America Invents Act: will the joinder provisions save time and money?

Intellectual Property and Technology News

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Over the past several years, the proliferation of multi-defendant patent cases has become a topic of significant commentary and great debate. A single plaintiff, often with no connection to the inventors other than having purchased the patent, could assert patents against numerous unrelated companies in a single lawsuit in a venue of its choosing. In examining whether the joinder of unrelated defendants was proper in patent cases, courts had been looking to the permissive joinder requirements of Rule 20 of the Federal Rules of Civil Procedure focusing on the second element – whether common questions of law or fact would arise in the action.

 

The recently enacted America Invents Act (AIA) contains specific requirements for joining defendants in a single patent case. In particular, the AIA no longer permits joinder where common questions of law will arise in the action – instead, only common fact questions are analyzed. The AIA also explicitly prohibits joinder based solely on allegations that the defendants infringe the same patent.

 

Recent case filing activity suggests these changes are having a profound impact. In the days leading up to enactment, we saw a torrent of multi-defendant patent cases in several popular jurisdictions, suggesting patent plaintiffs saw real benefit in being able to sue multiple defendants in a single action. In particular, in the week leading up to passage of the AIA there were 140 patent cases filed nationwide with 1,250 defendants. However, in the week following passage of the AIA there were 75 patent cases filed with only 95 defendants. This data suggests the AIA is having its intended impact – single patent lawsuits against multiple, unrelated defendants are decreasing.

 

Consequences of the new AIA joinder provisions

 

In addition to the dramatic impact on the composition of patent cases, we can anticipate several additional consequences as a result of the AIA.

 

More cases, at least in the short term. Plaintiffs intending to file new cases against many targets are now filing them separately. In the short term, this will mean more filing fees and more cases. But will the potential higher cost and complications of multiple suits on the same patent chill patent assertion in the long run? Time will tell.

 

More jurisdictions affected. Because venue may not be appropriate or convenient against single defendants in popular venues, plaintiffs likely will file more suits in venues where defendants are incorporated or have operations. This should spread cases more broadly throughout the US.

 

More transfer activity. Before the AIA, prospects for severing a defendant and transferring to a more convenient venue were pretty dim; thus, many defendants chose not to seek transfer. With more single-defendant cases, transfers to more convenient jurisdictions should increase. More reliance on FRCP 42 for pretrial consolidation. Even though the AIA will lead to fewer multi-defendant cases, plaintiffs may reach similar results through consolidation under Rule 42 of the Federal Rules of Civil Procedure. The presence of numerous cases in the same district on the same patent may provide a judicial economy argument, perhaps weakening the AIA. More activity through the Judicial Panel on Multi-District Litigation. If more cases on the same patent spread through numerous jurisdictions, multi-district litigation will increase. Although the cases ultimately will be sent back to the jurisdiction of filing, pretrial discovery and claim construction activity can be handled by a single judge, helping to alleviate inconsistent results and inefficiency.

 

More lawsuits against “standardized” products. With the AIA’s provision for common facts, we likely will see a stronger focus on cases against “standardized” products. Plaintiffs will look for similarities among accused products as a hook to join unrelated defendants; industry standards may provide the most straightforward solution.

 

More complicated joint defense activity. Sometimes, having the issues before the same judge, on the same schedule, in the same court made coordination among defendants quite simple and promoted a comprehensive, efficient defense. Spreading related cases across more judges and locales will bring new challenges to a joint defense.

 

Additional defense costs? Given the flurry of filing activity before the AIA’s enactment, it appears clear that plaintiffs viewed multi-defendant cases as more efficient and less costly than numerous single defendant cases. Because the AIA increases complications for defendants in coordinating a joint defense and likely will increase motion practice in the areas of convenience transfer and multi-district litigation, the overall costs for defending patent cases may grow in the short term. However, in the long run, the potential for decreased overall patent filings of the nuisance value variety may ultimately decrease patent litigation activity and, therefore, total defense costs. When will we know? Not for a few years.

 

It will take some time for us to be able to fully analyze the impact of the AIA on multi-defendant patent cases. However, one thing is clear: the AIA is already having quite an impact.

 

For more information about the AIA joinder provisions, please contact John Guaragna.