Consolidation in Multi-Defendant Patent Infringement Cases: Or How I Learned To Live with the AIA

The U.S. Judicial Panel on Multidistrict Litigation (JPML) concluded that there is no conflict between the anti-joinder statute (§ 299) of the America Invents Act (AIA) and 28 U.S.C. § 1407, which provides for consolidated pretrial proceedings. In re Bear Creek Technologies, Inc., Case No. 2344 (JPML, May 2, 2012) (K.H. Vratil, Acting Chairman).

Bear Creek filed suit against 14 telecommunications companies, accusing each of infringement of patent. Bear Creek moved to centralize all claims for pretrial proceedings under 28 U.S.C. § 1407. Vonage Holdings opposed, arguing that § 299 of the AIA precludes the panel from centralizing the actions. Section 299 provides that accused infringers may not, based solely on allegations that they each have infringed the patent in suit, either be joined in one action as defendants or have their actions consolidated for trial. Bear Creek argued that § 299 does not apply to a request for pretrial centralization, in which the defendants are not joined in one action or consolidated for trial.

The JPML concluded that it was appropriate to centralize the actions for pretrial proceedings, finding that § 299 does not alter its authority to order pretrial centralization. The JPML looked to the plain meaning of the statutes, noting that while § 1407 applies to pretrial proceedings, § 299 focuses on consolidation for trial.

Mindful of Vonage’s argument that centralization could be used as an “end run” around the AIA’s joinder requirements, the JPML noted that centralization is not automatic but rather depends on the circumstances of each specific case. In this case, which the JPML characterized as a “close call,” it concluded that pretrial centralization of the 14 actions was appropriate because the actions share common questions of fact involving the infringement, validity and enforceability of the patent and will promote convenience and efficiency of the proceedings.

Practice Note: In this case the JPML found no conflict between § 299 of the AIA and 28 U.S.C. § 1407. It may be expected that many non-practicing entities will invoke Bear Creek in seeking pretrial consolidation in situations where several defendants are targeted in separate suits.