Supreme Court Case Could Make Patent Lawsuits Easier on Domestic Automakers

Matt Posky
by Matt Posky
supreme court case could make patent lawsuits easier on domestic automakers

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.”

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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.

  • FreedMike This article fails to mention that Toyota is also investing heavily in solid state battery tech - which would solve a lot of inherent EV problems - and plans to deploy it soon. course, Toyota being Toyota, it will use the tech in hybrids first, which is smart - that will give them the chance to iron out the wrinkles, so to speak. But having said that, I’m with Toyota here - I’m not sold on an all EV future happening anytime soon. But clearly the market share for these vehicles has nowhere to go but up; how far up depends mainly on charging availability. And whether Toyota’s competitors are all in is debatable. Plenty of bet-hedging is going on among makers in the North American market.
  • Jeff S I am not against EVs but I completely understand Toyota's position. As for Greenpeace putting Toyota at the bottom of their environmental list is more drama. A good hybrid uses less gas, is cleaner than most other ICE, and is more affordable than most EVs. Prius has proven longevity and low maintenance cost. Having had a hybrid Maverick since April and averaging 40 to 50 mpg in city driving it has been smooth driving and very economical. Ford also has very good hybrids and some of the earlier Escapes are still going strong at 300k miles. The only thing I would have liked in my hybrid Maverick would be a plug in but it didn't come with it. If Toyota made a plug in hybrid compact pickup like the Maverick it would sell well. I would consider an EV in the future but price, battery technology, and infrastructure has to advance and improve. I don't buy a vehicle based on the recommendation of Greenpeace, as a status symbol, or peer pressure. I buy a vehicle on what best needs my needs and that I actually like.
  • Mobes Kind of a weird thing that probably only bothers me, but when you see someone driving a car with ball joints clearly about to fail. I really don't want to be around a car with massive negative camber that's not intentional.
  • Jeff S How reliable are Audi? Seems the Mazda, CRV, and Rav4 in the higher trim would not only be a better value but would be more reliable in the long term. Interior wise and the overall package the Mazda would be the best choice.
  • Pickles69 They have a point. All things (or engines/propulsion) to all people. Yet, when the analogy of being, “a department store,” of options is used, I shudder. Department stores are failing faster than any other retail. Just something to chew on.