The Waco Division Hosts a Patent Party

UPDATED MAR. 4, 2021

We’re jumping back in time a few weeks to cover an event that occurred during the runup to (but wasn’t related to) the MV3 v. Roku trial, and that’s been relatively little-covered by the legal media. Namely, on October 1 the Judicial Panel on Multidistrict Litigation issued an order centralizing eight patent cases filed by Proven Networks, LLC in front of Judge Albright.

A patent MDL is a relatively rare occurrence: Of the 180 MDLs pending as of October 15, 2020, only 11 (6.1%) involved patent litigations. (Over 57% of pending MDLs are either antitrust- or products-liability-related.) This is arguably unexpected, given that commentators have noted that when setting up the underlying statutory scheme, “Congress predicted that patent cases would be particularly appropriate for multidistrict litigation” (citing 1968 U.S.C.C.A.N. 1898 (“The types of cases in which massive filings of multidistrict litigation are reasonably certain to occur include not only civil antitrust actions but also, common disaster (air crash) actions, patent and trademark suits, products liability actions and securities law violation actions, among others.”)). The Proven Networks MDL is also only the sixth MDL ever to have been centralized in the Western District of Texas; only the second WDTX MDL since 1995; and the first-ever WDTX patent-related MDL.

So how did this come about? The first chapters tell a fairly common story. Between March and May 2020, Los Angeles-based patent assertion entity Proven Networks, LLC commenced a series of patent litigations—with some follow-on proceedings in July—as follows:

(As noted above, on July 14, Proven Networks voluntarily dismissed its EDTX action against HPE and refiled in Waco.)

On July 21, the accused infringers in all eight of the pending Texas patent cases (Arista, Amazon, Cisco, Dell, HPE, NetApp, SolarWinds, and SonicWall) filed a joint motion before the JPML to “consolidate and transfer ten related federal actions to the Northern District of California for coordinated or consolidated pretrial proceedings.” As of that time Proven Networks’ cases stood at one in EDTX (Cisco), two in NDCA (Extreme Networks and F5), four in Waco (Arista, HPE, NetApp, and SolarWind), and three in Austin (Amazon, Dell, and SonicWall—the last voluntarily commenced as a DJ). 

On August 11, Proven Networks voluntarily dismissed and refiled its NDCA case against F5 Networks, asserting a subset of the previously-asserted patents. Proven Networks then filed its response in opposition to the Texas parties’ MDL motion on August 12, in which it opposed the movants’ request for consolidation, in part on the ground that “a review of the five patents asserted across all cases confirms that none of the asserted patents share a common inventor or a common specification or claim terms that likely will be in dispute”; that “[i]n stark contrast to the cases cited in movants’ brief, this is not a situation in which a single patent or a family of patents with a common patent specification have been asserted in dozens of districts”; and that “[t]he list of accused products also vary to a great degree.” But in the alternative, Proven Networks maintained that “[i]f this panel were to find that centralization were proper in this case, the facts strongly suggest that centralization should take place in the Western District of Texas, not the Northern District of California.”

On August 13, NDCA defendant Extreme Networks filed its own response stating it “does not oppose transfer of Movants’ actions to the Northern District of California” and “does not oppose [MDL] centralization in the Northern District of California,” but otherwise “tak[ing] no position on Movants’ Motion, including whether consolidation is appropriate.” Proven Networks subsequently voluntarily dismissed its case against Extreme Networks on September 3, without prejudice to refile.

On August 31, F5 Networks filed a Waiver of Oral Argument in which it noted, much as Extreme Networks had done, that F5 “[d]oes not oppose transfer to N.D. Cal.” and “otherwise takes no position.”

Following completion of briefing on August 20, the JPML conducted a hearing on September 24, held remotely via Zoom. (Perhaps notably, “[t]o ensure the manageability of the Zoom hearing, only counsel presenting oral argument [were] provided access to the videoconference,” although “[n]on-arguing counsel, members of the press, and the general public [could] access live audio of the oral argument.”)

The JPML issued its order one week later, effectively giving no party the full relief it sought.

The Panel first noted that it found Proven Networks’ arguments opposing centralization “unpersuasive,” given that:

1. “[A]lthough different combinations of patents are asserted in the actions, there is substantial overlap in the asserted patents,” and “[a]bsent centralization, duplicative claim construction proceedings on these patents will be necessary”;
2. “[D]ifferences in the accused products and infringement allegations in the cases do not prevent centralization where common factual issues involving claim construction and patent invalidity are shared”; and
3. “[T]he anticipated consolidation of the Western District of Texas actions is insufficient to address the risk of duplicative proceedings and inconsistent rulings,” as “[a]ctions still would be proceeding independently in the Northern District of California and the Eastern District of Texas.”

The Panel also observed that “all actions involve common factual issues relating to the patents’ transfer history and associated valuation, damages, and standing issues.”

But then the Panel summarily concluded that rather than centralizing the actions in NDCA, as requested by the movants, “the Western District of Texas is an appropriate transferee district,” based on a very short set of considerations:

Seven of the eight actions on the motion are pending in this district, and the accused infringers in two actions have their headquarters there. Judge Alan D. Albright, who presides over six actions, is an experienced jurist who has the ability and willingness to manage this litigation efficiently. We are confident he will steer this litigation on a prudent course.

Following the October 1 MDL order, the JPML on October 5 issued a subsequent Conditional Transfer Order further directing the F5 Networks NDCA action to be centralized in WDTX as a “tag-along” action, in response to which F5 Networks filed a notice of objection and motion to vacate. That motion is still pending.

So what possible lessons can be learned in terms of the Panel’s selection of the WDTX over the NDCA? 

First, the JPML appears to consider raw arithmetic as a compelling factor when deciding in what district to centralize a related set of proceedings. Proven Networks chose to sue six alleged infringers in WDTX, and a seventh accused infringer similarly chose to commence suit here. The Panel appears to have given little if any weight to arguments raised by the movants about the locations of knowledgeable witnesses, etc., that are the hallmark of typical convenience-transfer motion practice. Rather, the Panel’s conclusion that WDTX is an appropriate forum to try a related set of complex patent cases focuses on the “ability and willingness” of the presiding Judge to “steer [the centralized] litigation on a prudent course.” 

Second, did the absence of the NDCA-located parties from the motion for centralization affect the Panel’s analysis? The Texas parties’ motion has—at least for now—potentially had the effect of sweeping in F5 Networks, as well, which had previously been sued only in its home jurisdiction of NDCA. Future parties to potential tag-along actions may be well-advised to memorialize a position at greater length than F5 Networks chose to do here.

At a minimum, it will be very interesting to see if patent defendants—or perhaps even patent plaintiffs—choose to go back to the MDL well again anytime soon.

UPDATED MAR. 4, 2021: The Panel denied F5’s motion to vacate on February 5, 2021, and entered that order on February 25. The F5 case was formally transferred to WDTX on March 3.