Bifurcated patent trials may benefit defendants to the detriment of patent holders; trade-off may be larger damage awards in some cases.

Federal Circuit rules that a judgment on patent infringement liability is appealable as a final judgment

  • even though a trial on damages has not yet occurred, and
  • even though willfulness issues are outstanding and remain undecided.

 

District courts have long had the power to order the bifurcation of liability, willfulness and damages issues in patent cases when it furthers convenience or to avoid prejudice, or when separate trials are conducive to expedition and economy.

The issue is even more relevant today. As the Federal Circuit explained “Modern patent damages trials, with their attendant discovery, are notoriously complex and expensive. As the district court put it, ‘discovery disputes related to document production on damages and the Daubert motion practice related to damages experts are a drain on scarce judicial resources.’ Given the substantial reversal rate of liability determinations on appeal, the whole expense of a damages trial is often wasted.” Bosch v. Pylon Manufacturing. Op. 19, 20.

Now, following its June 14, 2013 decision in Bosch v. Pylon Manufacturing, the en banc Federal Circuit may have breathed new life into the use of bifurcated patent trials as a litigation sword and shield for defendants.

The issue with bifurcated patent trials has been the appealability of a verdict of a patent infringement liability in a first phase of a trial before the trial of the bifurcated issues.  The applicable law provides that a final judgment of a patent infringement judgment is not a final judgment within the meaning of § 1295(a)(1) (i.e., an appeal from a final decision of a district court) and a traditional understanding of the finality requirement. So the trial court in Bosch entered final judgment pursuant to Federal Rule of Civil Procedure 54(b) (i.e., entry of a final judgment “as to one or more but fewer than all of the claims or parties only upon an express determination that there is no just reason for delay”) and encouraged the parties to pursue an  appeal on the basis of that certification which the parties did.

On appeal, the Federal Circuit held that a final judgment of patent infringement liability by a lower court even though a trial on damages and willful infringement has not occurred was appealable to the Federal Circuit as an appeal of a judgment under 28 U.S.C. § 1292(c)(2).

Under § 1292(c)(2), an appeal to this court may be made “from a judgment in a civil action for patent infringement which would otherwise be appealable to the United States Court of Appeals for the Federal Circuit and is final except for an accounting.” The disposition of Bosch turned on the meaning of “accounting,” and specifically, whether a trial on damages and willfulness is an accounting for the purposes of § 1292(c)(2). The en banc court found both to be an accounting and so the court had jurisdiction to hear the patent infringement liability appeal. The en banc returned the case back to the panel to hear the appeal of the patent infringement liability judgment.

The effect of this ruling may invite more and earlier appeals, delay final judgment of damages, and avoid final judgment of damages altogether if the patent is found to be invalid or not infringed. This ruling thus provides defendants charged with infringement with immediate litigation advantages. Defendants may be able to avoid the time and expense of litigating damages and willful infringement issues if no liability is found. Defendants may also be able to exclude the seriousness of a plaintiff’s injuries and the human element from the liability determination which are often on display during the willful infringement and damages phases of a trial. But if the patent holder survives the appeal of the liability judgment, the patent holder may enjoy a “much larger” damages award since the “uncertainty” of liability has been removed from the damages equation.  That is the new trade-off that litigants may now need to balance in view of the Federal Circuit’s ruling in Bosch.

About The Juhasz Burge PC Firm

The Juhasz Burge PC Firm is a patent and intellectual property (IP) protection, counseling, licensing and litigation firm. Combining deep patent/IP experience, broad capabilities across a wide spectrum of industries and technologies, and extensive expertise in strategic counseling, The Juhasz Burge PC Firm collaborates with clients to help them better see, understand and realize the potential strategic value from their patents and intellectual property.

For more information on bifurcated patent trials, contact Paul R. Juhasz at +1 713-260-9651.