A ruling by the Supreme Court has put an end to one practice common to what some professionals in New Jersey and around the country have termed abusive patent challenges. The decision set a new standard for venue in patent cases by ordering that claims must be brought in states where the defendants are chartered. This could result in more security for small businesses or start-ups concerned about the potential costs of patent litigation.
Prior to the ruling, small businesses often faced insurmountable challenges in defending themselves from patent litigation. Plaintiffs in these cases are sometimes referred to as patent trolls for the practice of buying patents and filing disputes to collect damages or licensing fees. The entity could buy a patent and claim infringement using any venue, which led to venue shopping. This would force a small business to take on excess costs, such as travel and finding legal counsel in what was often a hostile jurisdiction.
The ruling now places the burden on the claimant by eliminating the ability to venue shop. One app developer said that his company would just “write them a check” to avoid the expenses of intellectual property litigation, but the ruling now provides a measure of safety from patent trolling, which he referred to as “nothing more than extortion.”
Small companies often have a limited amount of liquid capital, and raising enough funds to fight even in-state intellectual property litigation can impose a long-term debt burden. The ruling provides some protection, but business owners may fare better by planning a strong defense. An attorney with experience in the area of intellectual property law can provide companies with advice on the use of a patent, trademark or copyright that reduces the risk of costly litigation.