Intellectual Property Report: December 2011

12/15/2011 / Intellectual Property Group

Update on the America Invents Act:
The AIA’s Current Effects on Patent Litigation
By Glenna L. Gilbert and John A. Kvinge
 

As part of our continuing series on the changes to America’s Patent Act under the America Invents Act (“the AIA” or “the Act”), this month we are looking at ways the AIA currently affects patent litigation. Several provisions of the Act related to litigation went into effect immediately upon enactment. Among these provisions were amendments related to multi-defendant lawsuits, best mode, and false marking lawsuits, all of which are addressed in this update.


Multi-Defendant Lawsuits

The AIA includes a significant anti-joinder provision, which applies to “any civil action commenced on or after” September 16, 2011 (except for pharmaceutical cases, which are exempted). Section 299 provides that a patentee cannot join multiple accused infringers in one lawsuit, or have multiple cases consolidated for trial, unless “(1) any right to relief is asserted against the parties jointly, severally, or in the alternative with respect to or arising 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; and (2) questions of fact common to all defendants or counterclaim defendants will arise in the action.” Section 299 explicitly states as well that “accused infringers may not be joined in one action as defendants or counterclaim defendants, or have their actions consolidated for trial, based solely on allegations that they each have infringed the patent or patents in suit.”

Only time will tell what effect the anti-joinder provisions of the Act have on patent litigation. It appears, for instance, that the Act does not preclude a patentee from filing multiple complaints against each defendant individually, and then moving to have the cases consolidated for discovery and pre-trial purposes.


The End of the Best Mode Defense

Upon enactment, the AIA eliminated best mode as a basis for holding a patent invalid or otherwise unenforceable in litigation. The AIA amended 35 U.S.C. § 282 to read:

The following shall be defenses in any action involving the validity or infringement of a patent and shall be pleaded:

 

1.      Noninfringement, absence of liability for infringement or unenforceability,

2.      Invalidity of the patent or any claim in suit on any ground specified in part II of this title as a condition for patentability,

3.      Invalidity of the patent or any claim in suit for failure to comply with

(A) any requirement of section 112, except that the failure to disclose the best mode shall not be a basis on which any claim of a patent may be canceled or held invalid or otherwise unenforceable; or

(B) any requirement of section 251.

4.   Any other fact or act made a defense by this title.
 

The amendment to § 282 (in italics above) applies to all “proceedings commenced on or after” the date of enactment of the Act, September 16, 2011. 

The Act however does not appear to alter the requirement that an applicant disclose its best mode to the United States Patent and Trademark Office.

False Marking

As explained in Larkin Hoffman’s November Intellectual Property Report, the Act also reduces the risk of false marking claims by limiting who can pursue those claims. Before passage of the Act, anyone could bring a false marking claim as a class action, with fines of up to $500 per offense. The Federal Circuit held that “per offense” meant per product, and manufacturing runs of only a few thousand products with incorrect information created liabilities of millions of dollars. Now, under the Act, only the United States government or competitors that can prove competitive injury may bring false marking claims. This change is retroactive. Indeed, many false marking suits that existed at the time of the change have been dismissed. Obviously it is still important to keep your marking current, but the end of the ever-looming threat of a multi-million-dollar false marking class action should help patent holders sleep better at night.

For more information on the subject of this article, contact the authors of this article, or the Larkin Hoffman attorney who customarily handles your matters. Larkin Hoffman Daly & Lindgren Ltd. has proudly served the legal and business counseling needs of clients since 1958. The firm includes over 70 attorneys serving clients’ legal needs throughout the state, the country and around the globe. As a full-service law firm, it provides counsel and legal guidance in more than 20 areas of law to clients ranging from individuals to emerging companies and Fortune 500 corporations.

 

While the information provided in this publication is believed to be accurate, it is general in nature and should not be construed as legal advice. You should consult an attorney for advice regarding your individual situation.