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Carmel-based company wins patent case at US Supreme Court

May 22, 2017

The U.S. Supreme Court is making it easier for companies to defend themselves against patent infringement lawsuits.

The justices ruled unanimously on Monday that such lawsuits can be filed only in states where defendants are incorporated. The issue is important to many companies that complained about patent owners choosing more favorable courts in other parts of the country to file lawsuits.

The case involved an appeal from TC Heartland LLC, a Carmel-based food sweetener company sued by Kraft Foods in Delaware. Lower courts refused to transfer the case to Indiana.

But the court's ruling will have the biggest impact on federal courts in eastern Texas, where more than 40 percent of patent lawsuits are now filed. Local rules there favor quick trials and juries tend to be more sympathetic to plaintiffs.

TC Heartland, which does business under the name Heartland Food Products Group, was sued by Kraft after Kraft alleged Heartland's liquid water-enhancers infringe on Kraft's MiO line of water flavorings.

Heartland’s appeal had support from a group of internet retailers and software companies, as well as the financial-services industry.

Federal patent law says lawsuits may be filed in the judicial district “where the defendant resides.” A 1957 Supreme Court decision said that means lawsuits can be filed only in the defendant’s place of incorporation, and Heartland says that ruling should remain the law.

The U.S. Court of Appeals for the Federal Circuit, however, said in 1990 that suits can be filed wherever the defendant regularly does business. That court, which specializes in patent cases, said Congress had redefined “resides” through a change enacted in 1988.

Heartland said it had no presence in Delaware and that 98 percent of its sales were outside of that state, but the appeals court denied the transfer last year.

But U.S. Supreme Court Justice Clarence Thomas, in his opinion for the court, said the U.S. Congress did not change the rules over where patent suits may be filed since the 1957 decision.

Heartland may be best known for owning the rights to the Splenda brand, a product that has been at the heart of other intellectual property cases.

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