East Texas' (Tyler) reign as a patent troll haven about to come to an end

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The Supreme Court on Monday delivered a major blow to so-called patent trolls—shell companies whose business revolves around acquiring patents and then suing others for infringing on them—by making it much harder to bring lawsuits in friendly venues like East Texas.

In a unanimous ruling written by Justice Clarence Thomas, the court overturned a lower court's interpretation of federal venue rules and said that patent owners must sue companies in the districts where they are incorporated.

The 13-page ruling, which sided with beverage company TC Heartland over Kraft, is terse and technical, explaining how the specific venue rules in the Patent Act trump the more general ones set out in a federal venue law. But its impact on companies, particularly those in the tech sector, will be significant.

While the Kraft case involved a dispute in Delaware, the Supreme Court's decision is also likely shut down what critics say is a cottage industry in East Texas. That district has acquired a reputation for patent friendly juries and judges, who helped small towns like Marshall and Tyler keep their restaurants and hotels bustling with out-of-town lawyers and executives attending patent trials.

The reputation of East Texas juries for handing down mind-boggling verdicts (one jury last year ordered Apple to pay $625 million to a shell company over patents from 1998) led many companies to simply pay the trolls to go away even if the patents in question appeared to be of dubious quality.

Now, though, the East Texas lawsuit mill appears to be set for a shutdown since defendants dragged down there will be able invoke today's ruling to demand a change of venue.

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