Norman IP v. Lexmark: Post AIA Joinder and the Rule 42 Trump Card
In Norman IP Holdings, LLC v. Lexmark Int’l, Inc., a recent Eastern District of Texas decision, Chief District Judge Leonard Davis provided guidance on the application of Fed. R. Civ. P. 20 (“Rule 20”) joinder and Fed. R. Civ. P. 42 (“Rule 42”) consolidation in patent infringement cases post-enactment of the Leahy-Smith America Invents Act (“AIA”). Norman IP brought suit against Lexmark and others on September 15, 2011, one day before the AIA was signed into law. Norman IP later added an additional 23 defendants. The defendants filed a motion to dismiss for improper joinder or to sever, and Norman IP alternatively requested that any severed cases be consolidated under Rule 42. The Court granted defendants’ motion to sever and issued an order consolidating the cases for pretrial issues excluding venue.
In the decision, Judge Davis assessed the defendants’ motion to sever under Rule 20 and under 35 U.S.C. § 299, the codification of the AIA joinder rule. Under Rule 20, defendants may be joined in an action if plaintiff’s asserted right to relief against each of the defendants “aris[es] out of the same transaction, occurrence, or series of transactions or occurrences.” 35 U.S.C. § 299 limits the scope of Rule 20 requiring that “accused infringers . . . not be joined in one action as defendants . . . based solely on allegations that they each have infringed the patent or patents in suit.”
Without considering whether 35 U.S.C. § 299 is applicable to additional defendants added after enactment of the AIA in cases filed prior to the AIA, the Court ruled that the defendants were not properly joined under Rule 20 or 35 U.S.C. § 299(a)(1). The Court’s rationale was that the claims against each defendant do not relate to “the same transaction, occurrence, or series of transactions or occurrences.” Memorandum Opinion and Order at 3, Norman IP Holdings v. Lexmark, 6:11-cv-00495-LED, (No. 253) (E.D. Texas August 10, 2012).
Judge Davis then ordered consolidation of the defendants under Rule 42 “as to all issues, except venue, through pretrial only” and noted that if transfer is appropriate in any of the cases, the Court would transfer the case after the Markman phase of the proceedings. Id. at 7. In support of his ruling, Judge Davis noted that consolidating the cases and retaining the cases through Markman proceedings would (1) conserve “judicial resources by requiring only one district court to address the underlying disputed claim term[s]” and (2) ensure that related cases “proceed initially on a consistent claim construction, thus avoiding inconsistent rulings.” Id. at 8. Judge Davis, however, cautioned that the ruling as to consolidation was not an invitation for the defendants to file additional venue transfer motions. Judge Davis noted that the Court has approximately 40 such motions to transfer pending. And, these 40 motions equate to approximately $12 million dollars spent by the parties “on an issue that does not move the ball down the field, but only seeks a new field upon which to play.” Id. at 8-9.
After enactment of the AIA, many plaintiffs have opted to “serially file multiple single-defendant . . . cases involving the same underlying patents.” Id. at 6. This presents administrative challenges for the Court and can lead to waste of judicial resources. As noted by Judge Davis, Rule 42 provides a mechanism to conserve judicial resources “via consolidation for common issues such as pretrial, Markman, or trial.” Id. at 7. Thus, parties to multiple single-defendant actions asserting the same patent(s) should consider the possibility of consolidation under Rule 42.