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Federal Circuit Expressly Allows Trial Courts to Stay Damages Until After an Appeal in a Patent Infringement Case

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Patent litigation tends to be protracted and expensive. In the past, such litigation has continued to a conclusion before any appeal was taken to the Court of Appeals for the Federal Circuit.  In some instances, a ruling that the trial court made early in the case on claim construction, or a ruling on liability, might be reversed on appeal, and the case would have to be remanded back to the trial court to repeat the trial on damages and other issues that depended upon the earlier ruling that was reversed on appeal.

On June 14, 2013, the Federal Circuit issued a decision in Robert Bosch, LLC v. Pylon Manufacturing Corp., No. 2011-1363, that may reduce litigation expenses in some patent cases. As a result of this decision, a trial court is expressly allowed to bifurcate the issue of damages and willfulness, and even to stay all discovery on damages and willfulness, until the conclusion of an appeal on the trial court’s judgment on liability.

In patent cases, the statutory provisions of 28 U.S.C. § 1292(c)(2) confer appellate jurisdiction over an appeal in a case from a judgment that is “final except for an accounting.”  Historically, an “accounting” in a patent case was a proceeding in a court of equity to determine an adjudged infringer’s profits. See Providence Rubber Co. v. Goodyear, 76 U.S. 788, 804 (1869) (describing an accounting in detail).

The Federal Circuit’s opinion traced the historical development of the law and the evolution of remedies in patent cases to allow for the recovery of a reasonable royalty as the measure of a patentee’s damages, and to allow the calculation of a reasonable royalty as part of an accounting.  The Court of Appeals also reviewed the legislative history of the statute and its predecessor statutes.  The Court reached the conclusion that, in the statute, the term “accounting” includes a determination of both a determination of damages and profits, and also means a trial on damages.

The Federal Circuit also decided that the statute in question allows the court to entertain an appeal from a patent liability determination when willfulness issues are outstanding and remain undecided.  In reaching this decision, the Court of Appeals noted that at the time the statute was enacted, the practice of determining willfulness as part of an accounting was well established.  The Court found nothing in the legislative history to suggest that when Congress first gave the courts of appeals interlocutory jurisdiction over cases that are final except for an accounting, it intended to disturb the practice of determining willfulness as part of an accounting.

Whether a trial court bifurcates the issues of damages and willfulness from a determination on liability remains discretionary. However, the potential drain on scare judicial resources that may be eliminated by postponing the issues of damages and willfulness until after issues of liability have been resolved on appeal will be a powerful argument in favor of bifurcation.

This decision in Robert Bocsh, LLC v. Pylon Manufacturing Corp., was an en banc decision by the entire court.