Monday, August 31, 2009

Bifurcation Ruling Highlights Divergent Approaches to Patent Case Management

As reported here and in the August 28, 2009 edition of the Docket Report, Judge Sue Robinson of the District of Delaware issued an order bifurcating liability from remedies in a patent case. While the ruling was appropriately based on the facts of that particular case, Judge Robinson seized the opportunity to reflect on her general approach to bifurcation in patent cases:

Bifurcation is appropriate, if not necessary, in all but exceptional patent cases . . . . [I]n my experience, discovery disputes related to document production on damages and the Daubert motion practice related to damages experts are a drain on scarce judicial resources. . . . I have concluded that bifurcation promotes the just and efficient resolution of what damages, if any, should be awarded by: (1) giving the parties -- those with the most expertise in the market -- the first opportunity to translate [the] decision on liability into practical commercial consequences; or (if the parties cannot resolve the matter) (2) giving the damages jury a focused dispute to resolve.

StreamServe AB v. Exstream Software LLC et al., 1-08-cv-00343 (DED August 26, 2009).

That same day, Judge Robinson issued an order in Robert Bosch LLC v. Pylon Manufacturing Corp., 1-08-cv-00542 (DED August 26, 2009) again granting bifurcation of liability and damages, but this time clarifying that she includes willfulness as part of the damages analysis: “[U]ltimately, a finding of willfulness is of no moment unless and until the district court, in its sole discretion, chooses to increase damages by reason of the finding; willfulness is a damages issue, not a liability issue."

Judge Robinson’s approach represents one end of a widely-divergent spectrum. The other extreme is expressed in Judge Kenneth A. Marra’s ruling in Baratta v. Homeland Housewares LLC, 0-05-cv-60187 (FLSD October 27, 2008) where he stated:

The Court finds that this is not an exceptional case that warrants bifurcation of liability and damages. Defendants point out the complexity of a patent case, which requires the Court to hold a Markman hearing, construe the claims of the patent-in-suit, and assess the validity of the patent in view of the prior art. These are the usual hurdles a court faces in most patent infringement actions and do not necessitate bifurcation. “In all cases, including patent cases, bifurcation is the exception, not the rule.”

Nationwide, there does not seem to be a clear trend. In the past 12 months, district courts in the United States have issued substantive rulings on 19 motions to bifurcate liability from damages in patent cases. 11 were granted and 8 were denied.

What is clear, however, is that district judges tend to have a preference based on past experience and they rarely deviate from that preference. This is suggested by the rulings discussed above and reflected even more clearly in court records. Since January 1, 2008, district courts in the United States have issued substantive rulings on 57 contested motions to bifurcate in patent cases -- 39 were granted, 18 were denied (this includes all motions to bifurcate, not just motions addressing liability and damages). During that same time period, 5 judges ruled on multiple motions to bifurcate. Considered on a judge-by-judge basis, the results are amazingly consistent:

As shown above, only Judge Jones deviated from his own track record. However, the circumstances and basis for the motions in each case were significantly different from each other. Compare IGT v. Alliance Gaming Corp., et al., 2-04-cv-01676 (NVD May 29, 2008) (denying motion to bifurcate antitrust claims from patent claims brought on the “eve” of trial) with Japan Cash Machine Co., LTD v. MEI, Inc., 2-05-cv-01433 (NVD November 20, 2008) (granting motion to bifurcate inequitable conduct from infringement). Stated differently, 83% of the decisions on motions to bifurcate have been consistent with a judge’s other bifurcation rulings.

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