Will Judges Become More Skeptical of Joinder in SAD Scheme Cases?–Dongguan Juyuan v. Schedule A

November 8, 2024 · by Eric Goldman · in Evidence/Discovery, Patents

[Like many of you, I am still trying to make sense of the election results. I’ll restart my normal blogging, but I’m having trouble focusing.]

This is a design patent SAD Scheme case before Judge Jeremy C. Daniel in the Northern District of Illinois. (He’s a Biden appointee from 2023). Immediately after the plaintiff filed its papers on November 1, Judge Daniel sua sponte issues an order that starts:

experience has shown that not all defendants named in a Schedule A case work together. More importantly, experience has shown that joinder under Fed. R. Civ. P. 20 is rarely appropriate in Schedule A cases.

Hello! The joinder problems should be obvious even without any past litigation experience, but at least the judge is now preemptively asking the right questions. Perhaps Judge Daniel feels a little burned by past SAD Scheme plaintiff gamesmanship?

Judge Daniel rejects the standard boilerplate allegations about joinder:

the complaint alleges that, “On information and belief, Defendants are an interrelated group of infringers working in active concert to knowingly and willfully make, use, offer for sale, sell, and/or import into the United States for subsequent sale or use the same product that infringe the **552 Patent in in a series of occurrences.” This is a conclusory statement that does nothing to establish the propriety of joinder. Moreover, experience has shown that, while some individual defendants may operate several online stores, and while some individual defendants may coordinate with other defendants before or after the filing of the infringement action, rarely, if ever, have all defendants named in a Schedule A case worked together.

As a result, Judge Daniel gives the plaintiff a choice: file a brief justifying joinder, or amend the complaint to reduce the defendants down to those who are properly joined.

* * *

Most SAD Scheme complaints contain some variation of this allegation: “Defendants are an interrelated group of infringers working in active concert.” However, the complaints rarely or never back up this claim with any defendant-specific supporting facts. Instead, the only “supporting” evidence eventually provided by plaintiffs is that the merchants sold the same (allegedly infringing) item in parallel with each other on the online marketplaces, which does not satisfy joinder standards (especially for patent cases, where Congress has imposed higher standards for joinder). Nevertheless, the plaintiffs hope the judges will take the joinder allegations on faith, then forget to double-check as the facts in the case actually emerge.

In this order, Judge Daniel instead “requires counsel for the plaintiff to show cause why the allegation that ‘defendants are working in active concert’ does not violate [FRCP] Rule 11(b)(3).” In other words, Judge Daniel calls BS on the joinder allegations and is prepared to hold the plaintiff’s lawyer (Robert Michael Dewitty of Dewitty And Associates) accountable for trying. (To be clear, if Judge Daniel is unsatisfied with the explanation, I expect the most “severe” sanction will be dismissal of the case, nothing more).

I haven’t looked to see if Judge Daniel has questioned joinder in other SAD Scheme cases. Either way, it seems like he’s now fully alert to the SAD Scheme joinder problem and should be inclined to similarly interrogate every future SAD Scheme case that makes it to his courtroom. Maybe that will inspire other N.D.Ill. judges to proactively do the same. And while they are at it, maybe the judges can preemptively probe other individualized fact-based questions like jurisdiction. #StoptheSADScheme