Supreme Court Case Could Make Patent Lawsuits Easier on Domestic Automakers

Matt Posky
by Matt Posky

A Supreme Court ruling between two food companies may benefit the Detroit Three and its many domestic suppliers.

The case of TC Heartland LLC v. Kraft Foods Group Brands focused on where plaintiffs in an intellectual property or patent infringement dispute can file a lawsuit. Current U.S. law dictates that the plaintiff may file a patent infringement suit in any court district where the defendant does business. This has saturated the Eastern District of Texas with countless patent and I.P. lawsuits. Plaintiffs prefer the region because rural Texas juries are more likely to rule against big businesses and the district is known for expediting proceedings.

According to a January study by the Stanford Technology Law Review, only about 15 percent of cases heard in the court actually involved a patent invented within the district or had an accused party that had an office in the area. However, the Supreme Court is expected to put the kibosh on the practice by forcing plaintiffs to try cases near the defendant’s headquarters — meaning domestic automakers could have the home field advantage in future legal proceedings. “The U.S. court system is set up to give the defendant an advantage of being at home, except in these cases,” said Joseph Barber, a Royal Oak-based IP attorney, speaking to Crain’s Detroit Business. “Patent trolls were really able to manipulate the system down in Texas with the use of a quick court that hindered a defendant’s prep time and [less sophisticated] rural jurors.”

Assuming the Supreme Court rules in favor of changing the jurisdiction guidelines, Detroit automakers will also save on legal fees. The Eastern District of Texas mandates the use of a local lawyer, so automotive companies typically keep some on retainer while also sending highly-paid consultants from other firms nearer to their home base.

Barber believes that the Eastern District of Michigan court could see as many as three dozen additional patent cases annually if the Supreme Court rules against venue shopping, with more to come as vehicles continue to adopt more technology.

“Cars are becoming computers on wheels,” Barber said. “Moving these cases to Detroit would provide [automakers] a more knowledgeable bench of judges and stable of jurors, many of which are engineers understanding the complex nature of these cases.”

Matt Posky
Matt Posky

A staunch consumer advocate tracking industry trends and regulation. Before joining TTAC, Matt spent a decade working for marketing and research firms based in NYC. Clients included several of the world’s largest automakers, global tire brands, and aftermarket part suppliers. Dissatisfied with the corporate world and resentful of having to wear suits everyday, he pivoted to writing about cars. Since then, that man has become an ardent supporter of the right-to-repair movement, been interviewed on the auto industry by national radio broadcasts, driven more rental cars than anyone ever should, participated in amateur rallying events, and received the requisite minimum training as sanctioned by the SCCA. Handy with a wrench, Matt grew up surrounded by Detroit auto workers and managed to get a pizza delivery job before he was legally eligible. He later found himself driving box trucks through Manhattan, guaranteeing future sympathy for actual truckers. He continues to conduct research pertaining to the automotive sector as an independent contractor and has since moved back to his native Michigan, closer to where the cars are born. A contrarian, Matt claims to prefer understeer — stating that front and all-wheel drive vehicles cater best to his driving style.

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  • Erikstrawn Erikstrawn on Mar 29, 2017

    "the Supreme Court is expected to put the kibosh on the practice by forcing plaintiffs to try cases near the defendant’s headquarters" For legal purposes our headquarters is in Detroit. For tax purposes our headquarters is in Jamaica. For marketing purposes our headquarters is in sunny California. For investment purposes our headquarters is in Silicon Valley...

  • 05lgt 05lgt on Mar 29, 2017

    I seem to have overheard differing explanations for the popularity or East texas Courts somewhere, something about judges who value the community income from the local lawyer rule and general corruptness. Not sure where I heard it and I certainly have no opinion of my own on the topic.

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