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LORAL FAIRCHILD CORP. v. VICTOR CO. OF JAPAN

July 16, 1996

LORAL FAIRCHILD CORPORATION, Plaintiff,
v.
VICTOR COMPANY OF JAPAN, LTD., et al., Defendants. LORAL FAIRCHILD CORPORATION, Plaintiff, v. MATSUSHITA ELECTRIC INDUSTRIAL COMPANY, LTD., et al., Defendants.



The opinion of the court was delivered by: RADER

 In this patent case, Loral Fairchild Corporation joined numerous Japanese electronics manufacturing companies in a single civil action for infringement of two United States patents. Defendants vigorously compete against each other in the electronics industry in the manufacture and sale of semiconductor devices as well as in the sale of consumer electronics products such as cameras, VCRs and camcorders.

 Some defendants manufacture semiconductor devices and consumer electronics devices. Other defendants only make and sell consumer electronics devices. These latter defendants purchase semiconductor devices for their consumer products from the other group of defendants. This same consumer defendant group sought to be severed and stayed from this case. They agreed to be bound by certain rulings made in the cases against the manufacturing defendant from whom they purchased chips. The court granted that motion. Six so-called manufacturing defendants remained -- Sony, Sanyo, Toshiba, Hitachi, NEC, and OKI.

  In view of the Federal Circuit's (now the Supreme Court's) decision in Markman v. Westview Instruments, Inc., 52 F.3d 967 (Fed. Cir. 1995) (en banc), aff'd on other grounds, 134 L. Ed. 2d 577, 116 S. Ct. 1384 (1996), the court ordered briefing on claim construction and scheduled a hearing to receive qualified expert testimony on the meaning of the claims. For this proceeding, the court allotted plaintiff and defendants each two expert witnesses. This joint proceeding clarified that a jury trial with all six manufacturing defendants would present logistical difficulties. For example, each defendant wanted an opportunity to question witnesses -- sometimes on repetitive points, other times on issues unique to a particular defendant's interests. Each defendant also sought to participate in oral argument -- sometimes raising redundant points, other times presenting confusing corollaries or even points conflicting with another defendant.

 Following the hearing, several defendants moved for separate trials. The various defendants cited a number of potential problems associated with a joint trial. For example, defendants foresaw potential unfair prejudice in trying a case with a single United States plaintiff against a large group of Japanese defendants. According to defendants, they would confront the prospect of making Goliath seem sympathetic against David, but would confront that task before an audience of Hebrews. In addition, defendants highlighted the substantial increased trial time and expense resulting from a joint trial.

 Defendants also expressed concern over the handling of sensitive trade secrets in the presence of other defendants, who may have the right to have a representative remain in the courtroom at all times. Finally, Loral apparently has accused more than 150 products and many processes of infringement of its two patents. Defendants believed the jury would face difficulty in considering each of their unique products and processes separately for infringement. Finding substantial merit in defendants concerns, on October 11, 1995, the court separated the trials of the six manufacturing defendants and established a trial schedule with the Sony defendants first.

 The case proceeded to trial between Loral and Sony in January 1996, on the issues of ownership, infringement under the doctrine of equivalents, and validity of the asserted claims of the patents-in-suit. After five weeks of trial and several days of deliberations, the jury returned a verdict on February 14, 1996. The jury found Loral had proven it owned the two patents and that Sony infringed the asserted claims of the patents under the doctrine of equivalents. The jury also reported that Loral had proven Sony induced infringement of only the '674 patent. However, the jury reported that Sony did not prove invalidity of any of the asserted claims of the patents-in-suit.

 Following this verdict, Sony moved for judgment as a matter of law and for a new trial. The court also tried the issues of laches and equitable estoppel to the bench in April 1996.

 On July 12, 1996, the court granted Sony's motion for judgment as a matter of law and for a new trial, in the alternative. The court found insufficient evidence under applicable law to support the jury's verdicts on infringement of the '485 and '674 patents.

 On July 16, 1996, the court held a telephone conference with counsel regarding possible certification of this case under Fed. R. Civ. P. 54(b) for immediate appeal. The parties raised no objection to this procedure. Having finally resolved all liability issues between Loral and Sony but with pending claims against the other defendants, the court believes no just reason for delay exists, dictating an immediate appeal of this matter to the United States Court of Appeals for the Federal Circuit under Fed. R. Civ. P. 54(b). This is the court's order certifying this case for appeal.

 DISCUSSION

 Federal Rule of Civil Procedure 54 authorizes a court to certify a final judgment for immediate appeal notwithstanding the fact that other issues remain for resolution. Fed. R. Civ. P. 54(b). Rule 54(b) reads:


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