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Patent Reform - A Rush To The Courthouse By Trolls
Wednesday, September 21 2011 @ 09:00 AM EDT

One consequence of the passage of the America Invents Act (HR1249) signed into law by President Obama last Friday (September 16) was a mad rush to the courthouse by some patent trolls. You see, one of the favorite tactics used by patent trolls is to bring a suit with dozens of defendants regardless of whether there are common issues of infringement other than the commonality of the asserted patents. This tactic allows the troll to benefit from a consolidated action, thus drastically reducing the troll's cost of litigation. Of course, this tactic doesn't always work as we learned in the Interval Licensing case.

But Congress, in an attempt to restrain patent trolls and to eliminate this "incentive" to file consolidated actions, included a provision in HR 1249 that would virtually eliminate such actions. That provision, codified in Section 19 of the Act, reads:


. . . .

(d) Procedural Matters in Patent Cases-

(1) JOINDER OF PARTIES AND STAY OF ACTIONS- Chapter 29 of title 35, United States Code, as amended by this Act, is further amended by adding at the end the following new section:
-`Sec. 299. Joinder of parties
`(a) Joinder of Accused Infringers- With respect to any civil action arising under any Act of Congress relating to patents, other than an action or trial in which an act of infringement under section 271(e)(2) has been pled, parties that are accused infringers may be joined in one action as defendants or counterclaim defendants, or have their actions consolidated for trial, or counterclaim defendants only if--
`(1) any right to relief is asserted against the parties jointly, severally, or in the alternative with respect to or arising 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 the same accused product or process; and

`(2) questions of fact common to all defendants or counterclaim defendants will arise in the action.

`(b) Allegations Insufficient for Joinder- For purposes of this subsection, accused infringers may not be joined in one action as defendants or counterclaim defendants, or have their actions consolidated for trial, based solely on allegations that they each have infringed the patent or patents in suit.

`(c) Waiver- A party that is an accused infringer may waive the limitations set forth in this section with respect to that party.'.

(2) CONFORMING AMENDMENT- The table of sections for chapter 29 of title 35, United States Code, as amended by this Act, is further amended by adding at the end the following new item:
`299. Joinder of parties.'.
(e) Effective Date- The amendments made by this section shall apply to any civil action commenced on or after the date of the enactment of this Act.

The likelihood of a party meeting both prongs of the test in new Sec. 299(a) are slim, especially with the additional provision stated in (b). So these mass filings should be a thing of history.

But given the week long delay between passage of the bill (September 8) and its signing (September 16), trolls realized they better strike fast if they want to continue to use (or abuse) this mechanism, and that is just what has occurred. Just look at this spate of filings over the last few days:

  • On September 15, Development Innovation Group, LLC brought a patent infringement action in the Southern District of California (Civil Action No. 3:11-cv-02150-DMS-NLS) against no fewer than 29 different defendants, including virtually every cell phone maker and wireless company in the U.S.
  • On September 15, Select Retrieval, LLC brought one patent infringement action in the Southern District of California (Civil Action No. 3:11-cv-02158-LAB-WMC) against no fewer than 34 different defendants, all retailers who presumably have some form of web presence, and a second patent infringement action in Oregon (Civil Action No. 3:11-cv-01104-AA) against no fewer than 19 different defendants, again apparently web-based retailers.
  • On September 15, LVL Patent Group LLC took first prize in this contest when it brought nine separate patent infringement actions in Delaware (Civil Action Nos. 1:11-cv-00830-UNA, 1:11-cv-00834-UNA, 1:11-cv-00827-UNA, 1:11-cv-00835-UNA, 1:11-cv-00832-UNA, 1:11-cv-00829-UNA, 1:11-cv-00831-UNA, 1:11-cv-00828-UNA, and 1:11-cv-00833-UNA) against a combined total of 140 different defendants. About the only positive thing you can say about this one is that the plaintiff actually tried to group defendants by industry sector even if there was no commonality in the acts providing the basis for the infringement claims.
These weren't the only mass-filings in the last days before the bill signing, but they certainly were some of the most egregious. We can only hope that the courts force these plaintiffs to deal with the defendants one at a time as in the Interval case, recognizing that these actions were clearly brought at the last minute to avoid the change in the law.

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