Multi-District Panel Rules That America Invents Act Does Not Bar Centralization of Multiple Defendants in Single District

May 16, 2012

Bear Creek Technologies, Inc. ("Bear Creek") is the patent holder in fourteen patent infringement actions pending in three different district courts. Bear Creek moved for centralization in the District of Delaware or, alternatively, the Eastern District of Virginia. In each of the cases, Bear Creek alleged that various telecommunications companies infringed the Bear Creek patent and the various telecommunications companies raised questions surrounding the validity or enforceability of the patent.

Certain of the defendants did not oppose centralization but suggested that the district should be either Delaware or the Eastern District of Pennsylvania. Other defendants opposed centralization and the Vonage defendants asserted that the America Invents Act ("AIA") limits centralization under 28 U.S.C. § 1407.

The Panel began its analysis of the Vonage argument by focusing on Section 1407: "Under our governing statute, Section 1407, we transfer 'civil actions involving one or more common questions of fact' that 'are pending in different district' to a single district 'for coordinated or consolidated pretrial proceedings.' 28 U.S.C. § 1407(a). Even though Section 1407 transfer contemplates transfer 'for coordinated or consolidated pretrial proceedings,' we do not order pretrial 'consolidation' of the cases before us. That is done, if at all, in a district court, typically the MDL transferee court. We refrain from dictating the structure of an MDL's pretrial proceedings (such as whether the litigation will proceed in a coordinated manner as opposed to consolidation of involved actions to the sound discretion of the transferee judge."

Vonage asserted that the Panel could not centralize the litigation because there was only an assertion of commonality based on an assertion that the defendants infringed the same patent. This argument was based on the following section of the America Invents Act: "Allegations insufficient for joinder. For purposes of this subsection, accused infringers may not be joined in one action as defendants or counterclaims defendants, or have their actions consolidated for trial, based solely on allegations that they each have infringed the patent or patents in suit."

The Panel disagreed. The panel found that "[t]he America Invents Act does not alter our authority to order pretrial centralization of this litigation. First, transfer under Section 1407 and joinder under Section 299 operate under decidedly different standards. The requirement for joinder expressed in Section 299(a) requires that (1) a civil action must contain 'questions of act common to all defendants or counterclaims defendants,' and (2) the plaintiff's claims must arise 'out of the same transaction, occurrence, or series of transactions or occurrences' relating to the alleged patent infringement. 35 U.S. C. § 299(a). In contrast, transfer under Section 1407 is for 'pretrial proceedings' and requires civil action pending in more than one federal district that involve 'common questions of fact' for which transfer will be 'for the convenience of parties and witnesses' and "promote the just and efficient conduct of such actions.' 28 U.S. C. § 1407(a)."

Ultimately, the Panel concluded that the AIA joinder provision did not implicate Section 1407: "The plain meaning of the AIA's joinder provision simply does not implicate Section 1407 transfer, and the Act's terms do not contain sufficient ambiguity to imply such a meaning. See Conn. Nat'l Bank v. Germain, 503 U.S. 249, 253-54 (1192) ('[I]n interpreting a statute a court should always turn first to one, cardinal canon before all others. We have stated time and again that courts must presume that legislature says in a statute what it means and means in a statute what it says there. When the words of a statute are unambiguous, then, this first canon is also the last: judicial inquiry is complete.') (citations and internal quotations omitted). We consequently decline to accept Vonage's interpretation of the joinder provision of the America Invents Act, 35 U.S. C. § 299, and hold that, by its terms, this statute does not affect our authority to transfer this litigation for coordinated or consolidated pretrial proceedings pursuant to 28 U.S.C. § 1407."

The Panel also rejected Vonage's arguments that centralization would lead to a flood of MDL litigation by non-practicing entities. "Vonage also predicts that centralization of this litigation will lead to a flood of MDL patent filings by non-practicing entities seeking to execute and 'end run' around the AIA's new joinder requirements. We do not accept this assertion as being a sufficient reason to deny centralization in this litigation. Centralization of any litigation--including patent cases--is not automatic, and will necessarily depend on the facts, parties, procedural history and other circumstances in a given litigation. See, e.g., In re CVS Caremark Corp. Wage and Hour Employment Pracs. Litig., 684 F.Supp. 2d 1377, 1379 (J.P.M.L. 2010) ('[W]e do not 'rubber stamp' in any docket...')."

Accordingly, the Panel centralized all of the actions in the District of Delaware.


In re: Bear Creek Technologies, Inc., ('722 Patent Litigation), Case No. MDL No. 2344 (May 2, 2012)

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