Leahy-Smith America Invents Act: Potential Effects On Patent Litigation

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The Leahy-Smith America Invents Act (AIA), which was signed into law on September 16, 2011, presents the greatest change in U.S. patent law since the 1952 Patent Act. While the AIA is perhaps best known for abolishing the first-to-invent system in favor of a first-to-file system, it also contains a number of other significant changes. This alert does not attempt to summarize all of the changes affected by the AIA, but focuses on one particular area—how the AIA may affect patent litigation.

Joinder of Parties

The AIA may significantly increase the cost of patent litigation filed by non-practicing entities (NPEs) by changing the rules of joinder. Under the new law, 35 U.S.C. § 299, accused infringers can only be joined in a single action if the allegations of infringement "aris[e] 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." In other words, the accused infringers must be tied together by "the same accused product or process." Furthermore, "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." Thus, the new joinder standard should end the practice of NPEs suing large groups of companies in a single case based on commonality of allegedly infringed patents and general similarities between products. Instead, NPEs will need to sue each accused infringer in a separate case, perhaps in different forums.

There are two general exceptions to this new joinder statute. First, Hatch-Waxman cases are excluded by an exception for cases that allege an act of infringement under 35 U.S.C. § 271(e)(2). Second, an accused infringer can waive the limitations on joinder, but only with respect to itself. This waiver may be useful when a group of companies sees some benefit to defending a case together, such as when a single party indemnifies all accused infringers. Also, accused infringers may use this waiver prerogative as negotiating leverage to obtain a more favorable forum.

Please see full alert below for more information.

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Published In: Administrative Agency Updates, Civil Procedure Updates, Intellectual Property Updates

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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