Federal Circuit Court Reverses District Court Decision in Pre-AIA Severance Case

May 22, 2012

A recent severance case was decided for cases filed prior to the signing of the American Invents Act (AIA) in September 2011. On a writ of mandamus, the Federal Circuit Court reversed a decision by the District Court for the Eastern District of Texas to deny severance of EMC Corporation in a multi-defendant suit regarding patents covering commercial online backup/storage services. The petition was filed just days before Congress signed the AIA. In its opinion, the Federal Circuit Court said, “Joinder of independent defendants is only appropriate where the accused products or processes are the same in respects relevant to the patent. But the sameness of the accused products or processes is not sufficient.”

Under Rule 20’s transaction or occurrence test, claims against independent defendants cannot be joined “unless the facts underlying the claim of infringement asserted against each defendant share an aggregate of operative facts.” The opinion states that there must be an actual link between facts underlying each claim of infringement for independently-developed products using differently-sourced parts to be part of the same transaction, “even if they are otherwise coincidentally identical.” The federal court determined that the district court applied an incorrect test, thereby granting EMC’s petition and extending it to other defendants, directing the district court to reconsider those motions in light of the correct test.

This decision is relevant only to those cases filed prior to the signing of the AIA. For cases filed under the AIA, the law provides that defendants may be joined in one action only 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.”

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