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