Wednesday, October 3, 2012

“Same Transaction” Required for Joinder Under 35 U.S.C. § 299 Does Not Encompass Separate Transactions Within a “Commerce Stream"

The court sua sponte severed two distributor-defendants from plaintiffs' infringement action because they were improperly joined with manufacturer-defendants under 35 U.S.C. § 299. "Plaintiffs . . . fail to allege that each of these Defendants was involved in the same transaction or series of transactions. Plaintiffs allege that [one defendant] 'developed and commercialized the [accused] products' . . . which it licensed to [a manufacturer-defendant] for manufacture and sale. [The manufacturer-defendant] in turn authorized [the distributor-defendants] as its distributors for the [accused] products. Even assuming that each Defendant was infringing on the same products, the only related transactions between these entities are those transactions within the commerce stream. But these transactions within the commerce stream do not constitute the same transaction or series of transactions. . . . [The distributor-defendants'] liability arises from its sale (or offer for sale) of the [accused] products to an end-user. This is entirely different from [the manufacturer-defendant's] liability, which arises from its sale (or offer for sale) of its [accused] product to [a distributor-defendant]."

Mednovus, Inc. v. QinetiQ Limited, et. al., 2-12-cv-03487 (CACD October 1, 2012, Order) (Wright, J.).

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