Rhode Island-based technology and manufacturing companies with valuable patent portfolios likely will benefit from recent changes in federal and state law relating to patent-infringement disputes. If patents are among your most important business assets, you should be mindful of these changes in the law.
First, on May 22, the U.S. Supreme Court, in the case TC Heartland Foods LLC v. Kraft Food Group Brands LLC, issued a much-anticipated unanimous decision that will likely have a significant impact on patent litigation going forward. The Supreme Court ruled that patent-infringement cases may only be filed in states where the allegedly infringing defendant is incorporated, or where there has been an act of alleged infringement and the defendant has a regular and established place of business.
The Supreme Court’s decision means that plaintiff patent owners in many cases will have to sue allegedly infringing Rhode Island businesses in Rhode Island federal court (or the place where they are incorporated, such as Delaware), as opposed to far-flung jurisdictions such as the eastern district of Texas. Prior to the decision, more than one-third of all patent cases in the country were filed in the eastern district of Texas because it was perceived to be friendly to plaintiff patent owners.
Second, Rhode Island last year enacted a state law authorizing the attorney general or an aggrieved party to file a bad-faith infringement suit seeking money and punitive damages, injunctive relief, and reasonable attorneys’ fees and costs against any person making a bad-faith assertion of patent infringement as defined under the act. The new law is aimed at discouraging frivolous patent-infringement claims without interfering with legitimate patent-enforcement actions.
Taken together, these two changes in the legal landscape should help Rhode Island companies protect their legitimate patent rights from meritless infringement challenges.
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Local venue for patent litigation. Prior to the Supreme Court’s decision, Rhode Island businesses bringing products with patented technology to market faced the possibility of being dragged into federal court in virtually every state in the country on an infringement claim. Far-off litigation often increases the costs of legal defense, including finding local counsel in a foreign state and transporting witnesses for trial. Now, Rhode Island companies can anticipate that patent-infringement cases, when filed against them, will in many instances be adjudicated locally in Rhode Island, or in states of incorporation such as Delaware, providing them with a potential home court advantage and lower defense costs.
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State jurisdiction over plaintiff patent owners. Since out-of-state plaintiff patent owners will in many cases have to file patent-infringement cases against Rhode Island firms in Rhode Island federal court, the likelihood increases that these plaintiffs will sufficiently avail themselves of Rhode Island jurisdiction to be subject, if appropriate, to state law claims for frivolous patent claims. Out-of-state plaintiffs previously could try to avoid enforcement of Rhode Island state law by having no contacts in the state, including by filing infringement lawsuits against Rhode Island businesses in Texas or elsewhere. Potentially forced now to come to Rhode Island to litigate a patent dispute against a Rhode Island business, out-of-state parties may become increasingly subject to the new state law concerning bad-faith infringement actions.
While the consequences of these new developments continue to take shape, Rhode Island companies creating products and technologies with patents should be encouraged by recent changes in the law.
Rep. Christopher R. Blazejewski, D-Providence, is a partner in the litigation and employment departments at Sherin and Lodgen LLP, with offices in Providence and Boston.
