Software Companies Sued For Patent Infringement May Seek Speedy Dismissals | Foley & Lardner LLP
Summary
Patent infringement litigation can be expensive, last multiple years, and be a huge distraction for a company’s efforts in the marketplace. While fighting an infringement accusation through trial to final judgement can be emotionally satisfying, an early exit to litigation may save significant resources for a defendant. Two years later, in 2017, the Supreme Court’s decision in TC Heartland LLC v. Kraft Foods Group Brands LLC clarified that for purposes of patent venue, a corporation “resides” only in its state of incorporation, and not just any forum where it is subject to personal jurisdiction, thus limiting he venues in which companies could be sued. Undeterred, and potentially protected from Rule 11 sanctions by having made an inquiry of Defendant concerning operation of the accused system, Plaintiff filed a patent infringement lawsuit, admitting in the complaint that its infringement allegations were based on a series of assumptions that a non-party software developer created software used by Defendant that performs the functions claimed by Plaintiff’s patent. While the Court recognized that Plaintiff could “do little more than speculate when it has no insight into” Defendant’s operations without discovery, the Court refused to let the case go forward because “allowing this case to proceed based on assumptions would impermissibly lower the pleading standard such that any patent holder can pursue claims, and force a defendant to incur the time and costs of litigation, simply because another product resembles its own.” Thus, the Court dismissed the complaint and found that Plaintiff is not “entitled to discovery to determine whether it has a claim in the first place.” The DataWidget case is of special importance to software companies whose products cannot be reverse engineered by potential patent plaintiffs.
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