The Supreme Court last week announced that it would hear the case of TC Heartland v. Kraft, which will be closely watched by banks and credit unions due to its implications for financial institutions facing litigation from patent trolls.
The case hinges on whether patent trolls -- entities that hold patents, often of dubious quality, but use them primarily as the basis for threats of litigation -- can bring cases in any federal court district or must bring them only where defendants are incorporated or doing business.
Last year, 40 percent of patent suits were filed in just one of 94 federal judicial districts: the Eastern District of Texas, known for its friendliness to patent trolls.
The appellate court’s decision in TC Heartland upholds a broad understanding of corporate residence -- rejected by the Supreme Court in a different case -- that would allow patent trolls to continue cherry-picking friendly courts for patent cases against faraway defendants, which increases the pressure on defendants to settle cases.
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