Parent Companies Can Be Liable for a Subsidiary’s Alleged Infringement Under Rule 12(b)(7)

What liability does a parent company have when a subsidiary’s actions allegedly constitute patent infringement?

That is the question answered in a recent patent infringement case, Akoloutheo, L.L.C. v. System Soft Technologies, Inc., No. 4:20-cv-985, 2021 WL 1947343 (E.D. Tx. May 14, 2021). In particular, Akoloutheo sheds light on the application of Rule 12(b)(7) in a situation where a subsidiary of the defendant parent company is the primary participant in the acts giving rise to the infringement action and could not be joined to the present infringement action. Based on the court’s determination, parent companies should not expect to escape infringement liability by pinning the blame on a subsidiary and seeking a dismissal via a 12(b)(7) motion when the subsidiary cannot be joined due to it being viewed as a joint tortfeasor and thus does not need to be joined to the present action under Rule 19. Further, the infringement statute may impute infringement liability on the parent through an inducement or contributory theory. Thus, despite the protection offered through the creation of separate corporate entities, parties should be aware that infringement liability may extend to both the parent and subsidiary under the theories of induced infringement or contributory infringement, even if the subsidiary is the primary participant in the alleged infringing acts.

View the full Alert on the Duane Morris LLP website.

Immunity Protections Expanded Under CARES Act for Covered Countermeasures and Healthcare Volunteers

As discussed in our March 18 Alert, the Secretary of Health and Human Services has issued a declaration authorizing drugs, devices and biologics used to treat or mitigate COVID-19 as covered countermeasures under the Public Readiness and Emergency Preparedness (PREP) Act. Following Secretary Azar’s declaration of a public health emergency, covered persons may obtain immunity under federal law for all claims arising from manufacturing, distributing or administering covered countermeasures, subject to the conditions laid out at 42 U.S.C. § 247d-6d, the declaration and other applicable regulations.

Subsequent to our previous Alert, President Trump signed into law the Coronavirus Aid, Relief and Economic Security Act (CARES Act), which expanded the covered countermeasure protections offered by the PREP Act.

To read the full text of this Duane Morris Alert, please visit the firm website.

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The opinions expressed on this blog are those of the author and are not to be construed as legal advice.

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