Federal patent-infringement lawsuits aimed at defendants whose identities are kept hidden have shot up 167% from 2022 to 2023 in the Southern District of Florida, raising due-process concerns for the businesses and individuals affected by such filings.
The data was tallied in a recent report by Lex Machina, a legal analytics company, which found that “Schedule A” patent lawsuits have become increasingly common in the southern Florida district, which includes Miami. The changing patent-litigation landscape in the region came about even though the total number of patent cases declined by 21.5% during the 2022-2023 time period, according to Lex Machina.
In Schedule A cases, a plaintiff typically sues a large number of defendants suspected of patent infringement – such as e-commerce sellers from China – and the defendants are listed on a schedule attached to the legal complaint. But the schedule is typically kept under seal, with the plaintiff filing the complaint under pseudonyms such as “XYZ Corp.,” according to Lex Machina.
“Given how recently these cases have been filed, the majority remain open with a handful of case resolutions,” Lex Machina said in a blog post. “It remains to be seen whether plaintiffs who file ‘Schedule A’ cases in the Southern District of Florida will overwhelmingly prevail like the plaintiffs in the Northern District of Illinois.”
Sarah Burstein, a professor at Suffolk University Law School in Boston, said that the Schedule A patent litigation model was perfected in Chicago.
“These cases seem to be clustered mainly in three districts, the biggest one being the federal court in Chicago, the Northern District of Illinois; the court in Miami; and the Southern District of New York," Burstein told the Florida Record.
The reason for the growth of these cases in southern Florida is likely not because Miami has become a hub for tech companies, she said. The Southern District of Florida appears to be open to this new form of litigation, which makes it easier to freeze or confiscate suspected counterfeiters’ assets without immediately alerting them, and more local attorneys are filing them, according to observers who have concerns about the litigation.
“Many defendants, attorneys and academics … feel this practice has been abused to become a lucrative business of suing sellers for sometimes baseless counterfeit claims,” a 2023 article in the MIT Technology Review states.
Burstein said she has concerns about the spread of such cases because defendants’ due process rights seem to often get stripped away. Notices of legal complaints can be sent by email rather than normal means of notification if the judge allows it, she said, and such emails can look like scams to defendants, leading them to disregard them.
“From what I’ve seen so far, this seems to be a lawyer-driven phenomenon,” Burstein said. “... There’s a cash-grab element where they ask for a freeze” on Amazon or other types of accounts.
Potential problems associated with this type of patent litigation include burdens to the court system and harm to consumers, in that legitimate competition in the marketplace can be reduced, she said.
“It is troubling to see this spread because we know for a fact that not all of the defendants are intentional infringers,” Burstein said. “... Plaintiffs’ lawyers would say they are deterring bad actors, but there are a lot of reasons ... that bad actors not only ones (who are) hurt."