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Nuisance Patent Suits Could Decline After TC Heartland

May 23, 2017

Fenwick patent litigation chair Michael Sacksteder was quoted in a number of publications, including in a San Francisco Chronicle story and in a Law360 article analyzing the impact of the U.S. Supreme Court’s highly anticipated ruling on patent venues in TC Heartland v. Kraft Food Brands Group.

Sacksteder told the SF Chronicle that the unanimous May 22 high court ruling is good news for Silicon Valley and other clients.

“For many years, my clients have asked me, ‘Can you explain why I’m being sued in Marshall, Texas?’ and with this (ruling), many of them won’t have to do that anymore,” Sacksteder said, adding that on top of its notoriety as a plaintiff-friendly forum for patent cases, the Eastern District of Texas also has been known for moving cases along quickly, which works to the benefit of aggressive plaintiffs.

Sacksteder told Law360 that the decision will particularly affect lawsuits filed by low-end non-practicing entities. The strategy in this type of suit, which Sacksteder called “ankle biters,” is to file a barrage of lawsuits and assert flimsy claims with no intention to go forward with the case, hoping to score small settlements early on.

“I don’t know if anyone is going to bother creating a cottage industry of filing that kind of really low-end case anymore,” Sacksteder said, citing volume as the key to the success of these lawsuits.

Sacksteder said these kinds of litigation campaigns have been largely unique to the Eastern District of Texas, which is widely expected to get fewer patent cases after the Supreme Court’s ruling because many patent defendants are not based there.

Texas Lawyer reported that because patent owners will no longer be able to sue large manufacturers in the Eastern District of Texas, they may choose instead to sue the retailers who sell infringing products at stores in the district. Sacksteder told the publication that manufacturers could try to short-circuit that strategy by filing declaratory judgment actions and seek to stay the actions against their customers.

In addition to the SF Chronicle story, the Law360 article and the Texas Lawyer article (subscriptions required), read Sacksteder’s insights in "​Tech Wins Big in TC Heartland, but ‘A Lot of Fighting’ Remains" by Legaltech News.

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