Joinder of Multiple Defendants Rejected Under the America Invents Act When Plaintiff Alleged Infringement by Defendants Involved in Different Transactions With Different Products

Authored by Daniel C. Cooley, D. Brian Kacedon, and John C. Paul

Joinder allows a plaintiff to aggregate multiple defendants into a single lawsuit for cost, efficiency, strategy, and other reasons. Under the Federal Rules of Civil Procedure, a plaintiff can join multiple defendants to a single lawsuit only if any claim raised against each defendant arises out of the "same transaction, occurrence, or series of transactions or occurrences."

The America Invents Act of 2011 (AIA) raised the standard for joining accused infringers in a patent suit: Accused infringers can be joined to a single suit only if any claim "aris[es] out of the same transaction, occurrence, or series of transactions or occurrences relating to the making, using, importing into the United States, offering for sale, or selling of thesame accused product or process." Therefore, different defendants with different products cannot be joined to the same suit based solely on the fact that they have been accused of infringing the same patent. This new joinder provision from the AIA was designed to "address problems occasioned by the joinder of defendants (sometimes numbering in the dozens) who have tenuous connections to the underlying disputes in patent infringement suits." H.R. Rep. No. 112-98, pt. 1, at 54.

In Mednovus, Inc. v. Qinetiq Grp.,¹the District Court for the Central District of California, without request by the parties, severed defendants ETS-Lindgren and Invivo from the suit because it found that they did not satisfy the new AIA joinder standard. In particular, the court found that patentee Mednovus had not accused the same infringing product or alleged that ETS-Lindgren and Invivo shared in the same transaction, occurrence, or series of transactions or occurrences of infringement as the other defendants.

Background

Defendant QinetiQ developed and commercialized a line of "Ferroguard" object detectors in 2004. Defendant Metrasens, a spin-off company from QinetiQ, manufactured and sold the Ferroguard products and systems under a license. Defendants ETS-Lindgren and Invivo were two of Metrasens's authorized distributors of the Ferroguard products and systems.

Plaintiff Mednovus accused QinetiQ, Metrasens, ETS-Lindgren, and Invivo of infringing one of its patents.

The Mednovus Decision

Applying the new joinder statute from the AIA, the district court found that Mednovus had alleged acts of infringement by Invivo or ETS-Lindgren involving a "different set of products." Specifically, the district court noted that Mednovus had accused:

• QinetiQ of infringing with the Ferroguard products and systems;
• Metrasens of infringing with the Ferroguard Screener, Ferroguard Entry Control, and Ferroguard "Best Practices" Solution;
• ETS-Lindgren of infringing with the Ferroguard Ferromagnetic Detection System, Ferroguard Beacon, and Ferroguard Screener; and
• Invivo of infringing with the Ferroguard Entry Control System, Freestanding Portable Ferroguard, Ferroguard Wall Mount ISD, Ferroguard Wall Mount OSD, and Ferroguard Patient Screener.

The district court thus concluded that Mednovus had failed to allege that the accused conduct related to the making, using, importing into the United States, offering for sale, or selling the same accused product or process, as required by the AIA.

The district court also found that Mednovus had not alleged acts of infringement involving the same transaction or series of transactions. Patent infringement under § 271(a) includes making, using, offering to sell, or selling a patented invention. The district court reasoned that the selling of a product by Metrasens to Invivo was a "first transaction," and the selling of a product by Metrasens to ETS-Lindgren was a "second transaction." The district court noted that these transactions were separate because they involved different products. The district court also stated that ETS-Lingren and Invivo would not have infringed in these two transactions since possession of an infringing product is not itself infringement (as opposed to making, using, selling, etc.).

The district court next reasoned that the sale of a product from Invivo or ETS-Lindgren to an end user was a "third transaction." The district court held that any liability for the "third transaction" related to a different sale than the "first transaction" or the "second transaction," and thus differed from the liability for the "first transaction" or the "second transaction." The court accordingly concluded that the defendants ETS-Lindgren and Invivo did not share in the same transaction, occurrence, or series of transactions or occurrences of infringement of the same infringing product as QinetiQ and Metrasens. Therefore, according to the district court, joinder was not proper, and it severed ETS-Lindgren and Invivo from the case.

Strategy and Conclusion

This recent decision provides guidance worth considering when dealing with multiple parties under the AIA's new joinder rules.

A patent holder looking at multiple possible infringement targets should consider whether each of those targets infringes with a common product or process. Focusing activity on a common product or process could help ensure that "the same accused product or process" is involved in any subsequent litigation, assuming that the patent holder envisions bringing all of the targets into a single litigation. Of course, as other courts interpret the AIA, they may have differing interpretations of its joinder requirements. For example, some courts may differ in their interpretation of whether "the same accused product or process" means that each defendant must have at least one product in common, each defendant must have every product in the suit in common, or some other interpretation. Nevertheless, patent holders should use consistent terminology when targeting common products.

A patent holder looking at multiple possible infringement targets should also consider whether those targets relate in such a way that infringement arises from the same transaction or series of transactions. Again, courts may have differing interpretations of what it means for a claim to arise "under the same transaction or series of transactions." Patent holders may want to consider, for example, corporate relationships, contractual arrangements, and other relationships among targets that would naturally lead to a transaction or series of transactions resulting in infringement. Similarly, patent holders may wish to clearly establish in any pleadings the transactions or series of transactions among the defendants that resulted in infringement. It is worth noting that indirect infringement—induced or contributory infringement—typically involves multiple parties and may arise under the same transaction or series of transactions.

On the flip side, a party jointly accused of patent infringement that does not share common products with other defendants or is unrelated to other defendants should consider challenging joinder under the AIA.

Endnotes
¹The Mednovus decision is available here.

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