Washington, D.C. – House Judiciary Committee Chairman Bob Goodlatte (R-Va.) today delivered the following remarks during the Courts, Intellectual Property and the Internet Subcommittee hearing on “Examining the Supreme Court’s TC Heartland Decision“.
Chairman Goodlatte: This Committee has regularly heard from American businesses nationwide about the challenges they have faced due to patent trolling behavior. Patents of questionable quality have been used to drag defendants into court and loopholes in procedural rules have been abused to ensure that these cases are brought in judicial districts that are favorable to these questionable claims.
For example, venue has been repeatedly found to exist based upon the creation of sham offices in what would appear to be simple warehouses with no one actually working in them. The Eastern District of Texas has been frequently cited by patent reform advocates as a judicial district that is very favorable to those with questionable patent claims.
In response to these challenges, the Judiciary Committee held several hearings to document patent litigation abuses and in 2013, I authored the bipartisan Innovation Act that was cosponsored by 16 of my colleagues to rein in abuses of our patent laws.
After several discussion drafts and hearings to improve the legislation, the Innovation Act was passed out of the Judiciary Committee by a bipartisan vote of 33-5. The legislation then passed the House by an overwhelming vote of 325-91.
Since the House passage of the Innovation Act, the Courts have also taken some action, most recently by taking up the TC Heartland case concerning venue. In this case, a defendant headquartered in Indiana was sued in Delaware despite the fact that the defendant was not even registered to do business in Delaware and had no meaningful local presence there.
Much to the chagrin of patent trolls, the Supreme Court unanimously found that venue in patent cases is grounded in statute at 28 U.S.C. §1400. This means that a corporation resides only in its state of incorporation for patent venue purposes. This decision will close the door on a loophole that allows patent trolls to hand pick courts that are favorable to them.
This morning’s hearing has a range of witnesses who have experienced the patent troll problem first hand, including a company that is faced with reducing its presence in the Eastern District of Texas in order to avoid patent trolls. As its testimony points out, patent trolls are causing direct economic harm to the districts in which it operates and also to small startups whose company resources are insufficient to indemnify purchasers of their products. We also have a witness this morning who can speak to the expected change in filing patterns going forward along with a witness who can speak to the patent world at large. Finally, the Minority has invited a witness who believes the Supreme Court has gone too far.
I thank the witnesses for making the time to appear before the Subcommittee this morning.