Robert Bosch, LLC v. Pylon Mfg. Corp.: Liability issues are appealable before damages or willfulness determinations

June 20, 2013

Overview

On June 14, 2013, the United States Court of Appeals for the Federal Circuit, sitting en banc, held that the Federal Circuit has jurisdiction to hear appeals from patent infringement liability determinations when damages and willfulness issues are outstanding and remain undecided.[1]  The court acknowledged the “substantial reversal rate” of liability findings on appeal.[2]  Now parties do not have to complete the damages and willfulness stages of trial before inevitably appealing the liability finding.  Instead, once the liability portion of the trial concludes, the parties may appeal to the Federal Circuit.  This holding enables litigants the opportunity to conserve resources when trying patent cases.

This decision promises to relieve the frustration of parties, and court personnel, who devote significant time and resources to a typical patent trial, only to see the liability result overturned on appeal.  Although a clear majority endorsed the result regarding damages—seven of the nine judges signed off on the majority opinion for that portion—the court was more closely divided on the question of willfulness—with five opining it did not have to be decided for appeal and four dissenting.  Both results turned on the interpretation of “an accounting,” found in the jurisdictional statute 28 U.S.C. § 1292(c)(2). 

I.                   The Facts of Robert Bosch, LLC v. Pylon Mfg.  Corp.

Robert Bosch, LLC sued Pylon Manufacturing Corporation in the United States District Court of Delaware for patent infringement.  The District Court granted Pylon’s motion requesting that the court bifurcate liability and damages issues.  The court additionally determined that willfulness was a damages issue and stayed discovery on damages and willfulness issues.

After a jury trial on liability, the court entered judgment on the liability issues.  After Bosch appealed and Pylon cross-appealed, Bosch moved to dismiss both appeals, arguing that the Federal Circuit lacked jurisdiction.  The Federal Circuit denied that motion.  Later, both parties argued before a panel of the Federal Circuit and subsequently the Federal Circuit sua sponte granted a rehearing en banc.

II.                The Federal Circuit’s en banc Decision

Because the trial court had not determined damages or willfulness issues, Bosch argued that the Federal Circuit did not have jurisdiction.  The final judgment rule determines whether the Federal Circuit has jurisdiction over an appeal from a United States district court.  Specifically, the final judgment rule states that a party may not appeal “until there has been a decision by the district court that ends the litigation on the merits and leaves nothing for the court to do but execute the judgment.”[3] An exception to the final judgment rule is in 28 U.S.C. § 1292(c)(2), which grants appellate jurisdiction to the Federal Circuit “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.” Thus, the court’s jurisdiction depended upon whether “an accounting” includes determining damages and willfulness issues.  The en banc court addressed each question separately.

Pointing to case law and the history of the statute, the court held that an accounting includes both a determination of damages and a trial on damages.[4]  Seven of the nine judges supported this conclusion.  The majority pointed out that nothing in the text or history of the statute, or the case law, mandated that they find a determination of damages is outside the scope of section 1292(c)(2).[5]  Instead, the majority argued that the statute’s history and policy, in addition to case law, suggests that the statute confers jurisdiction.[6]  Thus, the Federal Circuit can hear appeals after a determination of liability but before a trial on damages has occurred.

Next, the court held that a determination of willfulness also qualifies as “an accounting.”[7]Here, the court was more divided, with only five of nine judges supporting this second holding.  To start, the majority clarified that its determination did not hinge on the “interrelatedness of the willfulness and infringement issues.”[8] Additionally, the majority reiterated a district court’s province to bifurcate willfulness and infringement issues as properly within its discretion.[9]  Again the court turned to the history and text of the statute and found that willfulness issues may be tried as part of the accounting under section 1292(c)(2).[10]  Therefore, the majority held that the Federal Circuit has jurisdiction over appeals from “patent infringement liability determinations when willfulness issues are outstanding and remain undecided.”[11]

By holding that the Federal Circuit has jurisdiction over appeals before a trial on damages or willfulness has occurred, the Bosch court paved the way for potential cost and time savings for patent litigants.  Now parties can avoid retrying all three parts of a case simply because the liability determination was overturned on appeal.  Thus, the result in Bosch promises to decrease the resource expenditure that patent litigation requires. 

Authored by Brian McCall

 


 

[1] Robert Bosch, LLC v.  Pylon Mfg. Corp., No. 2011-1363, 1364, 2013 U.S. App. LEXIS 12005, at *3 (Fed. Cir. June 14, 2013).
[2] Id. at *28-29.
[3] Firestone Tire & Rubber Co. v. Risjord, 449 U.S. 368, 373 (1981) (citations omitted).
[4] Bosch, 2013 U.S. App. LEXIS 12005, at *32.
[5] Id.
[6] Id.
[7] Id.
[8] Id. at *33
[9] Id.
[10] Id. at *38-39.
[11] Id. at *39.

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