Friday, September 23, 2011

Multi-Defendant Patent Cases - Passé


On September 8, 2011, the Senate approved the America Invents Act. The legislation contains many important changes that affect the rights of inventors. Some of the changes affect patent litigation strategy.

Of interest is the new prohibition on joining multiple defendants in a single lawsuit, unless there are common issues of fact or the cases arise out of the same transaction or occurrence. That the plaintiff alleges that the defendants infringe the same patent is not enough to allow them to be joined in the same lawsuit. The new prohibition applies to all lawsuits filed on or after September 16, 2011.

If multi-defendant patent litigation becomes a thing of the past, it is likely that the number of patent cases filed will increase significantly. So, too, will the costs incurred by plaintiffs. One tactic by so-called "patent trolls" has been to sweep in many defendants into a single lawsuit, banking on the hope that most will settle before trial, and before substantial costs are incurred zeroing in on a particular defendant's facts.

The new legislation will require many different lawsuits to be filed, each against a single (probably) defendant, where getting "lost in the crowd" in settling will be less appealing. Also, patentees suing multiple defendants will face separate challenges to the patent's validity and scope, each with potential collateral estoppel effect that could determine the outcome of all the other cases with respect to that patent.

And, with the cost to plaintiff "patent trolls" being increased, what happens to all those new plaintiffs' patent troll law firms out there? No doubt the number of lawsuits will increase with the litigation, but will it increase enough to support all those new firms? Maybe not. Sphere: Related Content