Patent troll lawsuits may be on thin ice

Is Innovatio trying an end run around new laws?

Innovatio’s strategy of suing Wi-Fi end users might already be on uncertain ground, according to an American IP lawyer.

Brad Pedersen, a partner at Patterson Thuente Christensen Pedersen and chair of the firm’s patent practice group, told The Register the form of the filings makes it clear that Innovatio is trying to work around the “anti-joinder” provisions contained in recent patent reforms in the America Invents Act.

The new laws, which took effect in the US in September, are designed to prevent “greenmail” tactics in patent lawsuits.

Innovatio, which was founded in February and shortly afterwards acquired a portfolio of patents from Wi-Fi component supplier Broadcom, has filed suits designed to recover payments from end users of WiFi kit rather than from vendors, as is more normal.

In 35 USC 299 in the AIA, “Joinder of parties”, “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.”

Clearly, the new law aims to prevent a situation where a large number of small defendants are sued, or threatened with a lawsuit, with the aim that they might decide a token payoff is less trouble than mounting a defense. Instead, the plaintiff would have to initiate a single filing for each individual defendant, escalating its costs; this, in turn, would mean the plaintiff would have to demand more from its targets to cover its own costs, and would make a fightback more likely.

This provision in the Act, by the way, explains why Innovatio shows no interest in pursuing individuals using WiFi in their homes: individuals cannot be co-joined as defendants against their will, and the amounts recoverable from the ordinary home Wi-Fi user wouldn’t justify thousands of individual cases.

At least in part, the Innovatio case could therefore turn on whether or not the defendants can persuade the court that the case is trying to co-join multiple defendants.

While the filings appear to target a single organization – a hotel chain, for example – the action then names many individual outlets, some of which, Pedersen points out, may in fact be distinct businesses, either because they are operated by different subsidiaries of the parent (and could therefore argue that they’re different defendants); or because they’re operated by franchisees (which most certainly are distinct businesses).

“Each Best Western or Comfort Inn might try to argue that they each have to be sued individually,” he told The Register.

Even their purchase habits could be relevant in a defense, he said.

“For example, as this is a patent for Wi-Fi, if a first group of franchisees or subsidiaries bought their WiFi modems from Company A and a different group bought their WiFi modems from Company B, then the two groups might argue that the ‘fact pattern’ that gives rise to a charge of patent infringement is different between the two groups and, thus, the two groups should not be joined.”

If, as it seems to The Register, Innovatio is attempting an “end run” around the America Invents Act, then this case will bear watching. ®

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