Judicial Panel on Multidistrict Litigation: AIA Does Not Preclude Consolidated Cases

Guest Post by Jennifer Furey of Cooley Manion Jones LLP and Anthony Miele of Miele Law Group PC. Furey and Miele represent Bear Creek in the JPML proceeding and in the associated actions discussed below.

Suppose a patentee determines that in order to enforce its patent rights, it must sue multiple, but unrelated, parties. An obstacle then presents itself. The patentee plaintiff may very well be forced to file separate actions in disparate jurisdictions, and now risks being overwhelmed by conflicting case schedules, duplicative discovery disputes, and especially, conflicting Markman claim construction rulings. See Scott W. Burt et al., Intellectual Property Owners Associations Committee White Paper, Impact of the Misjoinder Provision of the America Invents Act 16 (2012). One mechanism for efficiently litigating the pre-trial phase of patent infringement lawsuits pending in different districts is multidistrict litigation ("MDL") under 28 U.S.C. § 1407 ("Section 1407"). In a recent opinion in In re Bear Creek Technologies, Inc., the Judicial Panel on Multidistrict Litigation ("JPML") unequivocally held that MDL remains a viable option for parties to transfer separate patent infringement actions pending in different districts for centralized pre-trial proceedings, and that the recently enacted Leahy-Smith America Invents Act ("AIA") "does not affect [the JPML's] authority" to transfer and centralize patent litigation under Section 1407. MDL No. 2344, at 3 (J.P.M.L. May 2, 2012). After Bear Creek, plaintiffs enforcing their patent rights across multiple jurisdictions may still consider MDL as a possible option to keep infringing defendants before one court up until trial. [Download JMPL Decision Bear Creek]

Enacted on September 16, 2011, the AIA's joinder provision states that accused infringers may not, "based solely on allegations that they each have infringed" the same patent(s):

  1. be joined in one action as defendants or counterclaim defendants, or
  2. have their actions consolidated for trial.

35 U.S.C. § 299. In contrast, centralization in MDL under Section 1407 requires that:

  1. actions are pending in different districts;
  2. the actions involve "one or more common questions of fact;" and
  3. transfer and consolidation of pretrial proceedings is convenient for the parties and witnesses, and promotes "the just and efficient conduct of such actions."

28 U.S.C. § 1407.

After the enactment of the AIA, Vonage in Bear Creek argued that the AIA's joinder restriction applied to Section 1407, to no avail. The JPML found the AIA "does not alter [its] authority to order pretrial centralization." MDL No. 2344 at 2. The JPML reasoned that there was "no overlap" between the AIA and Section 1407, emphasizing the different standards of the two statutes, and contrasting the AIA's focus on joinder and consolidation at trial with "Section 1407's express focus on transfer for pretrial proceedings." Id. at 2-3. Finding that both the plain language and legislative history of the AIA were "silent as to the conduct of pretrial proceedings" and did not "mention Section 1407," the JPML noted that if Congress intended the AIA to limit the JPML's authority under Section 1407, it would have "done so explicitly." Id.

After holding that the AIA did not apply, the JPML then concluded that transfer and centralization was appropriate in Bear Creek because the separate actions shared "substantial background questions of fact" concerning the "validity and enforceability" of the patent-in-suit, as well as "claim construction." Id. at 4. The JPML emphasized that "centralization offers substantial savings in terms of judicial economy by having a single judge become acquainted with the complex patented technology and construing the patent in a consistent fashion (as opposed to having six judges separately decide such issues)."

In light of the AIA's enactment, MDL can be an invaluable tool for patentee-plaintiffs to efficiently litigate their patent rights against multiple infringers with actions pending in different courts through Markman and summary judgment. Under Bear Creek, the AIA is not a magic bullet allowing patent defendants to escape multi-party litigation—they may be brought before one court up until trial in MDL under Section 1407.

25 thoughts on “Judicial Panel on Multidistrict Litigation: AIA Does Not Preclude Consolidated Cases

  1. effectively changing, ‘what a patent is.’ < .i>”

    Nonsense. Those things you mention are different patents in the cases of divs and cons, and the same patent in the case of reexams (but not asserted separately). You appear to be trying to argue something you do not understand.

  2. “A patent is what it is and the patentee cannot change what it is from one defendant to the next …”

    More accurately, a patent is what its claims says that it is (presuming proper spec support, of course).

    And are you assuming that the same claims are being asserted against different defendants for the same (exact) infringements?

    Plus when cons, divisionals, reexam, etc exist; which usually offers the opportunity for additional claims … effectively changing, “what a patent is.”

  3. the patentee cannot change what it is from one defendant to the next (while the defendants can each get a different bite at the apple).

    Sounds like infringers’ rights to me.

  4. Your position is a fallacy because of the one versus many problem.

    A patent is what it is and the patentee cannot change what it is from one defendant to the next (while the defendants can each get a different bite at the apple).

    There is no such thing as compromises between defendants’ various positions. OR are you saying that defendants are colluding in their attack on the one single patentee?

  5. A single Markman ruling benefits the plaintiff if it is favorable to the plaintiff, and a single Markman ruling benefits the defendants if it is favorable to the defendants. In every other case, the respective litigants would be better off getting another bite at the apple.

    This is compounded by two interrelated issue. 1) The idea the claim construction is a question of law is a farce. 2) Since there really aren’t common questions of law (see 1) or fact in most of these multi-defendant cases, the arguments are really just compromises between the defendants’ various positions.

  6. Rule 42(a) allows this, and this decision simply confirms what most people thought–the AIA does not take away the authority of courts to consolidate copending actions for purposes of pretrial matters. AIA simply took away the court’s authority to consolidate for purposes of trial.

  7. One of the problems is that there is rarely one, perfect interpretation for every claim limitation that a court will find if they are infallible and look hard enough. Consolidation doesn’t necessarily solve that issue, since each defendant may push for a slightly different interpretation which best suits their needs. And by no means does that imply that at most only one defendant’s interpretation can be correct. In other words, different claim interpretations does not necessarily mean that one of them is wrong.

  8. “Do we really want dozens of district courts all adjudicating infringement cases concerning the same patents?”

    Idk about you, but I do. It will make for more and more lulz as the different opinions come down where none of the courts reach the same conclusions and we can all lol at the farce that using our general purpose courts for patent matters really is.

    And it will help ensure my eventual employment in the litigation arena.

  9. This decision really should not come as a surprise to anyone, as the AIA clearly refers to the consolidation of actions “for trial.” A contrary decision would arguably have even prevented consolidation of actions filed in the same district. Does that make any sense?

  10. That is simply not true. Heck, I would suggest that in many cases most of the pretrial issues and questions (e.g., claim construction) will be common to all defendants–apart from, perhaps, discovery issues which might be unique to a particular defendant. And people often overlook the fact that allowing multi-defendant patent litigation is not always beneficial to the plaintiff alone. Many times it can help the defendants as well.

  11. I think it depends on what circuit you are in. But, at a minimum, the transferor court (i.e., the court where any trial takes place) must give substantial deference to the rulings of the transferee court. In other circuits, there is complete deference or they treat the ruling as the law of the case (can be changed, but requires clearly erroneous+manifest injustice, or a change in law).

    Plus, if the Markman decision results in the transferee court granting a case dispositive summary judgment, there may never be an opportunity for the trial court to examine the Markman decision.

    And keep in mind what I am referring to is how a trial court treats a Markman decision by the MDL transferee court in that same case (i.e., a party is not happy with the Markman decision by the transferee court in their case).

  12. “from one district may not feel compelled to be bound to the Markman decision of the judge from the MDL district.”

    Can they do that? I woudl think that the Law of the Case or at least findings of fact are not susceptible to such judicial override.

  13. given that most of the heavy lifting in patent infringement occurs at pre-trial, i.e., Markman hearings, MDL will impact and increase in such cases while possibly muting the effect of 299.

    caution should be taken as a judge from one district may not feel compelled to be bound to the Markman decision of the judge from the MDL district.

  14. That’s apparently what Congress wanted. Congress (and many courts) recognize that there aren’t really common questions in patent suits against unrelated defendants. So what is the point of consolidating them? So judges don’t contradict each other on claim construction? That only benefits the judges, not the litigants.

  15. My impression is that the AIA was designed to defeat a plaintiff’s choice of forum for multi-defendant patent litigation (i.e., E.D. Tex., D. Del.), and to prevent unrelated defendants from being lumped together at trial. Nowhere does the AIA state that it is improper for courts to consolidate patent cases for pre-trial matters. This ruling seems to be consistent with the AIA. First, a plaintiff does not get to choose the forum for an MDL proceeding. Second, MDL proceedings are limited to pre-trial matters, so the AIA prohibition on lumping unrelated defendants together for trial still stands. I would have been surprised if the panel had ruled any other way. Can’t blame the defendants for trying, though.

  16. So what the JPML is saying is, hey dudes, the AIA is bogus, it forces trolls to file separate suits against multiple defendants, but we judges can still consolidate those suits for purposes of discovery and everything up to trial, so that we can dispense justice pronto!

  17. Do we really want dozens of district courts all adjudicating infringement cases concerning the same patents? Dozens of separate discovery tracks and claim constructions? Drafters of AIA would have done a better job to say no joinder for trial, but for pretrial *question of law* matters, scattering these cases is ridiculously inefficient.

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