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For cases filed before enactment of the America Invents
Act, the Federal Circuit Court of Appeals has clarified that
unrelated defendants may be joined together in a single patent case
only if claims are based on the same product or
process.
In recent years, large multidefendant patent cases have become
increasingly common, with dozens or even hundreds of defendants
joined together in a single action. This phenomenon has raised
concerns about the fairness of requiring defendants to stand trial
together when they have no relationship to each other and may even
be fierce competitors. Such concerns prompted Congress to address
joinder in the recently enacted America Invents Act (AIA), under
which defendants cannot be joined together in the same patent case
unless they are accused of making or using "the same accused
product or process." However, for cases that were already
pending when the AIA was passed in September 2011, there was still
uncertainty about the standard that should be applied to determine
whether multiple defendants could properly be sued in a single
action. The Federal Circuit has now answered that question in
In re EMC Corp., Misc. Docket No. 100 (May 4, 2012).
Background
In EMC, the plaintiff had sued 18 different companies
for infringing the same family of patents, all relating to online
backup services. The defendants sought to sever the claims into
separate actions, but the U.S. District Court for the Eastern
District of Texas denied the motion because the accused products
and services were "not dramatically different" from each
other. EMC then petitioned the U.S. Court of Appeals for the
Federal Circuit for a writ of mandamus (a request that a superior
court review and reverse the final decision or order of a lower
court). Last Friday, the appellate court granted the petition,
vacating the denial of the defendants' motion and remanding the
case with instructions for the district court to reconsider the
motion under the correct standard.
Federal Circuit Decision
The Federal Circuit began by noting the aforementioned concerns
that the defendants in this case "will not have a meaningful
opportunity to present individualized defenses on issues such as
infringement, willfulness, and damages because each defendant will
have limited opportunities to present its own defense to the
jury." The court then proceeded to clarify the standard that
should be used to avoid such problems:
Unless there is an actual link between the facts underlying each
claim of infringement, independently developed products using
differently sourced parts are not part of the same transaction,
even if they are otherwise coincidentally identical. In addition to
finding that the same product or process is involved, to determine
whether the joinder test is satisfied, pertinent factual
considerations include whether the alleged acts of infringement
occurred during the same time period, the existence of some
relationship among the defendants, the use of identically sourced
components, licensing or technology agreements between the
defendants, overlap of the products' or processes'
development and manufacture, and whether the case involves a claim
for lost profits.
The court also, however, took care to point out that district
courts have "considerable discretion" not only in how
they apply the relevant factors but also in their ability "to
consolidate cases for discovery and for trial under Rule 42 where
venue is proper and there is only 'a common question of law or
fact.'"
Implications
For multidefendant patent cases filed before the AIA was
enacted, it will now be easier for defendants to get the claims
severed into separate actions, but it remains to be seen how great
the practical impact of that will be if the separate cases are then
consolidated for purposes of discovery and/or trial.
Copyright 2012. Morgan, Lewis & Bockius LLP. All Rights
Reserved.
This article is provided as a general informational service
and it should not be construed as imparting legal advice on any
specific matter.
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