Aldrich Law Firm, Ltd.
Aldrich Law Firm, Ltd.

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Patent trolls may be limited by U.S. Supreme Court ruling

A new idea can be exciting for inventors in Nevada, but discovering there is already a patent for it can destroy hopes of creating a new income source. According to Reuters, patent trolls hold many of these patents but have no actual product. Instead, they make their money by suing inventors who develop a way to turn the idea into a reality, and then accepting a settlement when the defendants find they cannot afford a protracted court battle that often takes place in another state.

One of the factors that has helped turn this unethical practice into a proliferating litigation business is the freedom patent trolls have had to choose the court district where they will file the lawsuit. One study found that over 40 percent of the patent litigation in the country winds up in the Eastern District of Texas, which is notably friendly to plaintiffs in these cases. Patent trolls are responsible for filing 90 percent of the lawsuits in that district.

Forbes magazine reports that a recent decision by the U.S. Supreme Court appears to have shut the door on patent trolls’ habit of exploiting this loophole in the justice system. The judges determined that plaintiffs may only file a lawsuit in the district where the defendant’s business is located, or in the district where the alleged infringement occurred.

In Eastern District of Texas, the patent litigation traffic declined drastically in the week following the decision. Only four cases were filed, in contrast to the 74 filed in the two previous weeks. Many believe that patent litigation will now also decrease across the country as smaller entities may defend their cases in their own districts. This has the potential to save them significant expenses in legal fees and make it more likely that they will refuse to consider an unfair settlement with patent trolls.

John P. Aldrich
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