Articles Posted in Multi-defendant Litigation

Plaintiff Micro Enhanced Technology Inc. (“Micro”) filed a patent infringement action against Videx, Inc., accusing Videx of infringing six patents. Micro subsequently amended its complaint to add two defendants, Verizon Wireless (“Verizon”) and ITC Holdings Corp. (“ITC”), both of whom are customers of Videx. Verizon filed a motion to dismiss and a motion to sever and stay.

As the district court explained, Fed.R.Civ.P. 21 “gives the Court discretion to sever any claim against any party” and that “[c]onsistent with that rule, courts have recognized that when a patentee sues both the manufacturer and its customers, ‘litigation against or brought by the manufacturer of infringing goods takes precedence over a suit by the patent owner against customers of the manufacturer.’ Speed Spectrum Screening LLC v. Eastman Kodak Co., 657 F.3d 1349, 1357 (Fed. Cir. 2011).” The district court further explained that this doctrine is referred to as the “customer suit exception” and “is based on the recognition that a manufacturer is presumed to have a ‘greater interest in defending its actions against charges of patent infringement [than a customer may]; and to guard against the possibility of abuse.’ Kahn v. Gen. Motors Corp., 899 F.2d 1078, 1081 (Fed. Cir. 1989); see also Spread Spectrum Screening, LLC v. Eastman Kodak Co., 2010 WL 3516106, at *2-3 (N.D. Sept. 1, 2010) (severing customer defendants and transferring claims against manufacturer under the notion that the customers were ‘peripheral’ to the infringement allegations).” The district court also noted that district courts have broad discretion to control their dockets by staying proceedings, as long as the stay is not indefinite or otherwise excessive.
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The patent holder, Genetic Technologies Limited (“GT”) sought centralization in the District of Colorado or, alternatively, in the Northern District of California of six actions involving the alleged infringement of a patent concerning methods of genetic testing. The six actions were pending in the Northern District of California, the District of Connecticut, the Middle District of North Carolina and three actions in the District of Delaware. All of the responding defendants opposed centralization.

The Panel found that centralization was not appropriate and would not serve the convenience of the parties and witnesses or further the just and efficient conduct of the litigation. Several factors weighed against centralization, particularly the patent holder’s litigation history. “Several factors weigh against centralization. The patent’s litigation history suggests that most actions that have been filed in the past several years have not required significant judicial attention. GT has filed at least nine actions over the course of the past nine years against at least 24 defendants, and only one case has proceeded to claim construction.” In addition, GT’s extensive licensing activities also weighed against centralization. “As in In re ArrivalStar, the litigation history of similar cases suggests that the advantages centralization typically affords – i.e., reducing duplicative discovery and motion practice, etc. – may not be relevant to most litigants. Further, GT has a fairly extensive licensing history, reportedly issuing licenses for the technology to over 60 entities.”
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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.
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Plaintiff Brandeis University (“Brandeis”) alleged that it was the owner of the patents-in-suit and plaintiff GFA Brands, Inc. (“GFA”) alleged that it was the exclusive licensee of the patents-in-suit. Plaintiffs asserted that the defendants infringed the patents by making, using, selling or importing various products such as cookies, cookie dough and spreads. A number of the defendants moved to transfer or sever.

With respect to the motions to sever, some of the defendants asserted that the joinder violated Fed.R.Civ.P. 20. Although most of the parties agreed that there were common questions of fact and law, the question remained whether plaintiffs’ claims against the different defendants arose out of the same transaction, occurrence or series of transactions or occurrences.
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Defendants in two Eastern District of Texas actions moved to centralize their cases in the District of Delaware or in another transferee forum. Three actions involving the same plaintiff and patent were already pending in the District of Delaware. Two of the defendants in the Delaware actions supported the motion to transfer and centralize, while the other defendants in the Delaware actions did not oppose the motion. The patent holder opposed centralization and, alternatively, suggested selecting the Eastern District of Texas as the transferee forum.

The panel found that the five actions involved common questions of fact and that centralization would serve the convenience of the parties and witness and promote the just and efficient conduct of the litigation. To support this conclusion, the panel noted that all five actions involve factual question regarding the infringement and/or validity of a single patent that relates to basic web presentation technologies, such as “previews” that pop up when a mouse rolls over certain site features. The panel found that “[c]entralization will eliminate duplicative discovery, prevent inconsistent pretrial rulings (particularly on claim construction issues), and conserve the resources of the parties, their counsel and the judiciary.”
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Plaintiffs asserted patents relating to computer-based messaging products and services against numerous defendants, including Facebook, LinkedIn, E*Trade and Verizon in two different district courts. The patents at issue named Charles Bobo as an inventor and one of the earlier patents in the Bobo family of patents was asserted in six of the actions pending in the Central District of California. Five later-issued patents in the Bobo family were asserted in actions in the Eastern District of Texas.

The panel considered whether centralization in one district would serve the convenience of the parties and witnesses or further the just and efficient conduct of the litigation. Many of the defendants supported centralization, while Verizon opposed centralization. The plaintiffs opposed the motion to centralize the cases.
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Pinpoint filed a patent infringement action in the Northern District of Illinois against L.L. Bean, Orbitz, Groupon and Hotwire for allegedly infringing three patents pertaining to accessing data using customer profiles. L.L. Bean filed a motion to sever and transfer to the District of Maine. The district court granted the motion and transferred the case against L.L. Bean to Maine.

The first step in the district court’s analysis was to analyze whether L.L. was misjoined in the action. Focusing on Fed.R.Civ.P. 20(a)(2), and in particular the requirement that “any right to relief is asserted against [the defendants] jointly, severally, or in the alternative with respect to or arising out of the same transaction, occurrence, or series of transactions or occurrences,” the district court found that joinder was not proper. “As L.L. Bean points out, defendants are unrelated companies that have nothing in common except Pinpoint’s allegation that they have infringed the same three patents.” Referring to Pinpoint’s response as “lame,” the district court found that the argument that all of the accused products are extremely similar to be insufficient to satisfy the first prong of Fed.R.Civ.P. 20(a)(2). “The defendants’ operations of unrelated websites does not establish a common transaction or occurrence.
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