in 2018.

Key Takeaways:

  • Companies should combat patent infringement risk by establishing a comprehensive risk management strategy that includes filing for and enforcing patents, identifying and clearing patent risks, instituting contractual strategies for risk-shifting and defending allegations of patent infringement.
  • After years of pro-patent troll decisions at the Federal Circuit, the Supreme Court got deeply involved in 2017 by strictly limiting plaintiff forum-shopping and prohibiting the use of patent law to control downstream users of a product.
  • Patent filings dropped in 2017, with fewer cases filed in plaintiff-friendly districts and more cases redistributed to other jurisdictions.