One of the
common practices employed by plaintiffs in patent infringement suits to reduce
litigation costs is to consolidate multiple
defendants in a “single lawsuit” as
opposed to filing a “separate lawsuit”
against each defendant. This practice of consolidation has been often critiqued
by industry observers who have attributed the increase in patent litigation in
the recent years to this practice. If you observe the litigation suits filed in
the various district courts in the United States, you will observe two
parallel, yet completely tangential stories. While some plaintiffs are
consolidating multiple defendants in the same lawsuit in some specific district
courts, other plaintiffs are filing separate lawsuits for each defendant when
the trail is happening in other district courts. Surprisingly enough, I found
out that the process of consolidating multiple defendants in a single lawsuit
is not straight-forward.
Traditionally, the
consolidation of multiple defendants in a single lawsuit was allowed only when any right to relief is asserted against
the defendants jointly, severally or when the infringement of the accused product
arises out of the same transaction, occurrence or series of transaction (299
(a)). In addition to the above factors, the consolidation was allowed
when questions of fact common to all
defendants or counterclaim defendants will arise in the action (299 (b)).
The first clause
of section 299 is also known as “same
transaction or occurrence” test which was used by courts for deciding on
consolidation of defendants. However, it has been observed based on case
studies that different courts have different interpretation of the “same transaction or occurrence” test.
For example, when multiple defendants are accused of infringing the same
patent through different acts of infringement, some courts have allowed for
consolidation stating that there is a definite logical or relational dependency
in the acts thereby satisfying the test while other courts have refused to
allow consolidation stating that different acts of infringement does not
satisfy the “same occurrence or
transaction” test. The second clause of section 299 is not as twisted as
the first clause as courts found out that question over the validity of patent claims
were common to all accounts (read: acts) of infringement. With the enactment of
the Leahy-Smith America Invents Act
(AIA), few amendments were made to Section 299 to bring clarity to the overall
process of consolidation. Post AIA, the defendants cannot be consolidated into
one suit for trial solely based on allegations that each defendant has
infringed the patent(s).
The AIA act will
certainly bring down the number of multi-defendant lawsuits, however, it may result
in an increase in the number of lawsuits that would translate into added burden
and load on the courts. Moreover, there may be still ways to beat the system and
reduce the costs. For example, plaintiffs may file a patent infringement
lawsuit covering the same patent in different district courts against different
parties thereby forcing the courts themselves to consolidate the lawsuits into
one single lawsuit. Even if the lawsuits are filed in the same court, the
judges themselves may consolidate the lawsuits during the trial.
