Federal Circuit Approves of Order to Drop Patents from the Lawsuit to Facilitate Case Management

by Dennis Crouch

In re Midwest Athletics and Sports Alliance LLC (Fed. Cir. 2021)

MASA sued Xerox for infringing 20 different patents that all relate to printer related technology.   The district court felt that 20 patents was too many to handle and so ordered MASA to reduce the number of asserted patents to 8 patents by the summary judgment pre-trial stage; and then further drop down to only 4 asserted patents by trial.  The defendant agreed that the eliminated patents would be dismissed without prejudice and that any applicable statute of limitations would be tolled — allowing later refiling of those claims.

Courts regularly limit the number of claims that may be asserted, but here the district court “acknowledges that it knows of no other court that has similarly found that it has the authority to limit the number of patents that a plaintiff may assert (as opposed to the number of claims) in the context of case management.” MASA petition. Court’s regularly use case-management powers to limit issues brought to trial — and typically push parties to work together to resolve their issues through a sort of negotiation: Plaintiff drops claims / defendant drops defenses or counterclaims.  Here, MASA proposed such an approach “MASA proposed a balanced approach consistent with case narrowing precedent, in which MASA would narrow its infringement case by reducing the number of asserted claims at certain points in the case, and Xerox would narrow its invalidity case by reducing the number of its invalidity theories.”  Id. However, the the court instead ordered MASA to eliminate patents from the case entirely.

MASA argued that the order to eliminate entire patents is different than eliminating particular claims, since each patent offers a discrete cause of action. However, the Federal Circuit has denied MASA’s petition for writ of mandamus.  In particular the court found that the dismissal without prejudice and tolling provide sufficient safeguards and “negate any concern that MASA would be deprived of any substantive or procedural right here.”

= = = =

Patents at issue: U.S. Patent Nos. 7,502,582 (“‘582 Patent”), 7,720,425 (“‘425 Patent”), 8,005,415 (“‘415 Patent”), 6,203,005 (“‘3005 Patent”), 6,305,684 (‘‘684 Patent”), 8,019,255 (“‘255 Patent”), 8,634,113 (“‘113 Patent”), 6,718,285 (“‘285 Patent”), 6,909,856 (“‘856 Patent”), 6,799,005 (“‘9005 Patent”), 6,462,756 (“’756 Patent”), 6,509,974 (“‘974 Patent”), 6,411,314 (“‘314 Patent”), 6,724,998 (“’998 Patent”), 6,993,278 (“’278 Patent”), 7,658,375 (“’375 Patent”), 8,220,795 (“’795 Patent”), 8,554,089 (“’089 Patent”), 8,591,022 (“’022 Patent”) 8,805,239 (“’239 Patent”).  According to MASA, “the Asserted Patents can be grouped into four general categories: (1) Roller/Feeder Patents (‘3005, ‘255, and ‘113 Patents); Pentachrome Patents (‘415, ‘425, ‘582 Patents); (3) Printer  performance and Maintenance Patents (‘285 and ‘856 Patents); and Work Flow Patents (‘9005, ‘314, ‘974 and ‘756 Patents). MASA accuses different models of Xerox’s office equipment of infringement, including printers, scanners, and
multifunction systems.”

 

20 thoughts on “Federal Circuit Approves of Order to Drop Patents from the Lawsuit to Facilitate Case Management

  1. 5

    I applaud the courts in limiting the number of patents allowed in the suit at one time. Patent cases are tough enough on district judges to manage and limiting the number makes eminent practical sense. I have read many times that plaintiffs regularly try to ambush the corporate defendant with as many claims and patents at once to force a premature settlement. Limiting the number of patents and claims puts a limit on the ambush tactics and gets to the heart of the matter with a fair trial on the merits. The plaintiffs are still provided due process with the tolling of the statute of limitation and the dismal without prejudice. Huh, the Fed Circuit did something right? What a nice surprise.

    1. 5.1

      One could argue that the district court’s order here is just a natural extension of the authority, recognized in Katz, to limit the number of asserted claims in a single lawsuit. But district courts have enormous discretion in case management issues, so the panel’s decision to not intervene here is unsurprising.

      A lot of judges get to this same basic result indirectly, by strictly limiting the amount of time the parties have at trial to put on their case. Some popular districts are well-known for giving each side only about ten hours trial time, which includes opening statement, all witness examinations (including cross examination), closing argument, etc. If you’ve ever participated in or even watched a patent trial, you’d know that time constraints like that make it impossible to litigate infringement, validity, and damages, for more than a handful of asserted claims. The result is that plaintiffs end up dropping entire patents, multitudes of asserted claims, and sometimes entire accused product lines, the day before trial, and defendants drop prior art references and other defenses at the same time, because they cannot present them coherently with the given time constraints.

      This approach is less inefficient because the dropped-at-trial patents, claims, products, defenses, prior art references, etc., were still litigated all the way through discovery. The district court’s order here should be applauded as it shows a further effort to impose some real discipline and streamlining into the process, at a much earlier stage.

  2. 4

    O.C., yes, Google tells me that Kodak filed for Chapter 11 bankruptcy protection in January 2012. But I assume that several of these patents issued and were enforceable before then. In any case, your conjectures do support my primary guess, which was “presumably cheapy acquired.” As I had suggested, my secondary guess of assignment to a PAE for getting “a big percentage of any lawsuit recoveries” was based on the various reports that this is now a common business practice for large corporations to monetize unused patents. As for a conjectured “business relationship,” obviously it did not provided a license for these patents.

  3. 3

    Re: “On December 13, 2017, just months after forming and weeks after acquiring the Kodak patents, MASA sued Xerox…”
    Adequate pre-suit evaluation/investigation of 20 [or more?] purchased patents for validity and infringement in “weeks”?

    1. 3.1

      Methinks that you are looking for problems where none exist.

      Consider that your “just weeks” does not include the time and effort leading up to the purchase.

    2. 3.2

      According to the assignment documents on record at the USPTO, all 20 patents asserted belong to a block of 96 patents acquired directly from Kodak by MASA. In those 96, the patent with the smallest number is US5980245 (filed 1997), and the highest is US9056739 (filed 2013). Many have expired years ago.

      The 20 asserted patents boil down to 17 distinct families (US7720425, US7502582, and US8005415 are mutually related, and so are US7658375 and US8220795). Roughly half of the patents were originally issued to Kodak, and the rest were acquired from Bell & Howell, or Heidelberg Druckmaschinen AG, et al. A couple come from a spin-off/joint-venture called NexPress.

      Overall, a rather motley assortment. If patent examination is subject to a unity of invention requirement, it wouldn’t seem entirely unreasonable to limit post-issue actions to a common theme or thread. But what would be the legal basis?

      The 2012 Kodak IP fire sale allegedly concerned something like 1200 patent titles, but elsewhere I saw another number in the 6000s.

      Many liens have been recorded, but most of them seem to have been released since the MASA acquisition. It might be worthwhile to check all patents of them are unencumberd, even though this would be tedious. If I understand correctly, pursuant 35USC286, MASA can only obtain recovery for the six years prior to the filing of the infringement lawsuit. Could the previous owner (or the lien beneficiaries) conceivably have any residual claim or right for eventual damages recovered for the period when they were still the owner? And is there any substantiation of the alleged infringement (eg., a chart comparing claims with actual Xerox products)? Where?

      In addition to Xerox, the purchaser is also trying to shakedown Ricoh.

      1. 3.2.1

        “In addition to Xerox, the purchaser is also trying to legally, reasonably, and morally obtain licensing revenue from Ricoh for the innovations Ricoh didn’t invent.”

        There. Fixed.

      2. 3.2.2

        “Bell & Howell”

        Does the company still exist as anything other than a brand name slapped on “As seen on TV” products like the pocket light or those insect repelling ‘sonic’ plug-in devices?

  4. 2

    OT, but this will give some regularly negative commentators here a bile duct attack:
    “President Joe Biden on Wednesday nominated eight new judges for federal courts, including Judge Lucy Koh for the U.S. Court of Appeals for the Ninth Circuit. Koh has been a prominent figure in intellectual property (IP) cases in recent years …”

    1. 2.1

      [Actually, of course, it means that she may never get stuck with another patent case again, which she may appreciate.]

      1. 2.1.1

        Good point Paul.

        Best to have her as far away as possible from IP cases.

      2. 2.1.2

        I like your follow-up — better on the ninth than on the CAFC.

  5. 1

    Wondering how an “entity” entitled “Midwest Athletics and Sports Alliance” is suing Xerox on a whole batch of xerographic patents? These are old Kodak patents, presumably cheapy acquired as otherwise why would Kodak not have asserted them itself some time ago? Or, is Kodak a secret partner getting a big percentage of any lawsuit recoveries while avoiding any of the normal requirements and risks of being a patent suit plaintiff itself by using a relatively judgement-proof and sanctions-proof PAE or other such plaintiff? [An increasingly common practice that ought to be challenged.]

    1. 1.1

      IF there is a financial tie – then that tie should be disclosed.

      I would be for heavy sanctions for any law firm aiding and abetting such nonsense.

    2. 1.2

      Its probably not a coincidence that MASA seems to be run by an attorney out of Omaha.

      “Formed on June 23, 2017, MASA is a wholly-owned subsidiary of Midwest Youth A&S, Inc…. On December 13, 2017, just months after forming and weeks after acquiring the Kodak patents, MASA sued Xerox…”

      1. 1.2.1

        meh – I have no problem with that per se — as our f0und1ng daddies FULLY intended the patent property right to be fully alienable.

        1. 1.2.1.1

          I don’t think its a problem per se. I just think it is interesting and wonder how it all came together. Why is a patent enforcement company a subsidiary of a non-profit? Are the proceeds going to flow to that non-profit? Are there about to be a lot of soccer jerseys thanks to Xerox?

          1. 1.2.1.1.1

            Your ‘interest’ comes across rather tainted in a “oh, that’s not proper” manner.

    3. 1.3

      >Or, is Kodak a secret partner getting a big percentage of any lawsuit recoveries

      Or Kodak had business relationships with Xerox, despite also being a competitor (quite common in the tech world, btw). Or Kodak management was incompetent (they did bankrupt a once great company after all). Or Kodak management was busy with more important issues (like said bankruptcy). Or the bankruptcy itself made it unclear who could authorize the suit. Or Kodak needed the cash up-front (not in the 15-20 years it takes to get a patent judgement). Or Kodak legal department didn’t realize what they owned. Or Kodak didn’t want the bad press. Or….

      1. 1.3.1

        +1

        (but none of those alternatives feed a ‘desired narrative’ of ill-suited conniving)

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