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Briggs & Stratton Corporation v. Chongqing Rato Power Co., Ltd.

United States District Court, Second Circuit

November 7, 2013

CHONGQING RATO POWER CO., LTD., et al., Defendants.

MATTHEW M. WOLF, ESQ., et al., for Plaintiffs

JEFFREY M. OLSON, ESQ., et al., for Defendants


ANDREW T. BAXTER, Magistrate Judge.

Presently before this court is defendants' letter motion dated October 4, 2013 (Dkt. No. 75) seeking to bifurcate the issue of patent damages from liability, and to stay damages discovery pending resolution of liability issues. The plaintiffs have opposed the motion by letter brief dated October 25, 2013 (Dkt. No. 76), and the defendants filed a brief reply (Dkt. No. 77). After considering the written submissions of the parties, and for the reasons set forth below, this court denies the motion to stay damages discovery. The defendants' motion to bifurcate liability and damage issues at trial is also denied, but without prejudice to renewing that motion before the presiding District Judge following the completion of discovery.

I. Background[1]

Plaintiffs Briggs & Stratton Corporation and Briggs & Stratton Power Products Group (collectively, "plaintiffs"), manufacturers of "Ferris"-branded lawn mowers, initiated this patent infringement action against Defendant Chongqing RATO Power Company and its subsidiaries, Defendants RATO North America and Denver Global Products (collectively, "defendants"), manufacturers of an allegedly infringing lawn mower named "RAVEN." (Compl., Dkt. No. 1). Plaintiffs' Ferris-branded lawn mowers feature an independent suspension enabling the two front wheels to move over terrain independently of each other. Plaintiffs purport to hold many patents relating to mower suspensions, but assert in this action multiple claims relating to two patents-U.S. Patent No. 6, 510, 678 (hereinafter the "678 Patent") and U.S. Patent No. 7, 107, 746 (hereinafter the "746 Patent"). ( See Pls.' Asserted Claims and Infringement Contentions, Dkt. No. 75 at 17-38). As set forth in their complaint, plaintiffs seek, among other things, injunctive relief and damages of "no less than a reasonable royalty." (Dkt. No. 1 at 7-8).[2]

On April 12, 2013, plaintiffs moved for a preliminary injunction, based on the alleged infringement of two particular claims by the defendants-claim 39 of the 678 Patent, [3] and claim 6 of the 746 Patent.[4] (Dkt. No. 27). In the Memorandum-Decision and Order denying the motion, Judge Kahn found that defendants raised a substantial question as to the validity of claim 39 of the 678 Patent, because the claim failed to satisfy the written-description requirement of 35 U.S.C. § 112 ¶ 1 (Dkt. No. 70 at 10-14) and on the grounds of obviousness under 35 U.S.C. § 103(a) (Dkt. No. 70 at 14-24). However, Judge Kahn rejected defendants' stated basis for challenging the validity of claim 6 of the 746 Patent and concluded that plaintiffs "have raised at least a sufficiently serious question going to the merits of their claim that the RAVEN infringes claim 6"[5] (Dkt. No. 70 at 31-33). Nonetheless, Judge Kahn denied the preliminary injunction, finding that plaintiffs did not sustain their burden of proving irreparable harm. (Dkt. No. 70 at 37-41).

Defendants have asserted a number of counterclaims, including false advertising and unfair and deceptive trade practices under the Lanham Act (15 U.S.C. § 1125(a)), and false advertising under New York, North Carolina, and Wisconsin law. (Dkt. No. 68 at 7-12). With respect to their counterclaims, defendants seek injunctive relief, as well as "an award to Denver of all profits, sums and gains received by [plaintiffs] of any kind made as a result of their false advertising" and "an award of all damages sustained by Denver by reason of [plaintiffs'] acts of false advertising." (Dkt. No. 68 at 13). Plaintiffs' letter brief noted that defendants' motion to bifurcate did not reference its counterclaims and argued that the false advertising counterclaims would generate discovery that substantially overlapped with discovery relating to patent infringement damages. (Dkt. No. 76 at 1, 2). Defendants' reply stated that, "if the Court grants [the] motion to bifurcate, [Denver] will agree to accept a nominal damage award of $1 should it prevail on its false advertising counterclaims (in addition to whatever injunctive relief and/or costs and fees that may be awarded)." (Dkt. No. 77 at 1).

II. Applicable Law[6]

Plaintiffs' motion implicates Rule 42(b) of the Federal Rules of Civil Procedure, which provides, in pertinent part, that "[f]or convenience, to avoid prejudice, or to expedite and economize, the court may order a separate trial of one or more separate issues [or] claims...." Fed.R.Civ.P. 42(b); see also Amato v. City of Saratoga Springs, New York, 170 F.3d 311, 316 (2d Cir. 1999). The decision of whether to bifurcate a trial "is a matter within the sound discretion of the trial court." Getty Petroleum Corp. v. Island Transp. Corp., 862 F.2d 10, 15 (2d Cir. 1988). The burden of demonstrating that bifurcation is appropriate rests with the party seeking such relief. Aldous v. Honda Motor Co., Ltd., 94-CV-1090 (TJM), 1996 WL 312189, at *1 (N.D.N.Y. May 30, 1996).

When exercising its discretion to order such relief, the court must consider "whether bifurcation would (1) avoid unfair prejudice to a party, (2) provide for convenience, and (3) expedite the proceedings and be more economical." Carson v. City of Syracuse, 92-CV-777 (NJM), 1993 WL 260676, at *2 (N.D.N.Y. July 7, 1993); see also Witherbee v. Honeywell, Inc., 151 F.R.D. 27, 29 (N.D.N.Y. 1993). In order for separate trials in a single case to be appropriate, the issues to be bifurcated must be distinct; bifurcation is not suitable where the evidence pertaining to the issues to be separately tried can reasonably be expected to overlap. Aldous v. Honda Motor Co., Ltd., 1996 WL 312189, at *1-2; see also Hanlin Group, Inc. v. Village of Solvay, New York, 88-CV-773 (TJM), 1990 WL 164694, at *1 (N.D.N.Y. Oct. 15, 1990) (denying bifurcation in order to promote efficiency in light of evidentiary overlap).

In support of their motion to bifurcate damage proceedings, defendants rely heavily on the recent en banc decision of the Federal Circuit in Robert Bosch, LLC v. Pylon Mfg. Corp., 719 F.3d 1305, 1316 (Fed. Cir. 2013), which upheld the decision of a Delaware district judge who has concluded that bifurcation "is appropriate, if not necessary, in all but exceptional patent cases. (Defs.' 10/4/13 Ltr. Brf. at 3 (citation omitted)). However, notwithstanding dicta in the Bosch decision cited by defendants, the Federal Circuit still recognizes that district judges "are best positioned to make [the bifurcation] determination on a case-by-case basis." Id. at 1319-20 (a district judge "may decide, for example, for reasons of efficiency due to the commonality of witnesses or issues in any particular case, that bifurcation is not warranted").

Moreover, despite the dominant role of the Federal Circuit in developing the law in patent cases, the decision whether to bifurcate damage proceedings is determined by the law of the circuit in which the district court is located. See, e.g., Medtronic Xomed, Inc. v. Gyrus ENT LLC, 440 F.Supp.2d 1333, 1335 (M.D. Fla. 2006) ("[b]ecause bifurcation of liability and damages is not unique to patent law, the law of the Eleventh Circuit applies to this issue") (citing Wexell v. Komar Industries, Inc., 18 F.3d 916, 919 (Fed. Cir. 1994) ("[t]his court applies the law of the pertinent regional circuit when the precise issue to be addressed involves an interpretation of the Federal Rules of Civil Procedure")). The prevailing view in the Second Circuit still seems to be that bifurcation of damages in patent cases is "the exception, not the rule." See, e.g., Plew v. Ltd. Brands, Inc., 08 Civ. 3741, 2012 WL 379933, at *9, 2012 U.S. Dist. LEXIS 14966, at *25 (S.D.N.Y. Feb. 6, 2012); Inc. v. The Knot, Inc., 03 Civ. 7369(RWS), 2004 WL 2984305, at *1, 2004 U.S. Dist. LEXIS 25749, at *3 (S.D.N.Y. Dec. 23, 2004); Computer Assocs. Int'l, Inc. v., Inc., 247 F.R.D. 63, 67 (E.D.N.Y. 2007).

A decision that patent liability and damage issues should be bifurcated for trial purposes does not necessarily resolve the issue of whether damages discovery should be stayed at the outset. See, e.g., Foseco, Inc. v. Consolidated Aluminum Corp.851 F.Supp. 369, 371 (E.D. Mo. 1991) (bifurcating trial on liability and damage issues, but declining to bifurcate discovery "[i]n the interest of judicial economy and expediency"). See also Enzo Life Scis., Inc. v. ...

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