e.d. tex caseIt’s well-known that concerns about patent assertions by non-practicing entities were part of the impetus for the America Invents Act of 2011.  In order to prevent multiple unrelated defendants from being added to the same infringement suit on the sole basis that they are accused of infringing the same patent, the AIA added the so-called “misjoinder” provision (35 U.S.C. § 299) to the patent laws.  Briefly, Section 299 provides that defendants are properly joined if (1) infringement is asserted against the defendants based on the same transaction or occurrence or as to the same accused product or process, and (2) questions of fact common to all defendants will arise in the action.  Over the past year and a half, courts have been grappling with evaluating whether otherwise unrelated defendants are properly joined in infringement actions.  In his recent ruling in an Eastern District of Texas case involving IEEE 802.3 Ethernet technology, Magistrate John D. Love held that standards-compliant system-on-a-chip (SoC) suppliers may be properly joined with their customers under Section 299.

First, a bit of background on the case.  U.S. Ethernet Innovations (USEI), a non-practicing entity, claims to hold a large number of patents related to IEEE 802.3 Ethernet technology that were previously a part of 3Com’s patent portfolio (before 3Com was acquired by Hewlett-Packard in 2010).  Over the first few months of 2012, USEI sued a number of printer manufacturers and chip suppliers for patent infringement in the Eastern District of Texas, asserting that the Ethernet functionality in the printers infringed several USEI patents.

One of the complaints filed by USEI was against Oki Data and Samsung, whom USEI claimed supplied Ethernet SoCs to Oki Data.  USEI contended that joinder under § 299 was proper because the accused Samsung Ethernet SoC chips were “functionally integrated” into the accused infringing Oki Data printers.  In August 2012, Oki Data moved to dismiss USEI’s complaint for failure to state a claim and for improper joinder, denying that it integrates Samsung SoCs into its printers.

On February 6, 2013, Judge Love issued a report and recommendation denying Oki Data’s motion.  First, he noted that while Oki Data denied the allegation that it integrates Samsung’s SoCs into its products, this denial by itself is insufficient to warrant dismissal of the complaint.  He also found that Oki Data and Samsung were properly joined in the action:

[W]e are talking about the same product—an Oki Data accused product that functionally integrates Samsung “System-on-Chips.” The Court finds that this allegation, taken as true, satisfies the “same product” prong of the AIA joinder standard. Naturally, as Samsung and Oki Data are the only Defendants in this civil action, there are undoubtedly common questions of fact related to the alleged integration of the “System-on-Chips.”  That is, for the accused integrated products, questions of fact regarding integration will be common to both Samsung and Oki Data. Accordingly, the Court finds the second joinder prong is also satisfied, and joinder is proper under the AIA.

This shows — not surprisingly — that when a plaintiff accuses both an end product seller and a component supplier of patent infringement, and those infringement accusations are based on functionality implemented within the supplier’s component, both parties may be properly joined under Section 299.  This has particular relevance for assertions involving standard-essential patented technology (such as Ethernet or 802.11 wireless networking), as such technology is often implemented through a system-on-a-chip.