On May 4, in what appears to be an about-face from a March 2011 order in another case, the Federal Circuit granted a petition for writ of mandamus and vacated an Eastern District of Texas order denying motions to sever and transfer. In re EMC Corp., 2012 U.S. App. LEXIS 9159 (Fed. Cir. May 4, 2012). In the district court, 18 companies had been accused, in one complaint, of infringing three patents related to online backup and storage services.
The case was filed before the America Invents Act (AIA), with its non-joinder provision, was enacted. The non-joinder provision (35 U.S.C. § 299) provides that accused infringers may only be joined in one action if the allegations of infringement “aris[e] 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.”
Under this provision, “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.” But because the case was filed before the non-joinder provision went into effect, it was not applicable to the motion before the district court or to the Federal Circuit’s mandamus consideration.
Several of the defendants had asked the district court to sever the claims against them and transfer those claims to Massachusetts, Arizona and California. These defendants argued that they were improperly joined because each of their services was different. According to the defendants, the sale of different services—even if those services are alleged to infringe the same patents—does not satisfy the “same transaction or occurrence” prong of Federal Rule of Civil Procedure 20(a). The district court disagreed, holding that “[t]he similarity of Defendants’ products is sufficient to satisfy the same transaction or occurrence prong.”
On defendants’ petition for writ of mandamus, the Federal Circuit sided with the defendants, holding that “joinder is not appropriate where different products or processes are involved.” Discussing the “same transaction or occurrence” requirement, the court held, “To be part of the ‘same transaction’ requires shared, overlapping facts that give rise to each cause of action, and not just distinct, albeit, coincidentally identical, facts.”
But in its 17-page order, the Federal Circuit did not cite, let alone attempt to distinguish, its March 4, 2011 order in In re Google Inc. (2011 U.S. App. LEXIS 4381 (Fed. Cir. March 4, 2011)). In that case, 23 defendants had been accused in the Eastern District of Texas of infringing two patents. Several of the defendants moved to transfer the entire case to the Northern District of California. Alternatively, these defendants asked that the claims against them be severed and transferred.
Addressing severance first, the Eastern District of Texas denied the request to sever, noting that “[s]everance would not promote judicial economy [and that] . . . the record before the Court does not show that the products or methods at issue are so different that determining infringement in one case is less proper or efficient than determining infringement in multiple cases.” The court also denied the motion to transfer the entire case to the Northern District of California.
Like the petitioners in In re EMC a year later, the defendants in In re Google sought a writ of mandamus from the Federal Circuit. In its order denying the writ, the Federal Circuit acknowledged the deference to be accorded the district court. It held that the district court did not abuse its discretion in denying the motion to transfer, and did not abuse its discretion in refusing to sever the petitioners’ claims and transfer them to the Northern District of California. The Federal Circuit performed no analysis under Rule 20, instead citing judicial economy as a basis to keep all defendants in one action in Texas.
Even though the non-joinder provision of the AIA did not technically govern either of these cases, the Federal Circuit’s about-face is likely explained, at least in part, by the fact that Congress had enacted the provision by the time the court considered the In re EMC petition. While not controlling, the provision nonetheless seemed to influence the court’s analysis.
Most importantly, the In re EMC opinion provides guidance to litigants and district courts as to how the Federal Circuit is likely to apply the non-joinder provision. For accused infringers to be joined in the same suit post-AIA, the Federal Circuit will likely require “shared, overlapping facts” and “an actual link between the facts underlying each claim of infringement” —that is, until another Federal Circuit panel provides a different standard for joining accused infringers in a single lawsuit. Stay tuned…