The Rise of Reverse Class Actions in the IP World

Seismotech IP Holdings Inc. and Seismotech Safety Systems Inc. (collectively referred to as “Seismotech”) have reportedly commenced four reverse class actions to enforce their patent rights.

Two of the class actions relate to classes of defendants comprised of persons who manufactured, distributed, or sold allegedly infringing intelligent thermostats, and two relate to classes of defendants comprised of individuals who purchased those thermostats. According to the Notice of Motion, Seismotech alleges the infringement of Canadian patents: 2,364,081; 2,551,847; 2,551,854; and 2,552,603.

Unlike a conventional class action, in which a representative plaintiff sues a defendant on behalf of a class, a reverse class action contemplates an individual plaintiff suing a group of defendants who are alleged to have engaged in the same wrongful conduct. Rather than a representative plaintiff, reverse class actions require a representative defendant.

Reverse class actions in the context of enforcing intellectual property rights were dealt with in the Federal Court’s recent decision in Voltage Pictures, LLC v Salna, where a plaintiff sought to bring a class action against all those that allegedly downloaded their copyrighted content. While the Federal Court ultimately rejected certification due to deficiencies in Voltage Picture’s litigation plan, it left the plaintiff with the option to reapply for certification with a revised plan.

While it is unclear whether Seismotech will be successful in having their class actions certified in this manner, the rise of reverse class actions may serve as a warning to consumers who may now be subject to liability.

Authors: Arash Rouhi and Olivia Moon