How should district courts interpret the joinder provisions of the America Invents Act? In Patent Misjoinder (forthcoming New York University Law Review), Professor David Taylor provides a comprehensive analysis of 35 U.S.C. § 299 and offers a statutory interpretation that would maximize judicial efficiencies and avoid undue prejudice to accused infringers. To develop his interpretation, Professor Taylor considers the policy concerns of permissive joinder and how these concerns have led to divergent joinder standards.
The article begins by reviewing Federal
Rule of Civil Procedure 20. Notably, several members of the Advisory
Committee sought to liberalize joinder rules while others sought to impose
loose restrictions. Ultimately it was left to the courts to interpret the
phrase “arising out of the same transaction, occurrence or series of
transactions or occurrences” and what constituted a “question of law or fact
common to all plaintiffs.” In United States v. Mississippi, the Supreme Court
found satisfaction of both the transaction and common question prongs of Rule
20 based on the allegation of concerted action by a group of defendants.
Later the Eighth Circuit, in Mosley v. General Motors Corp., adopted the proposition
that all logically-related events giving rise to a claim are regarded as
comprising a transaction or occurrence. But recently, district courts stretched the logical relationship
test to its breaking point.
Due in part to the vague joinder
language of Rule 20, district courts developed disparate stances on permissive
joinder. On one end of the spectrum sat courts that allowed practically unlimited
joinder of accused infringers. In these jurisdictions, courts required the party
alleging misjoinder to prove that the accused products or methods were “dramatically
different” based on evidence and not allegation. In contrast, other courts
permitted joinder only when the accused infringers and the accused products or
processes were related, the accused infringers acted in concert, or the accused
products or processes were the same. Perhaps unsurprisingly, empirical
data collected by Professor Taylor shows that initial complaints alleging patent infringement
filed in the Eastern District of Texas (a district having liberal joinder
standards) named four times more accused infringers than complaints filed in
the Northern District of California (a more restrictive district). This discrepancy in the application of Rule 20 may have been the catalyst for restricting permissive joinder of
accused infringers through enactment of 35 U.S.C. § 299.
Professor Taylor then dissects 35
U.S.C § 299, taking into consideration the statute’s legislative history,
policy goals, and the common law development of Rule 20. The most
significant difference between Rule 20 and Section 299 is the requirement that
the accused product or process be “the same.” Additionally, no longer is a
common question of law or singular common question of fact sufficient for
joinder. Instead, plural common questions of fact must
exist. With these new restraints on joinder, Professor Taylor suggests that
courts might focus on whether a complaint includes a good faith allegation that
the accused product or process is indistinguishable based on subsidiary
allegations related to concerted action by accused infringers. Furthermore, a
court might consider these allegations as a signal that joinder is appropriate,
and treat the allegations as creating a rebuttable presumption that the accused
products or processes are in fact indistinguishable.
Professor Taylor’s article also exposes the shortcomings of the new joinder provisions and raises significant questions regarding its effect. For instance, Section 299 applies to accused
infringers “making, using, importing into the United
States, offering for sale, or selling” an accused product or process. This
language appears to leave off extraterritorial infringement covered by 35 U.S.C. § 271(f). Will defendants who export a substantial portion of the
components of a patented invention be covered by Section 299?
Furthermore, will there be an increase of plaintiffs relying on the
multidistrict litigation provisions of 28 U.S.C. §1407 to consolidate pre-trial
proceedings? It may turn cost prohibitive for plaintiffs to go forward with
multiple trials, leading to an increase in pre-trial settlements. Would this be a good thing? Certainly the
effects of Section 299 will reverberate
throughout multiple areas of patent law.
Posted by Bryan Parrish (email@example.com), a registered
patent agent, research assistant to Sarah Tran, and a 2014 Juris Doctor candidate at SMU Dedman
School of Law.