Patent Ruling Shows Quiet Power of State-Law Bad-Faith Statutes

A Federal Circuit precedential decision involving a trio of technology patents is likely to have a meaningful downstream effect on cases involving state-law bad faith allegations against patent assertion entities.

By leaving significant bond orders intact pending final judgment, Micron Tech Inc. v. Longhorn IP LLC strengthens the leverage available to operating companies invoking state bad-faith patent assertion statutes and increases the financial and strategic risks faced by patent assertion entities early in litigation.

The US Court of Appeals for the Federal Circuit’s Dec. 18 opinion is the latest development in an ongoing dispute between a semiconductor industry leader and non-practicing patent assertion entities over alleged bad-faith patent infringement claims.

Micron Technology, a leading producer of DRAM and NAND flash memory, was accused of infringement by Katana Silicon Technologies LLC. Katana and appellant Longhorn IP are non-practicing entities with no manufacturing or research-and-development operations. Their business model centers on acquiring and asserting patents for licensing or litigation revenue rather than commercializing technology.

Although the court dismissed the appeal for lack of appellate jurisdiction and expressly declined to reach the merits, the opinion remains significant for its implications in cases involving state-law bad-faith allegations against patent assertion entities.

State-Level Actions

The patent assertion entity business model is well-known and substantial, often backed by hedge funds, private equity, or institutional investors. In response to concerns about perceived abusive patent enforcement practices, more than 30 states have enacted bad-faith patent assertion statutes aimed at deterring bad-faith patent assertions while preserving space for legitimate patent enforcement.

At issue in Micron v. Longhorn is Idaho’s Bad Assertions of Patent Infringement Act. The statute makes it “unlawful for a person to make a bad faith assertion of patent infringement in a demand letter, a complaint or any other communication.” Violations may result in equitable relief, costs and fees, and punitive damages.

The statute also includes a bond provision: If a court finds a reasonable likelihood of bad faith, it “shall require the person to post a bond in an amount equal to a good faith estimate of the target’s costs to litigate the claim and amounts reasonably likely to be recovered.”

Katana sued Micron for infringement of three expired patents in the US District Court for the Western District of Texas, and the case was transferred to the District of Idaho (home of Micron’s headquarters. Micron counterclaimed for bad faith under Idaho’s statute.

Katana moved to dismiss the counterclaim, arguing federal patent law preemption, and the State of Idaho intervened to defend the statute’s constitutionality.

Separately, Micron sued Longhorn in Idaho state court under the same statute, alleging Longhorn controlled Katana’s enforcement campaign and seeking a $15 million bond.

The District Court of Idaho rejected the preemption argument, denied the motion to dismiss, and imposed a bond of $8 million on Longhorn and Katana. They appealed to the Federal Circuit, primarily contesting jurisdiction over the non-final bond order. The Federal Circuit rejected all jurisdictional arguments.

It found no jurisdiction under 28 USC. §1292, because the bond was not an injunction and didn’t satisfy the Carson test for injunction-like factors. It found no collateral order jurisdiction because the bond determination was intertwined with the merits of the bad faith claim. And it found no mandamus jurisdiction under the All Writs Act, given the availability of adequate alternative relief.

The Broader Signal

This decision is noteworthy not because of what the Federal Circuit decided on the merits—but because of what it left standing.

By declining to exercise interlocutory jurisdiction, the court effectively allowed a substantial bond imposed under a state bad-faith patent assertion statute to remain in place during ongoing patent litigation, potentially exerting significant financial pressure on patent assertion entities before any final adjudication.

The opinion therefore highlights the practical power of state bad-faith statutes, even in cases touching core questions of federal patent enforcement.

More broadly, Micron v. Longhorn sits at the intersection of state powers, federal patent preemption, and procedural limits on appellate review. It signals that challenges to state bad-faith patent assertion statutes may have to wait until final judgment, meaning that defendants accused of bad-faith assertion may be required to post multimillion-dollar bonds without immediate appellate recourse.

For operating companies and patent assertion entities alike, the case underscores how procedural posture and jurisdictional doctrine can be as consequential as substantive patent law.

The ruling also may influence state legislatures considering whether to enact or revise bad-faith patent assertion statutes. In particular, the decision underscores the effectiveness of bond provisions as a deterrent that can operate even in the shadow of federal patent law, as long as appellate review is constrained procedurally.

Legislators may view Micron v. Longhorn as confirmation that carefully crafted state statutes—especially those emphasizing procedural safeguards and pre-merits bonding—can survive preemption challenges long enough to exert real-world impact, potentially prompting renewed legislative activity in this area.

The case is Micron Tech., Inc. v. Longhorn IP LLC, 2025 BL 453990, Fed. Cir., 2023-2007, 12/18/25.

This article does not necessarily reflect the opinion of Bloomberg Industry Group, Inc., the publisher of Bloomberg Law, Bloomberg Tax, and Bloomberg Government, or its owners.

Author Information

Lionel Lavenue is a partner at Finnegan whose practice focuses on patent trial litigation.

James Donegan is an associate in Finnegan’s Washington, DC office.

Caitlin Coverstone is a patent agent at Finnegan concentrating on patent prosecution and patent litigation.

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