How the TC Heartland decision helps free and open source software
by on May 23, 2017
Yesterday, the United States Supreme Court published a decision that is likely to make it harder for patent holders to use frivolous infringement lawsuits to extort settlement fees. In the TC Heartland LLC v. Kraft Foods Group Brands LLC case, the Court ruled that patent holders can only file suit in the jurisdiction where the alleged infringer is incorporated. Prior to TC Heartland, US patent holders had more flexibility to file suit in multiple jurisdictions, and as a result would often select seemingly unrelated jurisdictions for strategic reasons.
The Eastern District Court in Texas is, by far, the most popular venue in the United States for patent holders to file suit, due to its reputation for plaintiff-friendly judges and aggressively brisk (and, therefore, cheaper) litigation schedules. The United States federal court system has ninety four district courts, yet over a third of all patent litigations filed in the United States in the first quarter of 2017 were filed in the Eastern District. And, traditionally, the overwhelming majority of such cases filed in the Eastern District have been brought by non-practicing entities ("NPEs"; unaffectionately known as "patent trolls") — patent holders who enforce patents without being engaged in the business of selling the inventions disclosed in the patents. The media has covered the remarkable growth of a cottage industry centered around patent litigation in Marshall, Texas, the small town where the Eastern District is located. Many NPEs have built their business models around the economies of scale and efficiencies of pushing frivolous suits through this single venue. Hopefully, the fresh burden of having to file suit on a defendant's "home turf" will reduce the volume of nuisance patent litigation — and disrupt the business models that fund it.
As a public charity, Conservancy is not a traditional target for NPEs: we don't generate the kind of product-related revenue streams that NPEs typically hold for ransom in exchange for quick settlement payments. That said, we acknowledge that the threat of NPE litigation casts a shadow on the entire technology sector, including on free and open source communities. We believe that community-vetted free and open source licenses are sufficient to create a pool of explicit and/or implied patent licenses between contributors and users. But, that hasn't stopped many a nervous in-house counsel from using layers of extraneous paperwork to reduce the patent exposure they think participating in a free and open source software project may create. We hope that the TC Heartland decision sends a signal to would-be NPEs that the US judiciary will no longer be as complicit in facilitating nuisance patent litigation. We also hope that software developers and users of all types are encouraged by the decision, and are less likely to allow fear, uncertainty, and doubt around NPE patent exposure chill their participation in free and open source software communities.
Please email any comments on this entry to info@sfconservancy.org.
