Sunday, July 22, 2012

In Re EMC: Another Blow to patent troll

Hardly one year after passing of the American Invents Act which addressed some of the irritating habits of patents trolls now it is the turn of US Court of appeal for Federal circuit to address the menace of patent owners who uses patent litigation as a tool to make money from companies rather than entering into actual business.

On May 4th 2012, the Court of Appeal issued a blow to all Non-practicing entities who files multi- defendant cases as an effort to avoid the requirements of the America Invents Act. The Court in this case held that “Joinder” is not appropriate in multi-defendant patent infringement cases where only commanlity is alleged infringement of same patents. 

Oasis Research LLC, the plaintiff in the original suit is the owner of four US patents which deals with off-site computer data storage by allowing home computer users to remotely connect to an online service system for purposes of external data storage. Oasis Research LLC files a Multi – defendant patent infringement claim against the petitioners (defendants in original suit) as they offer online backup and storage though various websites.

The petitioners filed motions before the Eastern Texas District Court to sever the claims and transfer them to various jurisdictions. The District court denied petitioners motions reasoning that claims of Oasis LLC satisfy the transaction or occurrence test of Rule 20 of Federal Rules of Civil Procedure.

Denying the reasoning given by the Texas Court, the Court of appeal points out that under the correct test of transaction or occurrence an existence of a single common question of law or fact alone is insufficient to satisfy the transaction- or- occurrence requirement. Thus mere fact that the infringement of same claims of the same patent does not support joinder, even though the claims would raise common questions of claim construction.

Further the joinder of independent defendants is only appropriate where the accused products are same in respect to the same patent. But commonality of patent alone is not sufficient to allow joinder. Commonality shall be supplemented with overlapping facts which give rise to each cause of action. Thus, if there is no actual link between underlying facts of each claim of infringement the independently developed products using differently sources are not to be considered as the part of the same transaction.

The 18 page ruling of the Court of Appeal is a serious financial blow upon the patent owners who count on using cheap litigation to win favourable settlements.

 By Nithin V Kumar