Houston Chronicle

High court ruling may spell end of East Texas’ patent suit boom

- By Allen Pusey and Mark Curriden THE TEXAS LAWBOOK

The U.S. Supreme Court issued a ruling Monday that may have effectivel­y ended a 15-year intellectu­al property litigation boom in East Texas.

Lawyers from across the country — and even around the world — have filed patent infringeme­nt lawsuits in federal courts in Marshall and Tyler because of the judges’ expertise in patent trials, the district’s reputation for pro-plaintiff juries and so-called rocket dockets that get cases to trial quickly. Last year, 37 percent of the nation’s 4,537 new patent cases were filed in the Eastern District, according to Lex Machina, a company that tracks intellectu­al property litigation.

But Monday, the Supreme Court, in the much-anticipate­d decision in TC Heartland vs. Kraft Foods, reversed a 27-yearold ruling that had allowed patent infringeme­nt lawsuits to be filed in virtually any federal jurisdicti­on and kept the East Texas courts busy.

“This ruling represents a sea change for patent litigation across the country, not just in East Texas,” said Wasif Qureshi, patent litigation partner in the Houston office of Jackson Walker.

The high court, in a unanimous opinion, ruled that patent holders should only file intellectu­al property lawsuits in federal courts where the defendant is incorporat­ed or in jurisdicti­ons where the alleged infringeme­nt occurred and the companies have an establishe­d place of

business. The key change, according to legal analysis, is that the Supreme Court narrowed the definition of where businesses reside, which had previously thought to mean any state in which the company does business.

Under the ruling, businesses only reside in the state in which they were incorporat­ed. That means the venue for patents litigation will likely shift to Delaware, where most of the nation’s public companies incorporat­e.

“The Supreme Court took the title of ‘Patent Litigation Hotbed’ away from the Eastern District of Texas and awarded it to the District of Delaware,” said William Munck, a longtime patent litigator at the Dallas firm Munck Wilson Mandala.

But some legal experts say East Texas should continue to have a busy patent docket, despite the Supreme Court ruling. Charles Everingham, a former U.S. Magistrate who handled patent cases for four years in East Texas, said he expects he expects that federal courts in Marshall and Tyler will hear plenty of cases in which plaintiffs argue that the infringeme­nt occurred within their jurisdicti­on.

Tom Melsheimer, a partner at Winston & Strawn in Dallas, agreed.

“The plaintiffs lawyers here are very creative,” he said. “It will be a couple years before we truly know the impact.”

 ?? Scott Applewhite / Associated Press file ?? The Supreme Court’s ruling “represents a sea change for patent litigation across the country, not just in East Texas,” says Wasif Qureshi of the Houston office of Jackson Walker.
Scott Applewhite / Associated Press file The Supreme Court’s ruling “represents a sea change for patent litigation across the country, not just in East Texas,” says Wasif Qureshi of the Houston office of Jackson Walker.

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