On our Patent Infringement News page, we recently reported on a company called Innovatio IP Ventures, LLC which has filed several patent lawsuits against hotels and restaurants that provide free Wi-Fi for their customers. But as it turns out, Innovatio's patent enforcement campaign may fall victim to provisions in the America Invents Act (AIA).
Innovatio began its campaign by suing several restaurants in early 2011. Then, in September, it expanded its focus to include major hotel chains, including Marriott, Best Western and Hyatt, among others. Innovatio's campaign looked pretty likely to succeed because it only requested $2,000-$5,000 per infringing location - and even with several hotel or restaurant locations allegedly infringing, that payoff would be cheaper for the defendants than going to court.
The problem with that strategy is that, according to the "Joinder of parties" provision in the recently-enacted AIA (35 USC 299), “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.” (Hat tip: The Register)
Although Innovatio filed its suits against individual major hotel chains, it also went on to name several individual outlets of those chains within each filing. According to patent attorney Brad Pedersen, a partner at Patterson Thuente Christensen Pedersen, that's problematic because many of those individual hotels may be distinct businesses operated by franchisees or by different subsidiaries of the parent company. And that would make them different defendants in the same lawsuit - an AIA no-no.
If Innovatio is forced to file lawsuits against each hotel or restaurant location individually, the resulting escalation in legal fees would force Innovatio to demand more money from the defendants - and increase the likelihood that they will fight back instead of settling. It looks like the era of multi-defendant lawsuits is well and truly over, and Innovatio will have some tough choices to make.
The lesson to be learned: The AIA will force patent owners to be much more selective when choosing which infringers to pursue, and some fruit may have to be left hanging on the tree.
It's nice to know that the AIA is already doing some good. Its anti-joinder provisions may prove to be one of the most effective weapons to-date against shakedowns by trolls.