The Software IP Report

Multidistrict Litigation Under The AIA

By Charles Bieneman

Categories: Patent Civil Procedure, The Software IP Report

The Panel on Multidistrict Litigation (MDL) has further clarified its view of the interplay between the anti-joinder provisions of the America Invents Act (AIA), 35 U.S.C. § 299, and the provision for “coordinated or consolidated pretrial proceedings” under the MDL statute, 28 U.S.C. § 1407.  In In re Maxim Integrated Products, Inc., MDL No. 2354 (June 8, 2012), the MDL panel, upon a motion by the owner of five patents related to mobile commerce, consolidated fourteen actions pending in five different judicial districts.

The parties responding to the patent owner’s motion all opposed centralization, and, in the alternative, proposed various transferee forums.  Unsurprisingly, these parties were unanimous in opposing transfer to the Eastern District of Texas, where ten of the fourteen actions were pending.

The responding parties “principally argued that any common factual issues among the actions are subsumed by unique factual issues presented by each defendant, including questions of contributory or induced infringement.”  According to the MDL panel, however, variations in the defendants’ use of the accused technology were counterbalanced by “common factual questions concerning the background of the patents and the subject matter.”  Despite these common factual questions, different defendants were poised to advance different claim constructions and different theories of invalidity.  The MDL panel believed that centralization would reduce the likelihood of inconsistent rulings, and would increase judicial efficiency,  for example, allowing claim construction to be performed by one judge instead of many.

The MDL panel then addressed the question of whether consolidation would be inconsistent with the AIA.  Noting its recent holding (In re Bear Creek Techs., Inc., (J.P.M.L. May 2, 2012)) that “the America Invents Act does not alter our authority to order pretrial centralization,” the MDL panel agreed “that the AIA’s right to separate trials should be taken into account when making the decision to centralize a given litigation, inasmuch as the AIA is the new reality in patent litigation and its right to separate trials could impact the Panel’s calculus regarding whether centralization benefits ‘the convenience of parties and witnesses’ and ‘will promote the just and efficient conduct’ of the litigation.’ 28 U.S.C. § 1407(a).”

Nonetheless, the possibility that the AIA might need to be taken into account at some point because of differing non-infringement or invalidity defenses was not “sufficient to deny centralization of actions otherwise involving common factual questions.”  Nor did this possibility trump the potential efficiencies of having a single judge decide common issues.  There was no requirement in Section 1407 that a patent plaintiff prove that all common issues would be resolved during pretrial proceedings.  As litigation progresses, and draws nearer to trial, a transferee judge can always remand a case to the transferor court.  The panel concluded that “[c]entralization will eliminate duplicative discovery, prevent inconsistent pretrial rulings (particularly on claim construction issues), and conserve the resources of the parties, their counsel and the judiciary.”

The accused infringers did enjoy some measure of victory.  The MDL panel selected the Western District of Pennsylvania as the transferee forum for pretrial proceedings.  That district was centrally located, had a favorable caseload, and was a participant in the National Patent Pilot Program.  It had local patent rules and standardized model orders for use in patent cases.  Further, the Western District of Pennsylvania would be convenient because three defendants were incorporated in Pennsylvania, and five others, including the patent owner, were incorporated in neighboring states.

A write-up of the Bear Creek decision (by attorneys for Bear Creek, the patent owner there) may be found on the PatentlyO blog.