PROBLEMATIC FEDERAL DISTRICT COURT
APPROACHES TO THE JOINDER CLAUSE
UNDER THE AMERICA INVENTS ACT
PING-HSUN CHEN1CONTENTS
I. Introduction ... 101
II. Interpretation of 35 U.S.C. § 299 Under In re EMC 107 A. In re EMC and Interpretation of Rule 20 ... 107
B. 35 U.S.C. § 299 and In re EMC... 111
III. Approaches of the Majority of District Courts 116 A. Competitor Scenario ... 117
B. Upstream-and-Downstream Scenario ... 124
IV. Approach of the Eastern District of Texas ... 129
A. Addition to the Third EMC Factor ... 130
B. Recent Development ... 134
V. EMC Factors in Cases Related to Mobile Device Technology ... 140
A. Hardware Issues ... 140
B. Software Issues ... 143
C. Business Relationship Issues ... 147
1 Assistant Professor, Graduate Institute of Technology, Innovation and
Intellectual Property Management, National Chengchi University; J.D. 10’, Washington University in St. Louis School of Law; Email: cstr@mail.ntut.edu.tw.
VI. Proposed Resolution ... 150
A. Congressional Intent ... 150
B. “The Same Accused Product or Process” ... 154
C. “Certain Connection” Approach ... 156
VII. Conclusion ... 160
ABSTRACT
Before 35 U.S.C. § 299 was enacted, a minority of district courts had permitted joinder of independent defendants merely because the same patent was infringed. That gave a great incentive to non-practicing entities to sue as many defendants as possible in one suit. To resolve this problem, Congress enacted § 299(b) to abrogate the minority view of joinder. In addition, the Federal Circuit in In re EMC created a test requiring finding of “an actual link between the facts underlying each claim of infringement.” The Federal Circuit provided six EMC factors for lower courts to determine permissive joinder. However, the Eastern District of Texas has relied primarily on the “use of identically sourced parts” factor to find joinder, while other district courts have denied joinder of direct competitors. Particularly, in mobile phone technology cases, the Eastern District of Texas has permitted joinder merely because the same hardware component is used, while other courts have found misjoinder merely because mobile devices of one manufacturer’s operational system are not the same as mobile devices of another manufacturer’s operational system. To resolve the inconsistency, this article offers a “certain connection” approach in light of Congress’ intent and the In re EMC decision. The approach focuses on connections between the infringement claims and the independent defendants.
I. INTRODUCTION
On September 16, 2011, the Leahy-Smith America Invents Act (“AIA”) was signed by President Obama.2 Among its important goals is the goal to minimize negative effects caused by patent enforcement on small businesses.3 In recent years, small businesses in the United States have suffered from frivolous patent litigation brought by non-practicing entities (“NPEs”) that buy patents for the purpose of litigation but do not sell the underlying products or make the underlying innovations.4 This phenomenon results partially from the practice of Rule 20 of Federal Rules of Civil Procedure (“Rule 20”) in some jurisdictions.5
Rule 20(a)(2) provides,
Persons—as well as a vessel, cargo, or other property subject to admiralty process in rem—may be joined in one action as defendants if:
(A) any right to relief is asserted against them jointly, severally, or in the alternative with respect to or arising out of the same transaction, occurrence, or series of transactions or occurrences; and
(B) any question of law or fact common to all defendants will arise in the action.6
2 See Tracie L. Bryant, Note, The America Invents Act: Slaying Trolls,
Limiting Joinder, 25 HARV.J.L.&TECH. 687, 694 (2012).
3 See Adam Smith, Note, Patent Trolls—An Overview of Proposed
Legislation and a Solution That Benefits Small Businesses and Entrepreneurs, 9 OHIO ST.ENTREPRENEURIAL BUS.L.J. 201, 208–09 (2014).
4 See, e.g., David O. Taylor, Patent Misjoinder, 88 N.Y.U.L.REV. 652,
660 (2013); Ryan Desisto, Note, Ermont vs. The Patent Troll: Is State
Action a Bridge Too Far?, 48 SUFFOLK U.L.REV. 109, 115-19 (2015).
5 See Taylor, supra note 4, at 655–56 n.12. 6 FED.R.CIV.P. 20(a)(2).
To sue different defendants jointly, a plaintiff has to plead some facts supporting a two-prong test under Rules 20(a)(2)(A) and 20(a)(2)(B).7 In the patent context, a minority of district courts have applied Rule 20 to permit joinder of independent defendants or to consolidate different patent cases merely because the same patent is infringed.8 As a result, NPEs are more likely to file a complaint against irrelevant infringers in those minority courts.9
To solve the problem, AIA § 19(d) adds 35 U.S.C. § 299.10 Basically, the new statute is similar to Rule 20. 35 U.S.C. § 299(a) provides,
[w]ith respect to any civil action arising under any Act of Congress relating to patents, other than an action or trial in which an act of infringement under section 271(e)(2) has been pled, parties that are accused infringers may be joined in one action as defendants or counterclaim defendants, or have their actions consolidated for trial, only if—
7 See Acevedo v. Allsup’s Convenience Stores, Inc., 600 F.3d 516, 521
(5th Cir. 2010) (“Courts have described Rule 20 as creating a two-prong test, allowing joinder of plaintiffs when (1) their claims arise out of the ‘same transaction, occurrence, or series of transactions or occurrences’ and when (2) there is at least one common question of law or fact linking all claims.”) (citations omitted).
8 See Xun (Michael) Liu, Note, Joinder under the AIA: Shifting
Non-Practicing Entity Patent Assertions away from Small Businesses, 19
MICH.TELECOMM.&TECH.L.REV. 489, 503 (2013) (describing the minority view of Rule 20).
9 See Dongbiao Shen, Note, Misjoinder or Mishap? The Consequences
of the AIA Joinder Provision, 29 BERKELEY TECH.L.J. 545, 551–52 (2014).
10 See Sona Karakashian, Note, A Software Patent War: The Effects of
Patent Trolls on Startup Companies, Innovation, and
(1) any right to relief is asserted against the parties jointly, severally, or in the alternative with respect to or arising 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;
and
(2) questions of fact common to all defendants or counterclaim defendants will arise in the action.11
In addition, § 299(b) mandates that independent defendants cannot be joined in the same case merely because they infringe the same patent(s). Section 299(b) provides, “[f]or purposes of this subsection, 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.”12 Therefore, § 299(b) limits the traditional practice of Rule 20 in some minority district courts.
Section 19 of the AIA (codified at 35 U.S.C. § 299) became effective right after President Obama signed the bill. However, not all pending cases or newly-filed cases are subject to the new joinder clause. Under AIA § 19(e), 35 U.S.C. § 299 “shall apply to any civil action commenced on
or after the date of the enactment of [the AIA].”13 Thus, the
joinder clause is not retroactive, and only cases filed on or after September 16, 2011 are governed by 35 U.S.C. § 299.14
11 35 U.S.C. § 299(a) (Supp. I 2013) (emphasis added). 12 35 U.S.C. § 299(b) (Supp. I 2013) (emphasis added).
13 Leahy–Smith America Invents Act, Pub. L. No. 112–29, § 19(e), 125
Stat. 284, 333 (2011) (emphasis added).
14 See In re EMC Corp., 677 F.3d 1351, 1356 (Fed. Cir. 2012)
(explaining why 35 U.S.C. § 299 is not retroactive and holding that “[t]he timing of this petition means that our decision will only govern
The legislative history of § 299 shows that Congress intended to overrule some district court decisions which permit joinder of different defendants merely because they infringe the same patent(s).15 MyMail, Ltd. v. America Online, Inc.,16 decided by the Eastern District of Texas in 2004, was the beginning of the minority view.17 The MyMail, Ltd. court developed the proposition that “severance could be appropriate if the defendants’ methods or products were dramatically different.”18 Because there was no evidence showing any dramatic differences between the accused methods or products, the MyMail, Ltd. court permitted joinder.19 Following MyMail, Ltd., the Eastern District of Texas began to permit joinder merely because the same patents were infringed.20
a number of cases that were filed before the passage of the new joinder provision”).
15 See H.R.REP.NO. 112–98, pt.1, at 55 n.61 (2011) (“Section 299
legislatively abrogates the construction of Rule 20(a) adopted in
MyMail, Ltd. v. America Online, Inc., 223 F.R.D. 455 (E.D. Tex.
2004); Sprint Communications Co. v. Theglobe.com, Inc., 233 F.R.D. 615 (D. Kan. 2006); Adrain v. Genetec Inc., 2009 WL 3063414 (E.D. Tex. September 22, 2009); Better Educ. Inc. v. Einstruction Corp., 2010 WL 918307 (E.D. Tex. March 10, 2010); Mannatech, Inc. v.
Country Life, LLC, 2010 WL 2944574 (N.D. Tex. July 26, 2010); Alford Safety Services, Inc., v. Hot-Hed, Inc., 2010 WL 3418233 (E.D.
La. August 24, 2010); and Eolas Technologies, Inc. v. Adobe Systems,
Inc., 2010 WL 3835762 (E.D. Tex. September 28, 2010)”).
16 MyMail, Ltd. v. Am. Online, Inc., 223 F.R.D. 455 (E.D. Tex. 2004). 17 See Taylor, supra note 4, at 678–79 (“On one end of the spectrum lie
decisions that allowed practically unlimited joinder of accused infringers. The leading opinion on this end of the spectrum is
MyMail, Ltd. v. America Online, Inc., authored by Judge Leonard
Davis of the Eastern District of Texas.”).
18 MyMail, Ltd., 223 F.R.D. at 457 (emphasis added). 19 See id. at 457–58.
Even after the enactment of § 299, the Eastern District of Texas continued to follow its traditional minority view because the cases it handled were filed prior to the effective date of § 299.21 Only after In re EMC,22 a 2012 Federal Circuit case, holding that merely infringing the same patent does not support joinder under Rule 20,23 did the Eastern District of Texas start to change its methodology.24 For example, in Norman IP Holdings, LLC v. Lexmark Int’l,
Inc.,25 the Eastern District of Texas applied In re EMC and
held, “[t]hat the accused products or processes of the defendants are similar is not enough [to support joinder].”26
The Federal Circuit in In re EMC primarily interpreted Rule 20(a)(2)(A) in the context of patent infringement,27 as the case was not subject to the application
21 See, e.g., Imperium (IP) Holdings, Inc. v. Apple Inc., No.
4:11-CV-163, 2012 WL 461775, at *3 (E.D. Tex. Jan. 20, 2012) (applying Eolas Tech., Inc. v. Adobe Sys., Inc., No. 6:09-CV-446, 2010 WL 3835762 (E.D. Tex. Sept. 28, 2010)), report and recommendation adopted, No. 4:11-CV-163, 2012 WL 461802 (E.D. Tex. Feb. 13, 2012); Ganas, LLC v. Sabre Holdings Corp., No. 2:10-CV-320-DF, 2011 WL 8183246, at *8 (E.D. Tex. Oct. 19, 2011).
22 In re EMC Corp., 677 F.3d 1351 (Fed. Cir. 2012). 23 See id. at 1357.
24 See, e.g., Phoenix Licensing, LLC v. Aetna, Inc., No. 2:11–CV–285–
JRG, 2012 WL 3472973, at *1–2 (E.D. Tex. Aug. 15, 2012); Oasis Research, LLC v. Carbonite, Inc., No. 4:10–CV–435, 2012 WL 3544881, at *6 (E.D. Tex. Aug. 15, 2012); Norman IP Holdings, LLC v. Lexmark Int’l, Inc., No. 6:11-CV-495, 6:12CV508, 2012 WL 3307942, at *3 (E.D. Tex. Aug. 10, 2012).
25 Norman IP Holdings, LLC, 2012 WL 3307942 (applying Rule 20 to
a pre-AIA lawsuit).
26 Id. at *2.
of the AIA’s joinder clause.28 In addition, the Federal Circuit briefly addressed “the same accused product or process” requirement under 35 U.S.C. § 299.29 This author knows of no cases since In re EMC in which the Federal Circuit has interpreted § 299. Consequently, the In re EMC decision has guided district courts in determining whether misjoinder exists under § 299.30
One government survey has shown an increase in the number of patent lawsuits in 2011.31 This phenomenon may reflect that § 299 will restrict permissive joinder, and so NPEs have changed their strategies to file separate lawsuits against multiple defendants. But, whether district courts will apply § 299 as intended by Congress is a separate question. This article intends to explore the applications of § 299 and to propose a “certain connection” approach to resolve the inconsistencies in applications of § 299 among some of the district courts. Part II discusses the In re EMC decision and its implications on the interpretation of § 299. Part III and Part IV discuss the applications of § 299 by
28 See George D. Medlock Jr. & David Frist, Joinder: Over a Year after
the America Invents Act, 5 LANDSLIDE 44, 44 (2013).
29 See In re EMC Corp., 677 F.3d at 1360 n.4. 30 See Shen, supra note 9, at 575–76.
31 See U.S.GOV’T ACCOUNTABILITY OFFICE,ASSESSING FACTORS
THAT AFFECT PATENT INFRINGEMENT LITIGATION COULD HELP
IMPROVE PATENT QUALITY 14–15 (2013),
http://www.gao.gov/assets/660/657103.pdf [ http://perma.cc/E6KN-TEW6]; see also Lighting Ballast Control LLC v. Philips Elecs. N. Am. Corp., 744 F.3d 1272, 1293 (Fed. Cir. 2014) (“This problem might increasingly exist in light of the AIA’s limits on the number of accused infringers that can be joined as defendants in one lawsuit, thereby creating the possibility of more lawsuits on the same patent, and more inconsistency, than existed in the past.”)..”)..”) cert.
granted, judgment vacated sub nom. Lighting Ballast Control LLC v.
Universal Lighting Techs, Inc., 135 S. Ct. 1173 (2015) abrogated by Teva Pharm. USA, Inc. v. Sandoz, Inc., 135 S. Ct. 831 (2015).
district courts. Part IV focuses on the approach of the Eastern District of Texas, while Part III discusses the approaches adopted by the majority of the district courts. Part IV demonstrates that the Eastern District of Texas is still willing to permit joinder of independent defendants. Part V focuses on the context of mobile device technologies to show various approaches of permissive joinder among district courts. Part VI describes the rules of the “certain connection” approach.
II. INTERPRETATION OF 35U.S.C.§299UNDER IN RE
EMC
A. In re EMC and Interpretation of Rule 20
The In re EMC decision helps to predict how the Federal Circuit may interpret § 299 because of the similarity between § 299(a) and Rule 20(a)(2). The language of § 299(a) specifically links the transaction-or-occurrence requirement of Rule 20(a)(2) to patent infringement under 35 U.S.C. § 271(a).32 In 2013, the Federal Circuit in In re
Nintendo Co.33 noted that “[t]he AIA’s joinder provision is
more stringent than Rule 20, and adds a requirement that the transaction or occurrence must relate to making, using, or selling of the same accused product or process.”34
32 See 35 U.S.C. § 271(a) (Supp. I 2013) (“Except as otherwise
provided in this title, whoever without authority makes, uses, offers to sell, or sells any patented invention, within the United States or imports into the United States any patented invention during the term of the patent therefor, infringes the patent.”); see also EDWARD D. MANZO,THE AMERICA INVENTS ACT:AGUIDE TO PATENT
LITIGATION AND PATENT PROCEDURE 183 (Thomson Reuters Nov. 2014 ed. 2013).
33 In re Nintendo Co., 544 F. App’x 934 (Fed. Cir. 2013). 34 Id. at 939.
Therefore, the interpretation of § 299(a) should include the requirements of Rule 20(a)(2).
The Federal Circuit in In re EMC primarily interpreted Rule 20(a)(2)(A) and shed light on several aspects of Rule 20.35 First, there are two requirements under Rule 20 for proper joinder: “(1) the claims against them must be asserted ‘with respect to or arising out of the same transaction, occurrence, or series of transactions or occurrences,’ and (2) there must be a ‘question of law or fact common to all defendants.’”36 Because of the phrase “series of transactions or occurrences” in Rule 20(a)(2)(A), the court recognized that “a single transaction is not required.”37
Second, there are two categories of possible situations where joinder is proper. In the first category, “defendants are alleged to be jointly liable.”38 In the second category, “any right to relief is asserted against [defendants] jointly, severally, or in the alternative.”39
Third, Rule 20 permits joinder of independent defendants “as long as their actions are part of the ‘same transaction, occurrence, or series of transactions or occurrences.’”40 The ultimate question is “under what circumstances is the joinder of independent actors permissible under Rule 20.”41
To resolve this question, the Federal Circuit started with what is not permissible. The Federal Circuit twisted the transaction-or-occurrence requirement and the requirement
35 See In re EMC Corp., 677 F.3d 1351, 1356–60 (Fed. Cir. 2012). 36 Id. at 1356. 37 Id. 38 Id. 39 Id. 40 Id. 41 In re EMC Corp., 677 F.3d at 1357.
of a common question of law or fact by stating, “Rule 20 makes clear that the existence of a single common question of law or fact alone is insufficient to satisfy the transaction-or-occurrence requirement.”42 The Federal Circuit further held that “the mere fact that infringement of the same claims of the same patent is alleged does not support joinder, even though the claims would raise common questions of claim construction and patent invalidity.”43 This statement completely overrules the minority view of joinder.44
Then, based on the case law from the Supreme Court and other circuit courts,45 the Federal Circuit concluded that joinder of independent defendants may be proper “when there is a logical relationship between the separate causes of action.”46 There are two aspects of the logical relationship test. First, “there is substantial evidentiary overlap in the facts giving rise to the cause of action against each defendant.”47 Second, “the defendants’ allegedly infringing acts, which give rise to the individual claims of infringement, must share an aggregate of operative facts.”48
To further apply the logical relationship test in the context of patent infringement, the Federal Circuit transformed the transaction-or-occurrence requirement into a two-part test for determining whether joinder of
42 Id. 43 Id.
44 See Dianne Brown Elderkin & Domingo Manuel LLagostera, Case
Management Issues in Patent Infringement Litigation, 13 SEDONA
CONF.J. 77, 86 (2012).
45 See In re EMC Corp., 677 F.3d at 1357–58. 46 Id. at 1358 (emphasis added).
47 Id. 48 Id.
independent defendants is appropriate under Rule 20 in patent litigation.
Under the two-part test, the first question is whether “the accused products or processes are the same in respects relevant to the patent.”49 This sameness test mandates a district court to find that “joinder [of independent defendants] is not appropriate where different products or processes are involved.”50 If the sameness test is passed, then the second question is whether “the facts underlying the claim of infringement asserted against each defendant share an aggregate of operative facts.”51 To satisfy the transaction-or-occurrence test, a patentee is required to show “shared, overlapping facts that give rise to each cause of action, and not just distinct, albeit coincidentally identical, facts.”52 Alternatively, a patentee must prove that “there is an actual link between the facts underlying each claim of infringement.”53
In applying the transaction-or-occurrence test, although not explaining why, the Federal Circuit required district courts to consider six factors (“EMC factors”): (1) “whether the alleged acts of infringement occurred during the same time period,” (2) “the existence of some relationship among the defendants,” (3) “the use of identically sourced components,” (4) “licensing or technology agreements between the defendants,” (5) “overlap of the products’ or processes’ development and manufacture,” and (6) “whether the case involves a claim for
49 Id. at 1359.
50 Id. (emphasis added). 51 Id.
52 Id. (emphasis added). 53 Id. (emphasis added).
lost profits.”54 However, no single factor is dispositive. The transaction-or-occurrence test is a flexible test because “the district court enjoys considerable discretion in weighing the relevant factors.”55
B. 35 U.S.C. § 299 and In re EMC
While not directly providing clear guidance on the interplay between Rule 20 and § 299, the Federal Circuit imposed a limitation on the applicability of the In re EMC decision to the interpretation of § 299. In footnote 4 of the In re EMC decision, the Federal Circuit cautioned that the decision does “not decide today whether the new joinder provision at 35 U.S.C. § 299 changes the test for joinder of defendants in patent infringement actions.”56 Therefore, the Federal Circuit declared that it is not bound by the In re EMC decision when interpreting § 299.57
In footnote 4, the Federal Circuit also mentioned that “[t]he new statute only allows joinder of independent defendants whose acts of infringement involve ‘the same accused product or process.’”58 The question left was what “same” means. Although the Federal Circuit in In re EMC established a two-part test which first asks whether “the accused products or processes are the same in respects relevant to the patent,”59 the Federal Circuit refused to “decide whether the sameness test in the new legislation is identical to the sameness test [it previously adopted] for
54 Id. at 1359–60. 55 Id. at 1360. 56 Id. at 1360 n.4.
57 See id. (“[O]ur approach to the new provision is not dictated by this
case.”).
58 Id. (quoting 35 U.S.C. § 299(a)(1)). 59 Id. at 1359.
cases not covered by the new legislation.”60 Thus, the question remains.
Not only is the sameness test unpredictable as interpreted under § 299, but it is also ambiguous as interpreted in the In re EMC decision. Every product is to some extent different from another product even though they are under the same product name. For example, Apple’s smartphones and Samsung’s smartphones may be called the same product name “smartphone,” but they are considered different with respect to their operating systems.61 The standard of “same in respects relevant to the patent” does not help because the In re EMC decision does not clarify what “in respects relevant to the patent” means. However, there may be some clue in what does not qualify as the same under the In re EMC decision.
Under the In re EMC sameness test, accused products or processes infringing the same patent claims may not be the same because the In re EMC decision has rejected the “not dramatically different” standard adopted by the Eastern District of Texas.62 Under the “not dramatically different” standard, accused products or processes are the same if “some similarity in the allegedly infringing products or processes” exists.63 “Similarity” can be established simply because accused products or processes are alleged to infringe the same patent claims.64 For instance, as the
60 Id. at 1360 n.4.
61 See Jeremy Andrus et al.,Cider: Native Execution of iOS Apps on
Android 367-68, ASPLOS (2014),
http://www.cs.columbia.edu/~nieh/pubs/asplos2014_cider.pdf [http://perma.cc/P8VQ-8RBK ].
62 See id. at 1359. 63 Id.
64 See id.In re EMC Corp., 677 F.3d at 1359 (citing Oasis Research,
Federal Circuit in In re EMC noticed,65 the court in Oasis
Research, LLC v. Adrive, LLC66found that joinder is
appropriate because “each Defendant offers an online backup/storage service to its customers that allegedly infringe Plaintiff’s patents.”67 Although Oasis Research, LLC is a pre-AIA case applying Rule 20, the Federal Circuit’s refusal to apply the Oasis Research holding indicates that accused products or processes alleged to merely infringe the same patent claims are unlikely to be found the same under § 299. Furthermore, § 299(b) provides, “[f]or purposes of this subsection, 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.”68 Therefore, the sameness test under § 299 may require more than merely infringing the same patent claims.
Because of the nature of patent infringement, accused products or processes alleged to infringe the same patent claims alone do not mean that they are the same products or processes. Under 35 U.S.C. § 271(a), a patent may be infringed literally69 or under the doctrine of
(E.D. Tex. May 23, 2011) (“[S]imilarity which [sic] would exist simply because the same patent claims are alleged to be infringed.”).
65 See id. (quoting Oasis Research, LLC, 2011 WL 3099885, at *2). 66 Oasis Research, LLC, 2011 WL 3099885, at *1.
67 Id. at *2. But, such finding actually relates to the “transaction or
occurrence” requirement. See id. (“The similarity of Defendants’ products is sufficient to satisfy the same transaction or occurrence prong.”).
68 35 U.S.C. § 299(b) (Supp. I 2013) (emphasis added).
69 See DeMarini Sports, Inc. v. Worth, Inc., 239 F.3d 1314, 1331 (Fed.
Cir. 2001) (“Literal infringement of a claim occurs when every limitation recited in the claim appears in the accused device, i.e., when ‘the properly construed claim reads on the accused device exactly.’”).
equivalents (“DOE”).70 On one hand, claim language can be broad enough to cover different products or processes. For example, if a claim uses “metal,” the term can cover copper, silver, and gold. But, products of different metals may be different in some aspect. For example, a semiconductor chip using aluminum as metal lines is different from that using copper because the latter offers better energy efficiency.71 On the other hand, when DOE is applied, at least one element of the claim cannot read on the accused product or process.72 To establish DOE, the accused product or process must have an equivalent, which is insubstantially different from the missing element.73 “Equivalency” can also be found if the asserted equivalent plays substantially the same function in substantially the same way to reach substantially the same result as the missing element does.74 The application of DOE indicates that each accused product or process is
70 See B. Thomas Watson, Carbons into Bytes: Patented Chemical
Compound Protection in the Virtual World, 12 DUKE L.&TECH.REV. 25, 29–30 (2014).
71 See Annabelle Pratt, Overview of the Use of Copper Interconnects in
the Semiconductor Industry 1–2 (Advanced Energy Industries, Inc.
2004),
http://www.advanced- energy.com/upload/File/White_Papers/SL-ELECTROPLATING-270-01.pdf [http://perma.cc/9KG4-A4FL].
72 See Epos Techs. Ltd. v. Pegasus Techs. Ltd., 766 F.3d 1338, 1348
(Fed. Cir. 2014).
73 See id. (“When addressing the doctrine of equivalents, a court must
ask whether an asserted equivalent is an ‘insubstantial difference’ from the claimed element, or whether it matches the ‘function, way, and result of the claimed element.’”).
74 See EMD Millipore Corp. v. AllPure Techs., Inc., 768 F.3d 1196,
1202 (Fed. Cir. 2014) (“Even without literal infringement of a certain claim limitation, a patentee may establish infringement under the doctrine of equivalents if an element of the accused device ‘performs substantially the same function in substantially the same way to obtain the same result as the claim limitation.’”).
literally different from the patented invention on at least one element. It is possible that accused products or processes have different equivalents with respect to the same missing element or different missing elements. Therefore, accused products or processes may be considered different because they have different equivalents.
The transaction-or-occurrence requirement under § 299 may be determined in view of the same accused product or process. The question is how this requirement interacts with the In re EMC decision and Rule 20. District courts have recognized 35 U.S.C. § 299 as governing law for misjoinder. Most of district courts have applied § 299 in light of the In re EMC decision. For example, the Southern District of Mississippi in MGT Gaming, Inc. v. WMS
Gaming, Inc.75 has even recognized that 35 U.S.C. § 299
preserves the transaction-or-occurrence requirement under Rule 20.76 While the Federal Circuit in In re EMC has identified the phrase “the same accused product or process” in § 299 as a separate requirement and has referred to it as the sameness test, the sameness test is not a significant requirement because most district courts have adopted the transaction-or-occurrence test.77 One exception is Summit 6
75 MGT Gaming, Inc. v. WMS Gaming, Inc., 978 F. Supp. 2d 647 (S.D.
Miss. 2013).
76 See id. at 661 (“Section 299 of the AIA has preserved the
requirement in Rule 20 that the claims against the parties must arise out of the ‘same transaction or occurrence.’”).
77 See, e.g., IpVenture, Inc. v. Acer, Inc., 879 F. Supp. 2d 426, 430 (D.
Del. 2012) (“The fact that computers generally have the same components and the same functionalities does not mean that they are ‘the same in respects relevant to the patent.’”); Mednovus, Inc. v. QinetiQ Grp. PLC, No. 2:12-CV-03487-ODW, 2012 WL 4513539, at *2–3 (C.D. Cal. Oct. 1, 2012) (“Plaintiffs’ allegations that each Defendant infringed on a different set of products fails § 299(a)(1)’s requirement.”).
LLC v. HTC Corp.,78 where the Northern District of Texas found misjoinder simply because iOS-based mobile phones are not the same products as Android-based mobile phones.79
III. APPROACHES OF THE MAJORITY OF DISTRICT
COURTS
The transaction-or-occurrence test developed by the majority of district courts is often applied in two scenarios: competitor and upstream-downstream.80 The competitor
78 Summit 6 LLC v. HTC Corp., No. 7:14-CV-0014-O, 2014 WL
4449821 (N.D. Tex. Sept. 10, 2014).
79 See id. at *16.
80 See, e.g., See, e.g., See, e.g., Broadband iTV, Inc. v. Hawaiian
Telcom, Inc., No. CIV. 14-00169 ACK, 2014 WL 5580967, at *5–8 (D. Haw. Oct. 30, 2014); Pipeline Techs. Inc. v. Telog Instruments Inc., No. CV-13-02104-PHX-SPL, 2014 WL 5241719, at *1–3 (D. Ariz. Oct. 15, 2014); NFC Tech., LLC v. HTC Am., No. 2:13-CV-01058-JRG, 2014 WL 3834959, at *1–2 (E.D. Tex. Aug. 1, 2014); Star CoLED Techs., LLC v. Sharp Corp., No. 2:13-CV-416-JRG, 2014 WL 1998051, at *1–3 (E.D. Tex. May 15, 2014); Richmond v. Lumisol Elec. Ltd., Civ. Action No. 13-1944 (MLC), 13-1949(MLC), 1950(MLC), 1951(MLC), 1952(MLC), 1953(MLC), 1954(MLC), 1957(MLC), 1958(MLC), 1959(MLC), 13-1960(MLC), 13-2916(MLC), 2014 WL 1716447, at *1–6 (D.N.J. Apr. 30, 2014) (reversing Richmond v. Lumisol Elec., Ltd., Civ. Action No. 13-1944(MLC), 13-1951(MLC), 13-1953(MLC), 13-1954(MLC), 13-1959(MLC), 2014 WL 457661 (D.N.J. Feb. 4, 2014)); MGT
Gaming, Inc., 978 F. Supp. 2d at 657–63; Digitech Image Techs., LLC
v. Agfaphoto Holding GmbH, No. 8:12-CV-1153-ODW, 2012 WL 4513805, at *1–4 (C.D. Cal. Oct. 1, 2012); Mednovus, Inc. v. QinetiQ Grp. PLC, No. 2:12-CV-03487-ODW, 2012 WL 4513539, at *1–3 (C.D. Cal. Oct. 1, 2012); Golden Bridge Tech., Inc. v. Apple, Inc., No. 2:12-CV-4014-ODW, 2012 WL 3999854, at *1–3 (C.D. Cal. Sept. 11, 2012); Net Nav. Sys., LLC v. Cisco Sys., Inc., No. 4:11-CV-660, 2012 WL 7827543, at *2Aug. –3 (E.D. Tex. Aug. 22, 2012) report
and recommendation adopted, No. 4:11-CV-660, 2013 WL 1309837
scenario arises when independent defendants are competitors of each other. The upstream-downstream scenario arises when independent defendants are upstream manufacturers and downstream clients (e.g., users, retailers, resellers, distributors) with respect to each other.
A. Competitor Scenario
“Direct competitors” are unlikely to be jointly sued as defendants81 primarily because it is unlikely to find “the facts underlying the claim of infringement asserted against each [of the] defendant[s to] share an aggregate of operative facts.”82 Nevertheless, if competitors are sued as defendants, as in the competitor scenario, district courts have found misjoinder. In these misjoinder decisions, the competitor
1:10-CV-23580-RNS, 1:12-CV-20271-RNS, 2012 WL 3113932, at *4 (S.D. Fla. Jul 31, 2012); IpVenture, Inc., 879 F. Supp. 2d at 429–30; Omega Patents, LLC v. Skypatrol, LLC, No. 1:11-CV-24201-KMM, 2012 WL 2339320, at *1–2 (S.D. Fla. June 19, 2012).
81IpVenture, Inc., 879 F. Supp. 2d at 430 (“They are all direct
competitors, which also significantly counsels against their joinder in the same case.”); Motorola Mobility, Inc., 2012 WL 3113932, at *4 (“Moreover, HTC and Motorola are competitors, not collaborators, in the smartphone market.”) See, e.g., Broadband iTV, Inc., 2014 WL 5580967, at *7 (“Additionally, since TWC and HTI are competitors in the cable TV market, joinder may be inappropriate in this case given that ‘sensitive and confidential information’ is ‘likely [to] be revealed in discovery in this matter.’”); MGT Gaming, Inc., 978 F. Supp. 2d at 660 (“As direct competitors with different casino clients, WMS and Aruze’s products never involve the same stream of commerce.”);
Golden Bridge Tech., Inc., 2012 WL 3999854, at *3 (“Defendants are
unrelated competitors that design, manufacture, and sell smartphones and other data communication devices.”); Motorola Mobility, Inc., 2012 WL 3113932, at *4 (“Moreover, HTC and Motorola are competitors, not collaborators, in the smartphone market.”);
IpVenture, Inc., 879 F. Supp. 2d at 430 (“They are all direct
competitors, which also significantly counsels against their joinder in the same case.”).
relationship between the defendants is the key factual concern.
A plaintiff must assert some link among different claims against different competitor defendants for a joinder of claims. A common approach is to assert some facts supporting the third EMC factor (the use of identically sourced components) or the fourth EMC factor (licensing or technology agreements between the defendants). However, these misjoinder cases demonstrate that these two EMC factors are weak factors.
In three 2012 cases, each of the plaintiffs tried to assert some similarity among the defendants’ products. In
IpVenture, Inc. v. Acer, Inc.,83 the plaintiff based joinder on
the allegation that different accused products use the same components and comply with the same industry standard.84 Nevertheless, the District of Delaware held that this allegation alone is not enough to support joinder of claims.85 The plaintiff failed to allege any “connection between the industrial standard and alleged infringement.”86 The court also considered that the defendants are all direct competitors, and recognized it as a factor that “significantly counsels against their joinder in the same case.”87 Thus, the court held that the infringement claims against the defendants’ products do not share an aggregate of operative facts.88
83 IpVenture, Inc., 879 F. Supp. 2d 426. 84 See id. at 430.
85 See id. 86 Id. 87 Id.
88 See id. (noting that the IpVenture plaintiff’s approach focuses on the
third EMC factor: “the use of identically sourced components,” but, the District of Delaware did not discuss the third EMC factor in the reasoning).
In Motorola Mobility, Inc. v. Apple Inc.,89 the plaintiff asserted that the defendants hold a membership of the Open Handset Alliance (“OHA”) that is a form of joint development of the Android software.90 The Southern District of Florida followed a pre-AIA decision of the Northern District of Illinois,91 which held, “[s]imply being a member of an industry organization does not indicate that Defendants have jointly designed, developed, manufactured, marketed, or sold their Accused Products.”92 Because the OHA was found to be merely an organization promoting products and services based on the Android system,93 the Southern District of Florida held that the connection based on the OHA is “too tenuous.”94 The court found that the defendants are “competitors, not collaborators, in the smartphone market.”95 Ultimately, the court held that the plaintiff does not satisfy the AIA joinder clause by merely alleging the defendants are members of an industry association promoting products and services that “use the Android platform” infringing the same patent.96
89 Motorola Mobility, Inc. v. Apple Inc., No. 1:12-CV-20271-RNS,
1:10-CV-23580-RNS, 2012 WL 3113932 (S.D. Fla. Jul 31, 2012)..
90 See id. at *4.
91 Body Sci. LLC v. Boston Sci. Corp., 846 F. Supp. 2d 980 (N.D. Ill.
2012) (applying Rule 20 to the pre-AIA lawsuit).
92 Id. at 989; see also Motorola Mobility, Inc., 2012 WL 3113932, at
*4.
93 See Motorola Mobility, Inc., 2012 WL 3113932, at *4. 94 See id.
95 See id. 96 See id.
In Golden Bridge Tech., Inc. v. Apple, Inc.,97 the plaintiff argued that the defendants’ products use one of two baseband processors designed and manufactured by two different third-party suppliers.98 Nevertheless, the Central District of California found misjoinder because the defendants did not “have any relationship relating to the accused products or infringement of the [patent-in-suit].”99 The court based its decision on several facts. First, the defendants were “unrelated competitors.”100 Second, no evidence showed that the accused products are identical or that the defendants “collaborated in any manner to infringe the [patent-in-suit].”101 Third, Infringement of the patent-in-suit required other components to work with the alleged baseband processor.102 Fourth, the plaintiff was a non-practicing entity, which cannot theoretically claim lost profits.103
After Golden Bridge Tech., Inc., the Central District of California disregarded whether competition existed between defendants. In 2012, the Central District of California in Mednovus, Inc. v. QinetiQ Group PLC104 found misjoinder of different distributors of the same
97 Golden Bridge Tech., Inc. v. Apple, Inc., No. 2:12-CV-4014-ODW,
2012 WL 3999854 (C.D. Cal. Sept. 11, 2012). 98 See id. at *1. 99 Id. at *3. 100 See id. 101 See id. 102 See id.
103 See Golden Bridge Tech., Inc., 2012 WL 3999854, at *3. This
consideration echoes the sixth EMC factor “whether the case involves a claim for lost profits.”
104 Mednovus, Inc. v. QinetiQ Grp. PLC, No. 2:12-CV-03487-ODW,
manufacturer.105 The court’s analysis began by assuming that the accused products are the same.106 While admitting that “the only related transactions between these entities are those transactions within the commerce stream,”107 the court nevertheless held that “these transactions within the commerce stream do not constitute the same transaction or series of transactions.”108 Without asking whether those distributors are competitors, the court concluded that a transaction between the manufacturer and one distributor is different from a transaction between the same manufacturer and the other distributor.109
In 2013, the Southern District of Mississippi in MGT
Gaming, Inc. v. WMS Gaming, Inc.110 found misjoinder of
different gaming machine manufacturers, misjoinder of one manufacturer’s different casino clients, and proper joinder of each manufacturer and its casino clients.111 The court dealt with the competitor scenario and the upstream-downstream scenario concurrently.112 Regarding the manufacturer defendants, although the plaintiff did not assert that the
105 See id. at *2–3.
106 See id. at *2 (“Even assuming that each Defendant was infringing on
the same products”).
107 Id. 108 Id.
109 See id. (“For instance, when Metrasens sells ETS-Lindgren a
Ferroguard Ferromagnetic Detection System, that is one transaction. When Metrasens sells Invivo a Ferroguard Entry Control System, that is a second transaction. These two sales have nothing to do with each other-other than involve different products in the Ferroguard line.”).
110 MGT Gaming, Inc. v. WMS Gaming, Inc., 978 F. Supp. 2d 647
(S.D. Miss. 2013).
111 See id. at 651. 112 See id. at 659
defendants relate to the same products,113 the court did not end its analysis. The court held that the plaintiff did not pass the transaction-or-occurrence test.114 The court considered the manufacturer defendants as “direct competitors with different casino clients.”115 The court considered that one manufacturer of gaming machines had no relationship with a transaction involving a second manufacturer, who made and licensed its gaming machines to its client.116 Therefore, the court held that both manufacturers’ products do not “involve the same stream of commerce.”117 Regarding the casino defendants, the court found misjoinder because they have “no relationship to each other beyond the allegation that they have infringed the same patent.”118 The court also recognized the casino defendants as direct competitors and further commented that a “[d]irect competitor may not be joined in the same action because their acts do not arise out of the same transaction or occurrence and they do not share an ‘aggregate of operative facts.’”119
In 2014, the District of New Jersey finally provided an operative standard for determining whether joinder of competitors is proper. In Richmond v. Lumisol Elec. Ltd.,120
113 See id. (“MGT’s claims against WMS and Aruze do not relate to the
same accused products.”).
114 See id. at 660.
115 Id. MGT Gaming, Inc., 978 F. Supp. 2d at 660. 116 Id.
117 Id. 118 Id. at 662.
119 Id. Id. (quoting IpVenture, 879 F. Supp. 2d at 430).
120 Richmond v. Lumisol Elec. Ltd., Civ. Action No. 13-1944(MLC),
1949(MLC), 1950(MLC), 1951(MLC), 1952(MLC), 1953(MLC), 1954(MLC), 1957(MLC), 1958(MLC), 13-1959(MLC), 13-1960(MLC), 13-2916(MLC), 2014 WL 1716447 (D.N.J. Apr. 30, 2014).
the court followed the prevailing view of other district courts121 and held that “direct competitors may not be joined in a patent infringement action pursuant to § 299, absent allegations of concerted action.”122 Alternatively, the court held that “competitors, absent a conspiracy, are not part of the same transaction.”123 The court further discussed a manufacturer-importer-retailer scenario and concluded that joinder of different importers is inappropriate, even though the same manufacturer sells the same products to the same retailer through those different importers.124 Finally, by applying this conspiracy-or-concert test, the court found misjoinder because the competitor defendants were “not alleged to have acted in concert.”125
The approach of the District of New Jersey was adopted later in the same year by the District of Hawaii in
Broadband iTV, Inc. v. Hawaiian Telcom, Inc.126 In
Broadband iTV, Inc., two cable television operators were
121 See id. at *5 (citing MGT Gaming, Inc., 978 F. Supp. 2d at 658–59,
663; Digitech Image Techs., LLC, 2012 WL 4513805, at *3; Omega
Patents, LLC, 2012 WL 2339320, at *2).
122 Id. 123 Id.
124 See id. (“For example, where the same manufacturer sells the same
accused product to two importers who then sell to the same retailer, there are multiple streams of commerce and multiple transactions: (1) manufacturer A to importer A to retailer A; and (2) manufacturer A to importer B to retailer A. The two importers—who are competitors— are not part of the ‘same transaction,’ as demonstrated by this example.”).
125 Id. at *6.
126 Broadband iTV, Inc. v. Hawaiian Telcom, Inc., No. CIV.
14-00169(ACK), 2014 WL 5580967 (D. Haw. Oct. 30, 2014). The District of Hawai’i quoted some propositions of the conspiracy-or-concert test made by the Richmond court before analyzing the joinder issue. See id. at *5–6.
sued jointly.127 While the plaintiff asserted that both operators used the same method and system to operate their television services,128 the District of Hawaii did not mention the sameness test but rather focused on the competition relationship between these two defendants.129 Because of no allegation that the defendants “have acted in concert or conspired together,”130 the court concluded that the infringement by these two defendants does not arise out of the same transaction or occurrence.131
B. Upstream-and-Downstream Scenario
In the upstream-and-downstream scenario, some district courts may find proper joinder, while some district courts may not. The ultimate question is whether an upstream defendant and downstream defendant have some relationship beyond mere sale of the accused products.
The Southern District of Florida in Omega Patents,
LLC v. Skypatrol, LLC132 found proper joinder of a
manufacturer and its client because their infringing acts arose from the same series of transactions-or-occurrences.133 The manufacturer sold the client accused products, which then were reconfigured and modified by the client and
127 See id. at *1.
128 See id. (“Plaintiff also alleges that Defendants ‘utilize the same
systems and methods in connection with their use and implementation of the accused systems and they have been, and are, utilizing the same methods and series of transactions in connection [with] their
customers’ downloads of VOD content.’”) (citing Compl. ¶¶ 23–24)).
129 See id. at *6. 130 Id.
131 Id.
132 Omega Patents, LLC v. Skypatrol, LLC, No.
1:11-CV-24201-KMM, 2012 WL 2339320 (S.D. Fla. June 19, 2012).
relabeled as the client’s products.134 The client was assisted with the information and documentation provided by the manufacturer.135 Therefore, the court concluded that “[i]nherent in this relationship are common questions of fact, such as the nature of the guidance and modifications [the client] provides its users relative to the asserted claims against [the manufacturer], and the design and functionality of the product [the manufacturer] provides to [the client].”136
In MGT Gaming, Inc., the Southern District of Mississippi treated joinder of a manufacturer and its casino client differently from joinder of different manufacturers.137 The court found that one manufacturer made gaming machines and provided the machines to its casino client under an ongoing agreement of revenue sharing and machine maintenance.138 The manufacturer’s offers for sale and sales of the machines to the casino client constituted a series of transactions, and the use of the machines by the casino client under the ongoing agreement constituted a series of related transactions.139 In addition, the court specified some facts in relation to several of the EMC factors.140 First, the infringing acts done by the manufacturer and casino client occurred during the same period and resulted from the mutual agreement.141 Second, the manufacturer and casino client
134 Id. 135 Id. 136 Id.
137 MGT Gaming, Inc., 978 F. Supp. 2d at 659. 138 Id. at 660–61.
139 Id. at 660.
140 Id. at 661 (“In addition, the Aruze Defendants share various factual
considerations outlined in In re EMC”).
141 Id. (“[T]he alleged acts of infringement took place during the same
time period throughout the Aruze Defendants’ relationship.”). This fact relates to the first EMC factor: “whether the alleged acts of
maintained a manufacturer-user or joint-user relationship, when the manufacturer provided a maintenance service to the casino client.142 Last, the revenue sharing agreement was part of a licensing agreement between the manufacturer and casino client.143 These facts support joinder in relation to the first, second and fourth EMC factors respectively, but the court also discussed the third, fifth, and sixth EMC factors in footnote 11 to disfavor the plaintiff’s position.144 Ultimately, the court held that the transaction–or–occurrence test was satisfied.145
The Central District of California has taken a strict view of an upstream-and-downstream relationship. In
infringement occurred during the same time period.” In re EMC
Corp., 677 F.3d at 1359.
142 Id. (“Aruze and Penn allegedly have maintained a relationship as
manufacturer and user, or joint users, and Aruze has supported the upkeep of the relevant machines.”). This fact relates to the second
EMC factor: “the existence of some relationship among the
defendants.” In re EMC Corp., 677 F.3d at 1359.
143 MGT Gaming, Inc., 978 F. Supp. 2d at. at 661–62 (“[T]he alleged
revenue sharing agreement that resulted between Aruze and Penn amounts to a licensing agreement.”). This fact relates to the fourth
EMC factor: “licensing or technology agreements between the
defendants.” In re EMC Corp., 677 F.3d at 1359–60.
144 Id. at 662 n.11 (“As for the other factors, MGT has not directly
alleged that the defendants use ‘identically sourced components’ . . . The ‘overlap of the products’ or processes’ development and
manufacture’ does not apply here because Penn had no involvement in the accused machines’ development or manufacture. The case is also unlikely to involve a claim for lost profits given that MGT is a non-practicing entity.”). .”) (quoting Novartis Vaccines & Diagnostics, Inc. V. MedImmune, LLC, No. CIV. 11-084-SLR, 2012 WL 3150524, at *2 (D. Del. Aug. 2, 2012) (quoting Rite-Hite Corp. V. Kelley Co., 56 F.3d 1538, 1548 (Fed. Cir. 1995))).
Digitech Image Techs., LLC v. Agfaphoto Holding GmbH,146 the plaintiff sued forty-five defendants who can be divided into manufacturers and of retailers.147 The infringing products were digital cameras.148 One manufacturer defendant moved for severance from retailer defendants as well as other manufacturer defendants, and the court agreed.149 While the court did not separate the reasoning for retailers from the reasoning for manufacturers, it did consider the alleged transactions as different transactions.150 With respect to the manufacturer-retailer scenario, the court observed that “the only instances involving the ‘same accused product’ are the transactions for an individual camera (or camera model) within the commerce stream.”151 But, the court held that “these transactions within the commerce stream do not constitute the same transaction or series of transactions.”152 Considering that the patent liability of a manufacturer is different from that of a retailer,153 the court found that a sale from the manufacturer
146 Digitech Image Technologies, LLC v. Agfaphoto Holding GmbH,
No. 8:12-CV-1153-ODW, 2012 WL 4513805 (C.D. Cal. Oct. 1, 2012). 147 Id. at *1. 148 See id. 149 Id. at *1, *5. 150 See id. at *3. 151 Id. 152 Id. at *3.
153 See id. at *4 (“[The retailer’s] patent liability arises from its sale (or
offer for sale) of the [manufacturer’s] camera to an end-user. This is entirely different from [the manufacturer’s] liability, which arises from its sale (or offer for sale) of its camera to [the retailer] (and others).”). See Mednovus, Inc., 2012 WL 4513539, at *3 (“Taking this analysis further, when Invivo or ETS-Lindgren sells an infringing Ferroguard product from Metrasens (and by extension, QinetiQ) to an end-user (presumably an institution), this is a third transaction.
to one retailer is a different transaction from a sale from such retailer to an end user.154 Therefore, the defendants did not share an aggregate of operative facts.155 The joinder of the manufacturer and its retailers was improper.156
While the Central District of California does not consider merely selling accused products from a manufacturer to a retailer as a basis for proper joinder of the manufacturer and retailer, the District of Arizona has disapproved joinder based on a retail contract without actual sales. In Pipeline Techs. Inc. v. Telog Instruments Inc.,157 the plaintiff based joinder on an agreement between the manufacturer defendant and retailer defendant under which the retailer defendant is required to “‘solicit orders for and promote the sale of’ the alleged infringing devices offered by [the manufacturer defendant].”158 The court held that such allegation is not enough.159
Although adopting a proposition that “one manufacturer defendant (the upstream defendant) and one retailer defendant (the downstream defendant)—can be properly joined pursuant to § 299 where the upstream defendant provides the product to the downstream defendant,”160 the District of Arizona distinguished the
Specifically, Invivo’s and ETSLindgren’s patent liability arises from its sale (or offer for sale) of the Ferroguard products to an end-user. This is entirely different from Metrasens’s liability, which arises from its sale (or offer for sale) of its Ferroguard product to Invivo.”).
154 Id. at *4. 155 Id. 156 Id. at *5.
157 Pipeline Techs. Inc., 2014 WL 5241719. 158 Id. at *2 (internal quotation marks omitted). 159 Id.
present case from the proposition because the manufacturer here did not provide accused products to the retailer.161 In addition, the court considered the solicitation and promotion of the accused products by the retailer as a different transaction from the manufacturing and selling of the accused products by the manufacturer.162 The court even held that the manufacturer’s “sales constitute separate transactions, whether completed with or without the assistance of a sales solicitor or promoter.”163 Furthermore, the court found that the retailer’s affiliated sales are a fraction of the manufacturer’s total sales of the accused products.164 Therefore, the court held that the plaintiff failed to meet the transaction-or-occurrence test.165
IV. APPROACH OF THE EASTERN DISTRICT OF TEXAS Without clear guidance from the Federal Circuit, district courts are developing the case law for applying § 299. While the legislative history and the In re EMC Corp. decision both consider the Eastern District of Texas as a minority view,166 the Eastern District of Texas continues to permit joinder of independent defendants. Thus, this article treats the Eastern District of Texas differently from other district courts.
161 Id. 162 Id.
163 Id. Pipeline Techs. Inc., 2014 WL 5241719, at *2. 164 Id.
165 See id.
166 See, e.g., In re EMC Corp., 677 F.3d at 1359 (implying that the
Eastern District of Texas’ practice is a minority view); H.R. REP.NO. 112–98, pt.1, at 55 n.61 (2011).
A. Addition to the Third EMC Factor
The Eastern District of Texas is still more likely to permit joinder. The court has outweighed the third EMC factor: “the use of identically sourced components.”167 This trend started in Imperium (IP) Holdings, Inc. v. Apple Inc.,168 a 2012 decision issued after the enactment of the AIA and before In re EMC.169 There, the joinder issue was governed by Rule 20 only.170 However, the court commented that the joinder of different cell phone manufacturer defendants is proper even under § 299.171 In footnote 3, the court found that the transaction-or-occurrence test under § 299 is met because the defendants “are not merely accused of making or selling similar products that infringe the same patents,”172 but rather “make similar products that use the same technology and in many instances the same image sensor or processor.”173
The Imperium court focused on “the use of an identical image sensor or processor in different [accused] products.”174 This approach asks whether “the technology
167 See In re EMC Corp., 677 F.3d at 1359.
168 Imperium (IP) Holdings, Inc., 2012 WL 461775.
169 See generally Leahy-Smith America Invents Act, Pub. L. No.
112-29, 125 Stat. 332 (2011) (codified as amended 35 U.S.C. § 299 (2013)) (creating statutory requirements for joinder in patent
infringement suits); In re EMC Corp., 677 F.3d 1351 (Fed. Cir. 2012) (creating judicial guidelines for determining when joinder is
appropriate under § 299).
170 See Imperium (IP) Holdings, Inc., 2012 WL 461775, at *3 n.2. 171 Id. at *3 n.3.
172 Id. 173 Id. 174 Id.
at issue is the same.”175 If so, then the transaction-or-occurrence test is satisfied.176 Under Imperium, the use of an identical component in different accused products is sufficient to show that the technology at issue is the same.177
After Imperium, the Eastern District of Texas in
Motorola Mobility, Inc. v. Tivo, Inc.178 first applied the AIA
joinder clause to an upstream-and-downstream scenario.179 There, the counterclaim plaintiff sued a television signal transmitter equipment manufacturer and cable TV provider jointly.180 The manufacturer’s equipment was accused of infringing the patent, while the cable TV provider was accused of distributing such equipment.181 When applying § 299, the court did not explain whether the new law changed its Rule 20 practice.182 Rather, the court permitted joinder simply because the counterclaim plaintiff alleged that both manufacturer and cable TV provider “infringe its patents based on [their] conduct relating to [the equipment].”183 The Motorola court’s approach is similar to the Imperium court because they focus on whether the technology or product at issue is the same.
After the Federal Circuit in In re EMC limited the scope of joinder under Rule 20, the Eastern District of Texas started to heighten the standard of joinder. In Norman IP
175 Id. 176 See id. 177 See id.
178 Motorola Mobility, Inc. v. Tivo, Inc., No. 5:11-CV-53-JRG, 2012
WL 2935450 (E.D. Tex. July 18, 2012).
179 Id. at *2. 180 Id. at *1. 181 Id.
182 See id. at *1–2. 183 Id. at *2.
Holdings, LLC v. Lexmark Int’l, Inc.,184 the court held that “the accused products or processes of the defendants are similar is not enough” to support joinder.185 The court rejected the plaintiff’s “allegations regarding the common use” of the designs of a particular component as a basis of joinder.186 But, the court actually did not reject the Imperium court’s approach.187 Rather, the court only criticized that the complaint did not explain what “defining characteristic” such particular component possesses in each accused product with respect to each defendant’s infringement.188 Thus, the Norman court indeed modified the Imperium court’s approach to require something more than a list of “non-limiting examples of infringing system components.”189 Under Norman, a plaintiff has to “establish that the allegations of infringement against each defendant relate to a common transaction or occurrence for joinder purposes [under Rule 20].”190
Five days after Norman, on August 15, 2012, the Eastern District of Texas issued a decision in Oasis Research LLC v. Carbonite, Inc. to respond to the Federal Circuit’s In
re EMC decision.191 In Oasis Research the court applied the
184 Norman IP Holdings, LLC v. Lexmark Int’l, Inc., No. 6:11-CV-495,
6:12-CV-508, 2012 WL 3307942 (E.D. Tex. Aug. 10, 2012).
185 Id. at *2 (citing In re EMC Corp., 677 F.3d 1351, 1359 (Fed. Cir.
2012)).
186 Id. at *3. 187 See id.
188 See id. (“The complaint did not mention ARM processors as
defining characteristic regarding each defendant’s alleged infringement.”).
189 Id.
190 Id. Norman IP Holdings, LLC, 2012 WL 3307942 at *3. 191 Oasis Research, LLC v. Carbonite, Inc., No. 4:10-CV-435, 2012
EMC factors192 and severed all defendants because of a “lack of a logical relationship between the claims against each [d]efendant.”193 With respect to two particular defendants, the court found no allegation showing that they “use similarly sourced products, worked in concert, or had any relationship at all.”194 Although the court did not explain whether such finding relates to the EMC factors, the court looked into something other than the technology.195
In the same month, the Eastern District of Texas issued two decisions regarding misjoinder in the context of an upstream-and-downstream scenario.196 In Net Nav. Sys.,
LLC v. Cisco Sys., Inc.,197 the court applied § 299 and the
EMC factors.198 While the plaintiff asserted that the
manufacturer defendant and client defendant “are working together in a ‘strategic alliance,’”199 the court found that “the nature of the relationship” is unknown.200 The court also found that the plaintiff did not identify an appropriate entity of the client defendant or its subsidiaries.201 Moreover, no
192 Id. at *4. 193 See iId. at *6. 194 Id. at *5. 195 Id. at *6.
196 See Net Nav. Sys., LLC v. Cisco Sys., Inc., No. 4:11-CV-660, 2012
WL 7827543 (E.D. Tex. Aug. 22, 2012) adopted by Net Nav. Sys., LLC v. Cisco Sys., Inc., No. 4:11-CV-660, 2012 WL 1309837 (E.D. Tex. Mar. 27, 2013); Phoenix Licensing, LLC v. Aetna, Inc., No. 2:11-CV-285-JRG, 2012 WL 3472973 (E.D. Tex. Aug. 15, 2012).
197 Net Nav. Sys., LLC v. Cisco Sys., Inc., No. 4:11-CV-660, 2012 WL
7827543 (E.D. Tex. Aug. 22, 2012).
198 Id. at *3. 199 Id. 200 Id. 201 Id.
allegations were found to support other EMC factors.202 Thus, the court found misjoinder.203 In Phoenix Licensing,
LLC v. Aetna, Inc.,204 the court applied both § 299 and Rule
20 to the joinder issue raised by a supplier defendant.205 While the Net Nav. Sys. court did not analyze the factual allegations by going through all six EMC factors,206 the
Phoenix Licensing court did so.207 The Phoenix court found
only the first EMC factor satisfied.208 Thus, the court severed the supplier defendant from the present case.209
B. Recent Development
Although a series of 2012 decisions may show that the Eastern District of Texas has become unlikely to permit joinder, that is not the whole story. In 2014, the Eastern
202 Id. 203 See id.
204 Phoenix Licensing, LLC v. Aetna, Inc., No. 2:11-CV-285-JRG,
2012 WL 3472973 (E.D. Tex. Aug. 15, 2012).
205 Id. at *1.
206 Net Nav. Sys., LLC, 2012 WL 7827543, at *3 (analyzing only the
same transaction or occurrence factor).
207 Phoenix Licensing, LLC, 2012 WL 3472973, at *2.
208 See id. (“Phoenix has not sufficiently shown the presence of the
other factors discussed by the Federal Circuit in the In re EMC decision. Although not explicitly stated in the complaint, it appears that the alleged infringements occurred during the same time period. However, there is no evidence of any relationship among the
defendants, the use of identically sourced components, any licenses or other agreements between the Defendants with regard to Plaintiff’s patents, or any overlap of the products’ or processes’ development and/or manufacture. Additionally, Phoenix does not explicitly include a claim for lost profits in its Complaint.”).
