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IP Alert: Federal Circuit Issues Decision in Bosch v. Pylon

June 17, 2013

As previously reported, on June 14, 2013, the U.S. Court of Appeals for the Federal Circuit issued an en banc decision in Robert Bosch LLC v. Pylon Manufacturing Corp. The court ruled that the interlocutory appeals statute, 28 U.S.C. § 1292(c)(2), confers jurisdiction on the Federal Circuit to entertain appeals from patent infringement liability determinations when a trial on damages has not yet occurred, and even if the issue of willful infringement remains undecided. This decision is significant because it will potentially provide a quicker route to appeal for the losing party in a patent case.

Generally, U.S. appellate courts observe what is known as the “final judgment” rule. This rule specifies that parties dissatisfied with a judgment or order of a district court may appeal only after the district court has entered a final judgment in the action. The final judgment rule is subject to a number of exceptions, one of which is the interlocutory appeal statute, 28 U.S.C. § 1292. Section (c)(2) of this statute provides that the Court of Appeals for the Federal Circuit has exclusive jurisdiction “of an appeal 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.”

In the Bosch appeal, the parties disputed the meaning of the term “accounting” in this statute. The district court had bifurcated the liability and damages phases of the trial, stating that “bifurcation is appropriate, if not necessary, in all but exceptional patent cases.” Following a jury trial on liability and motions for judgment as a matter of law, the district court entered judgment on the liability issues. This prompted appeals from both parties. Bosch then filed a motion to dismiss the appeals on the grounds that the interlocutory statute did not apply.

In its analysis, the en banc Federal Circuit considered whether the term “accounting” was limited to an accounting of an infringer’s profits, a former equitable remedy for patent infringement that is no longer available for infringement of utility patents. The court answered this question in the negative, holding that an “accounting” within the meaning of the statute includes reasonable royalty or other damages. The court reached this conclusion via historical analyses of the law of patent damages and of the interlocutory appeals rule.

With regard to the willfulness question, the court first observed that district courts possess the authority to bifurcate willfulness and infringement issues. The court also noted prior holdings that separate trial of damages and willfulness issues did not violate the Seventh Amendment to the U.S. Constitution. The court then held that willfulness may be tried as part of the “accounting” under the statute, again basing its conclusion on a historical analysis. Four of the judges on the en banc court dissented in part.

The Federal Circuit’s decision is seen as constituting a response to the cost of patent litigation. The district court had observed that “discovery disputes related to document production on damages and the Daubert motion practice related to damages experts are a drain on scarce judicial resources.” Echoing this sentiment, the Federal Circuit observed that “[g]iven the substantial reversal rate of liability determinations on appeal, the whole expense of a damages trial is often wasted.” Thus, the court found that public policy considerations supported its decision.

For more information, please contact Fitch Even partner Allen E. Hoover, the author of this alert.

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