A party sued for patent infringement may seek to shift some or all of its liability through an indemnification claim. While a patent infringement defendant may seek to implead an indemnitor under Rule 14 of the Federal Rules of Civil Procedure, a recent Eastern District of Kentucky decision is a reminder that third-party complaints are limited to claims seeking to shift liability for the underlying patent infringement claim. Linda’s Leather, LLC v. Zambrano, No. 5:21-CV-046-CHB, 2022 WL 100216 (E.D. Ky. Jan. 10, 2022).
Linda’s Leather, LLC, accused Victor Zambrano of patent infringement. Zambrano subsequently filed a third-party complaint against Linda Scott, the sole member of Linda’s Leather and identified as the sole inventor on the asserted patents. Zambrano asserted four declaratory judgment claims in his third-party complaint, stating that the patented inventions were a result of work done by Scott for Zambrano, making him at least a joint inventor on the patents, that his products did not infringe, and, in the alternative, that the patents were invalid and that he had a license. Each was dismissed.
Critically, none of Zambrano’s declaratory judgment claims were an attempt to “transfer liability” to Scott, and “if proven, would not make Scott derivatively liable to Linda’s Leather” for the patent infringement claims. Id. at *3-4. Under Rule 14(a)(1), “[i]mpleader is proper only when the third-party defendant’s liability is secondary to, or derivative of, the original defendant’s liability on the original plaintiff’s underlying claim.” Id. at *2. A third-party complaint is not a proper vehicle for “separate and independent” claims even if they “arise out of the same general set of facts as the underlying action.” Id. at *3-4. This stands in contrast to crossclaims under Rule 13(g). Under Rule 13(g), “[a] pleading may state as a crossclaim any claim by one party against a coparty if the claim arises out of the transaction or occurrence that is the subject matter of the original action or of a counterclaim,” and this “may include a claim that the coparty is or may be liable to the crossclaimant for all or part of a claim asserted in the action against the crossclaimant.” Even though they were tied to the same “general set of facts,” Zambrano’s declaratory judgment claims were rejected because, if proven, they would have defeated his liability to Linda’s Leather for the underlying patent infringement claims instead of shifting that liability to Scott.
The dismissal order is a reminder that a third-party complaint is not a vehicle for any and all claims against a nonparty. While a patent infringement defendant may have claims against a nonparty tied to the underlying claims, only those claims that seek to shift liability for the underlying patent infringement claims should be brought in a third-party complaint.
[View source.]
