David Taylor: Patent Misjoinder

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 (bparrish@smu.edu), a registered patent agent, research assistant to Sarah Tran, and a 2014 Juris Doctor candidate at SMU Dedman School of Law.