The Supreme Court of the United States (SCOTUS) on Wednesday dealt a blow to patent aggregators (or trolls depending how you feel about them) in a 9-0 decision. The ruling, according to @SCOTUSblog, says,
“When a patent-holder sues someone else for infringing his patent, he has the burden to prove that the patent was indeed infringed. Sometimes, even before the patent-holder files suit, an individual or company using related technology will want to know whether its products infringe the patent — perhaps because they don’t want to lose in a possible suit for infringement. Fortunately, they don’t have to wait for the patent-holder to sue them. Instead, they can file a separate suit for a declaratory judgment, asking the court to “declare” what would happen if the patent-holder did sue them for infringement. The question in this case is who has to prove infringement in that kind of case, and the Justices said that the person that holds the patent has the burden. The Justices explained that the burden should be the same in the ordinary action by the patent-holder as in the special “declaratory” judgment action.”
Essentially, the ruling requires the burden of proof to be shown by the patent holder — they cannot simply file a lawsuit without any explanation as to why the target is infringing on the patent. The ruling overturns a decision by the U.S. Court of Appeals for the Federal Circuit, the court which hears all patent appeals in the country. This, in addition to the Innovation Act which is set to pass Congress this spring, and a new head of the US Patent Office that support patent litigation reform, will likely hurt businesses like RPX Corporation (RPXC) and Acacia Research Corporation (ACTG), not to mention potential returns for investment firms like Intellectual Ventures and Altitude Capital. ACTG is down ~4% today and RPXC is down slightly over 1% (coincidentally, the CEO of RPX sold ~$300K worth of stock in a pre-planned 10b5-1 trading plan on Tuesday and Wednesday).