NPEs Rush to File Multi-Defendant Suits before Patent Act Signed into Law
- September 16, 2011
September 16, 2011- The Leahy-Smith America Invents Act is expected to be signed into law today by President Obama. The Act will likely alter the future landscape of NPE litigation as it constrains the ability of a plaintiff to file suit against a number of defendants simply because they are accused of infringing the same patent. Under the new law, multiple defendants can be joined in one action only 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.” This means that NPEs will no longer benefit from the tremendous economies of scale derived from filing a single suit against dozens of defendants with a variety of accused products. Although this provision appears to be a positive development for operating companies, it may also reduce the availability of lower cost “volume-based” licensing settlements as NPEs may drive to extract larger sums out of fewer targets. In anticipation of the new law, patent holders have rushed to file complaints against large numbers of defendants. According to district court filings, a record 51 new patent suits were filed yesterday against 680 defendants. In the past week, 115 new cases were filed against more than 1,000 defendants.