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Future of Patent Liability: More Bifurcated Patent Trials Ahead?

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By Aditi Mukherji, JD on July 01, 2013 10:01 AM

The U.S. Federal Circuit Court of Appeals has held that it can hear an appeal on patent infringement liability before the trial on damages has occurred.

The court ruled it could hear Pylon Manufacturing's liability appeal of an infringement decision in favor of Robert Bosch LLC over patents related to windshield wipers. The ruling could lead to more bifurcated patent trials, reports Reuters.

The ruling stemmed from a lawsuit filed in 2008 by Bosch Corp against Pylon Manufacturing over a patent relating to windshield wiper parts. U.S. District Judge Sue Robinson of Delaware had bifurcated the case on the issues of liability and damages.

After the district court ruled for Bosch, Pylon appealed. Bosch moved to dismiss, arguing the appeals court didn't have jurisdiction to hear the case.

Much to the surprise of many people, the the Federal Circuit, sua sponte, decided to consider the jurisdictional issues en banc.

The ruling, written by Circuit Judge Sharon Prost, centered on what constitutes an "accounting." Under 28 U.S.C. § 1292(c), the Federal Circuit can hear a non-final district court decision only when all that's left is an accounting.

Damages

Congress first introduced the term accounting back in 1927. The court's opinion insisted that it was "well-known to include both the calculation of an infringer's profits and a patentee's damages" under the umbrella of accounting.

While Bosch argued that an accounting was limited to an accounting of an infringer's profits, the court ruled that it could include a trial on damages.

Willfulness

The court, however, split on whether parties can appeal a decision on liability in patent infringement cases before there has been a trial on willfulness. This, too, was a jurisdictional issue.

Citing historical cases, the majority said that it could, since willfulness is often determined as part of an accounting.

Circuit Judge Kathleen O'Malley, who dissented from the majority on both the damages and willfulness grounds, said that the court's decision "stretches the statutory provision beyond reasonable grounds." The appeal over Pylon's liability will now be heard by a panel of the Federal Circuit.

The Bottom-Line

The Federal Circuit wants to "make clear that district courts, in their discretion, may bifurcate willfulness and damages issues from liability issues in any given case [and] have the authority to try these issues together or separately."

The appeals court's decision "encourages judges to bifurcate, so a good part of district court litigation may never have to happen," said Edward Reines of Weil, Gotshal & Manges told Reuters.

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