Customers Severed in Multi-Defendant Litigation and Case Against Suppliers Transferred

November 14, 2011

In the wake of the new restrictions on joinder of multiple defendants after the enactment of the America Invents Act, a number of plaintiffs have still attempted to join multiple defendants in a single lawsuit. One tactic used by plaintiffs is to file suit against several customers of a supplier along with the supplier of the accused product. This type of lawsuit establishes a close connection between the defendants in that the accused product is the same across all the defendants, which likely is a permissible joinder under the new standards set forth in the America Invents Act.

Nonetheless, this new tactic is having limited success. In a recent patent infringement action in the United States District Court for the Northern District of Illinois, the plaintiff sued several customers and the supplier of an accused product. The defendants moved to sever the customer defendants from the supplier defendant and to stay the action against the customer defendant. The supplier defendant also moved to transfer the severed action against it to the Northern District of California where it was based. It also asserted that transfer was appropriate because the plaintiff was based in Southern California, much closer to the Northern District of California than the Northern District of Illinois.

The district court ruled that the joinder of the customer defendants with the supplier defendant was still an improper joinder because the thrust of the action was against the supplier and its accused product and the customers were peripheral defendants. "After a careful review of the parties' briefs on the issue of joinder, the Court concludes that a misjoinder has occurred. The Court finds that the [defendant supplier's] customers are peripheral defendants and that [the supplier] is the real party of interest here who defends this patent lawsuit." Accordingly, the district court ordered the defendant customers severed from the defendant supplier.

The district court next turned its attention to the issue of transfer of the lawsuit against the defendant supplier. The district court concluded that transfer was appropriate because the defendant supplier was located in the Northern District of California and the plaintiff was located in Southern California. "The Court further concludes that the interests of justice would be served by transferring this lawsuit to the Northern District of California given the fact that plaintiff ... is a holding company located in Pasadena, California and that [the defendant supplier] is a resident of the Northern District of California."

Finally, the district court stayed the claims against the customer defendants pending the outcome of the plaintiff's case against the supplier defendant in the Northern District of California.

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As it becomes increasing likely that plaintiffs will file action against customers of suppliers while simultaneously filing against the supplier, the option to file a motion to sever should be kept in mind. This type of motion should be brought as soon as possible to keep a supplier's customers out of litigation and to make it easier to transfer the underlying action to a location more beneficial to the supplier.

Trunqate, LLC v. Aramark Corporation, Case No. 11 C 4709 (N.D. Ill. Oct. 27, 2011)

The authors of www.PatentLawyerBlog.com are patent trial lawyers at Jeffer Mangels Butler & Mitchell LLP. We represent inventors, patent owners and technology companies in patent licensing and litigation. Whether pursuing patent violations or defending infringement claims, we are aggressive and effective advocates for our clients. For more information contact Stan Gibson at 310.201.3548 or SGibson@jmbm.com.