MDL Proceedings as a Tool to Manage Patent Cases After TC Heartland

Under TC Heartland LLC v. Kraft Foods Group Brands LLC,[i] patent owners may no longer sue alleged patent infringers wherever the alleged infringers are subject to personal jurisdiction.[ii] Instead, patent infringement cases may only be brought “in the judicial district where the defendant resides, or where the defendant has committed acts of infringement and has a regular and established place of business.”[iii] In TC Heartland, the Court reaffirmed its earlier decision in Fourco Glass Co. v. Transmirra Products Corp.,[iv] and held that a domestic corporation is only resident in its State of incorporation.[v]

Some analysts have concluded that the Supreme Court’s recent decision in TC Heartland will make it more difficult for patent owners to enforce their patents.[vi] Generally, they assert that patent infringement litigation will become more costly for patent owners because they may have to assert their rights in multiple jurisdictions throughout the country. They also contend that concurrent litigation in multiple courts will lead to inconsistent outcomes.

One response to these concerns is multidistrict litigation under 28 U.S.C. § 1407. Congress authorized the formation of a Judicial Panel on Multidistrict Litigation to transfer “civil actions involving one or more common questions of fact” to a single “district for coordinated or consolidated pretrial proceedings.”[vii] The Judicial Panel on Multidistrict Litigation has authority to transfer patent cases as it does any other “civil actions.” Indeed, Congress predicted that patent cases would be particularly appropriate for multidistrict litigation.[viii] Multidistrict litigation presents a variety of advantages for patent owners and alleged infringers alike. In particular, it allows for common adjudication of common questions of fact and law, lowered costs compared to concurrent litigation in geographically dispersed district courts, and the possibility of litigating in a patent owner’s favored jurisdiction. Alleged infringers may also benefit from multidistrict litigation because all pretrial proceedings are conducted without the pressure of a firm trial date. Moreover, although Congress authorized “coordinated or consolidated pretrial proceedings,” cases must be remanded to their original courts for trial because the original courts will have personal jurisdiction over the parties, and thus, are the appropriate constitutional venues for trial. Accordingly, alleged infringers may benefit from the same patent being subject to multiple trials, any one of which might result in the patent being found invalid.

Consideration of Common Questions of Fact and Law

The Judicial Panel on Multidistrict Litigation may transfer all civil actions involving common questions of fact to a single district.[ix] This “common questions of fact” requirement helps ensure that multidistrict litigation fulfills Congress’s purpose to “promote the just and efficient conduct” of litigation.[x] It also helps prevent inconsistent pretrial rulings.[xi]

The Judicial Panel on Multidistrict Litigation often concludes that cases present common questions of fact when multiple defendants attack the validity or enforceability of a patent.[xii] In fact, the panel has concluded that cases may present common questions of fact even if different patents are asserted in the cases, as long as the patents all derive from the same family.[xiii] Although the multidistrict litigation statute speaks to “common questions of fact,”[xiv] the Judicial Panel on Multidistrict Litigation also considers the presence of common questions of law, such as claim construction, when deciding whether to transfer civil actions.[xv]

In re TransData, Inc., Smart Meters Patent Litigation, one of the largest patent multidistrict litigations ever to be remanded for trial settings, involved common questions of fact and law relating to three patents, each of which was asserted in each of the underlying cases. After the cases were transferred to a single jurisdiction, the parties litigated the cases as if they were one and the defendants often coordinated their filings, including summary judgment motions,[xvi] claim construction briefing,[xvii] and Daubert motions.[xviii] As a result of pretrial consolidation, the parties in the TransData case obtained summary judgment rulings that collectively applied across all of the cases, including dispositive orders regarding patent validity.[xix]

Cost

Multidistrict litigation may also help patent owners mitigate the cost of concurrent litigation in geographically diverse jurisdictions through coordinated or consolidated pretrial proceedings in one jurisdiction. Indeed, Congress intended multidistrict litigation to further “the convenience of parties and witnesses,”[xx] and the Judicial Panel on Multidistrict Litigation routinely identifies the benefits of eliminating duplicative discovery and conserving private and judicial resources when deciding motions to transfer.[xxi]

Upon transfer by the Judicial Panel on Multidistrict Litigation, the transferee court may order coordination or consolidation of the transferred cases as appropriate in the sound discretion of the transferee court. As the Panel observed in one transfer order:

We refrain from dictating the structure of an MDL’s pretrial proceedings (such as whether the litigation will proceed in a coordinated manner as opposed to consolidated proceedings). We choose instead to leave the degree of coordination or consolidation of involved actions to the sound discretion of the transferee judge.[xxii]

If consolidated, a party can effectively proceed through pretrial proceedings as if all the cases were brought in a single jurisdiction, thereby mitigating costs of patent litigation after TC Heartland.

For example, in the TransData case, the transferee court specifically required that “any discovery in any of these [transferred] cases applies to all,” that “[t]here will be no duplication,” and that the parties were to make use of common discovery requests where appropriate.[xxiii] In this way, the cost of litigating multiple cases simultaneously through the multidistrict litigation process were similar to the costs the parties would have incurred had the cases all been brought in a single jurisdiction.

Favored Jurisdiction

The multidistrict litigation process allows lawsuits originally filed in multiple jurisdictions to proceed for pretrial purposes in a single jurisdiction. Accordingly, one particularly contentious issue in many patent-related multidistrict litigation matters is which court will serve as the transferee forum. In other words, the question of where to transfer cases is separate from the question of whether to transfer cases for coordinated or consolidated pretrial proceedings. The Judicial Panel on Multidistrict Litigation evaluates a host of considerations when determining where to transfer appropriate cases.[xxiv] The Panel’s decision on this issue provides patent owners with a valuable opportunity to influence the jurisdiction in which their cases will proceed for pretrial purposes.

Moreover, the Judicial Panel on Multidistrict Litigation has authority to transfer so-called “tag?along actions.”[xxv] “Tag-along” actions are those “pending in a district court which invole[] common questions of fact with either (1) actions on a pending motion to transfer to create an MDL or (2) actions previously transferred to an existing MDL, and which the Panel would consider transferring under Section 1407.”[xxvi] Tag?along actions are generally transferred to the transferee court using a Conditional Transfer Order, or “CTO.”[xxvii] In other words, once the Panel transfers civil actions under § 1407, the Panel will generally transfer subsequent cases sharing common issues of fact to the same transferee jurisdiction.

In the TransData case, the patent owner filed lawsuits in five jurisdictions: the Eastern District of Texas,[xxviii] the Middle District of Alabama,[xxix] the Middle District of Georgia,[xxx] the Southern District of Mississippi,[xxxi] and the Western District of Oklahoma.[xxxii] While the patent owner’s motion to transfer pursuant to § 1407 was pending before the Judicial Panel on Multidistrict Litigation, the patent owner filed additional lawsuits in two more jurisdictions: the Southern District of California[xxxiii] and the Western District of Wisconsin.[xxxiv] The Judicial Panel on Multidistrict Litigation transferred the pending cases to the United States District Court for the Western District of Oklahoma[xxxv] and the two tag?along actions were subject to a Conditional Transfer Order transferring them to that same court.[xxxvi]

Once the pretrial proceedings in the TransData litigation were concluded, the transferee court issued a suggestion of remand.[xxxvii] After receipt of that Order, the Judicial Panel on Multidistrict Litigation filed a Conditional Remand Order that eventually remanded the remaining cases to their original transferor courts for trial.[xxxviii] The first of the remanded cases to be set for trial was in the United States District Court for the Eastern District of Texas.[xxxix]

No Trial Date

The Judicial Panel on Multidistrict Litigation has authority to transfer cases for “pretrial proceedings” only.[xl] Thus, the discovery and pretrial phases of the case general proceed without a firm trial date. This could pose a challenge, as trial dates often help push the parties to sharpen their arguments and resolve their disputes. At the same time, some parties prefer to draw out litigation, and proceeding without a trial date may prove advantageous in certain circumstances. Generally, trial dates will be left for the transferor courts to set after the cases in the multidistrict litigation are remanded for trial.

In the TransData case, the transferee court decided the parties’ dispositive and Daubert motions all without a trial date set. After resolving the parties’ common issues, the transferee court noted that the cases were “ready for trial at the earliest possible date” and issued a Suggestion of Remand, suggesting that the Judicial Panel on Multidistrict Litigation remand the cases for trial.[xli] The first trial date was set within months of the Panel’s remand order taking effect.[xlii]

Multiple Trials

While multidistrict litigation may make the pretrial phase of appropriate cases more efficient, it does not dispense with the need for multiple trials. Of course, in light of TC Heartland, patent owners may be faced with the prospect of multiple trials anyway. For alleged infringers, multiple trials involving the same patent or patents presents multiple opportunities to invalidate or render unenforceable the patents-in-suit.

After remand, the first trial setting may help promote a global settlement of multidistrict litigation because it is a hard deadline for the parties’ work and negotiations. In the TransData litigation, the last cases settled shortly before the first trial was scheduled to commence in the United States District Court for the Eastern District of Texas.

Conclusion

Multidistrict litigation proceedings may be more cost efficient than widespread concurrent litigation and they may help avoid issues of inconsistent outcomes. Moreover, multidistrict litigation presents its own set of tactical advantages and drawbacks for plaintiffs and defendants alike. Especially in light of the Supreme Court’s decision in TC Heartland, we may very well see an uptick in multidistrict litigations for patent cases.

_______________

[i] No. 16-341, 2017 WL 2216934 (U.S. May 22, 2017).

[ii] TC Heartland, 2017 WL 2216934 at *3.

[iii] 28 U.S.C. § 1400(b).

[iv] 353 U.S. 222 (1957).

[v] TC Heartland, 2017 WL 2216934 at *7.

[vi] E.g., Matthew Bultman, TC Heartland Could Make Enforcing Patents More Expensive, Law360 (June 2, 2017, 9:10 pm EDT), https://www.law360.com/articles/930849/tc-heartland-could-make-enforcing-patents-more-expensive.

[vii] 28 U.S.C. § 1407(a), (d).

[viii] H.R. Rep. 90?1130, at 3 (1968), as reprinted in 1968 U.S.C.C.A.N. 1898, 1900.

[ix] 28 U.S.C. § 1407(a); see also In re TransData, Inc., Smart Meters Patent Litig., 830 F. Supp. 2d 1381, 1381 (J.P.M.L. 2011) (“the TransData litigation”).

[x] 28 U.S.C. § 1407(a); see also H.R. Rep. 90?1130 at 3, as reprinted in 1968 U.S.C.C.A.N. at 1900 (“It is expected that such transfer is to be ordered only where significant economy and efficiency in judicial administration may be obtained.”).

[xi] See, e.g., In re Bear Creek Techs., Inc. (’722) Patent Litig., 858 F. Supp. 2d 1375, 1380 (J.P.M.L. 2012); In re Webvention (’294) Patent Litig., 831 F. Supp. 2d 1366, 1366 (J.P.M.L. 2011); In re TransData, 830 F. Supp. 2d at 1382; In re VTran Media Techs., LLC, Patent Litig., 559 F. Supp. 2d 1409, 1410 (J.P.M.L. 2008); In re Halftone Color Separations (’809) Patent Litig., 547 F. Supp. 2d 1383, 1384 (J.P.M.L 2008); In re Cygnus, 177 F. Supp. 2d at 1376; In re FMC Corp. Patent Litig., 422 F. Supp. 1163, 1165 (J.P.M.L. 1976).

[xii] See, e.g., In re Bear Creek, 858 F. Supp. 2d at 1380; In re Webvention, 831 F. Supp. 2d at 1366; In re TransData, 830 F. Supp. 2d at 1381–82; In re VTran Media Techs., 559 F. Supp. 2d at 1410; In re Halftone, 547 F. Supp. 2d at 1384; In re Cygnus Telecom Tech., LLC, Patent Litig., 177 F. Supp. 2d 1375, 1376 (J.P.M.L. 2001); In re FMC, 422 F. Supp. at 1165.

[xiii] In re Tramadol Hydrochloride Extended?Release Capsule Patent Litig., 672 F. Supp. 2d 1377, 1377 (J.P.M.L. 2010); id. at 1377 n.2.

[xiv] 28 U.S.C. § 1407(a).

[xv] E.g., In re Cygnus, 177 F. Supp. 2d at 1376; In re TransData, 830 F. Supp. 2d at 1382.

[xvi] E.g., Defs.’ Mot. Summ. J. Invalidity U.S. Patent No. 6,903,699, U.S. Patent No. 6,462,713, & U.S. Patent No. 6,181,294, In re TransData, Inc., Smart Meters Patent Litig., No. 12-ml-2309 (W.D. Okla. Apr. 19, 2013), ECF No. 182, stricken Mem. Op. & Order, In re TransData, Inc., Smart Meters Patent Litig., No. 12-ml-2309 (W.D. Okla. June 25, 2013), ECF No. 199.

[xvii] E.g., Defs.’ Responsive Claim Construction Br., In re TransData, Inc., Smart Meters Patent Litig., No. 12-ml-2309 (W.D. Okla. Aug. 16, 2013), ECF No. 241.

[xviii] E.g., Defs.’ Mot. Exclude Expert Rep. & Test. Robert L. Stoll, In re TransData, Inc., Smart Meters Patent Litig., No. 12-ml-2309 (W.D. Okla. Jan. 23, 2015), ECF No. 508.

[xix] In re TransData, No. 12-ml-2309-C, 2015 WL 5091940, at *3 (W.D. Okla. Aug. 28, 2015).

[xx] 28 U.S.C. § 1407(a).

[xxi] See, e.g., In re Bear Creek, 858 F. Supp. 2d at 1380; In re Webvention, 831 F. Supp. 2d at 1366; In re TransData, 830 F. Supp. 2d at 1381–82; In re VTran Media Techs., 559 F. Supp. 2d at 1410; In re Halftone, 547 F. Supp. 2d at 1384; In re Cygnus, 177 F. Supp. 2d at 1376; In re FMC, 422 F. Supp. at 1165.

[xxii] In re Bear Creek, 858 F. Supp. 2d at 1377.

[xxiii] Tr. Initial Conference at 34:8–9, 35:3–13, In re TransData, Inc., Smart Meters Patent Litig., No. 12-ml-2309 (W.D. Okla. Aug. 1, 2012).

[xxiv] See Multidistrict Litigation Manual: Practice Before the Judicial Panel on Multidistrict Litigation §§ 6:3–6:22 (West 2017).

[xxv] Rule 7.1 of the Rules of Procedure of the United States Judicial Panel on Multidistrict Litigation, available at http://www.jpml.uscourts.gov/sites/jpml/files/Panel%20Rules-Index_%20Copy-Effective-10-4-2016.pdf.

[xxvi] Rule 1.1(h) of the Rules of Procedure of the United States Judicial Panel on Multidistrict Litigation, available at http://www.jpml.uscourts.gov/sites/jpml/files/Panel%20Rules-Index_%20Copy-Effective-10-4-2016.pdf.

[xxvii] Rule 7.1 of the Rules of Procedure of the United States Judicial Panel on Multidistrict Litigation, available at http://www.jpml.uscourts.gov/sites/jpml/files/Panel%20Rules-Index_%20Copy-Effective-10-4-2016.pdf.

[xxviii] See Pl. TransData, Inc.’s Original Compl. Patent Infringement, TransData, Inc. v. Denton Cty. Elec. Coop., Inc., No. 6:11-cv-00113 (E.D. Tex. Mar. 14, 2011), ECF No. 1; Pl. TransData, Inc.’s Original Compl. Patent Infringement, TransData, Inc. v. Tri?County Elec. Coop., Inc., No. 6:11-cv-00046 (E.D. Tex. Jan. 27, 2011), ECF No. 1; Pl. TransData, Inc.’s Original Compl. Patent Infringement, TransData, Inc. v. CenterPoint Energy Hous. Elec., LLC, No. 6:10-cv-00557 (E.D. Tex. Oct. 21, 2010), ECF No. 1.

[xxix] See Pl. TransData, Inc.’s Compl. Patent Infringement, TransData, Inc. v. Ala. Power Co., No. 2:11-cv-00635 (M.D. Ala. Aug. 8, 2011), ECF No. 1.

[xxx] See Pl. TransData, Inc.’s Compl. Patent Infringement, TransData, Inc. v. Ga. Power Co., No. 2:11-cv-00305 (M.D. Ga. Aug. 8, 2011), ECF No. 1.

[xxxi] See Pl. TransData, Inc.’s Compl. Patent Infringement, TransData, Inc. v. Miss. Power Co., No. 3:11-cv-00499 (S.D. Miss. Aug. 8, 2011), ECF No. 1.

[xxxii] See Pl. TransData, Inc.’s Compl. Patent Infringement, TransData, Inc. v. Okla. Gas & Elec. Co., No. 5:11-cv-01032 (W.D. Okla. Sept. 16, 2011), ECF No. 1.

[xxxiii] See Compl. for Patent Infringement, TransData, Inc. v. San Diego Gas & Elec. Co., No. 3:11-cv-02529 (S.D. Cal. Oct. 31, 2011), ECF No. 1.

[xxxiv] See Pl. TransData, Inc.’s Compl. Patent Infringement, TransData, Inc. v. Wis. Power & Light Co., 3:11-cv-00745 (W.D. Wis. Nov. 1, 2011), ECF No. 1.

[xxxv] In re TransData, 830 F. Supp. 2d at 1382.

[xxxvi] Conditional Transfer Order, In re TransData, MDL No. 2309 (J.P.M.L. Dec. 21, 2011), ECF No. 35.

[xxxvii] Suggestion of Remand, In re TransData, No. 5:12:ml-2309-C (W.D. Okla. Dec. 8, 2015), ECF No. 623.

[xxxviii] Conditional Remand Order, In re TransData, MDL No. 2309 (J.P.M.L. Dec. 14, 2015), ECF No. 42.

[xxxix] Scheduling Order, TransData, Inc. v. CenterPoint Energy Hous. Elec. LLC, Nos. 6:10-cv-00557 (E.D. Tex. Mar. 17, 2016), ECF No. 128.

[xl] 28 U.S.C. § 1407 (“When civil actions involving one or more common questions of fact are pending in different districts, such actions may be transferred to any district for coordinated or consolidated pretrial proceedings.”).

[xli] Suggestion of Remand at 1–2, In re TransData, No. 5:12-ml-2309-C (W.D. Okla. Dec. 8, 2015), ECF No. 623.

[xlii] Compare Order Lifting Stay of Conditional Remand Order, In re TransData, MDL No. 2309 (J.P.M.L. Jan. 26, 2016), ECF No. 59, with Scheduling Order, TransData, Inc. v. CenterPoint Energy Hous. Elec. LLC, Nos. 6:10-cv-00557 (E.D. Tex. Mar. 17, 2016), ECF No. 128 (setting trial on July 18, 2016).

Share

Warning & Disclaimer: The pages, articles and comments on IPWatchdog.com do not constitute legal advice, nor do they create any attorney-client relationship. The articles published express the personal opinion and views of the author as of the time of publication and should not be attributed to the author’s employer, clients or the sponsors of IPWatchdog.com.

Join the Discussion

No comments yet.