Bosch v. Pylon: 1292(c)(2) CAFC Jurisdiction

By Jason Rantanen

Robert Bosch, LLC v. Pylon Manufacturing Corp. (Fed. Cir. 2013) (en banc) Download Bosch v Pylon

Majority opinion written by Judge Prost, joined by judges Rader, Newman, Lourie, and Dyk.  Judges Moore and Reyna concurred and dissented-in-part in separate opinions.  Judges O'Malley and Wallach dissented.

This case deals with the question of whether the Federal Circuit has jurisdiction to entertain appeals from patent infringement liability determinations when damages and willfulness issues remain outstanding.  The court held that 28 U.S.C. § 1292(c)(2) confers jurisdiction in both situations.

Background on the case is available here.  The Federal Circuit requested that the parties brief the following issues:

  1. Does 28 U.S.C. § 1292(c)(2) confer jurisdiction on this Court to entertain appeals from patent infringement liability determinations when a trial on damages has not yet occurred?
  2. Does 28 U.S.C. § 1292(c)(2) confer jurisdiction on this Court to entertain appeals from patent infringement liability determinations when willfulness issues are outstanding and remain undecided.

Section 1292(c) states that "The United States Court of Appeals for the Federal Circuit shall have exclusive jurisdiction— (2) 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."  At issue was whether a trial on damages and willfulness is an "accounting" for purposes of this section.  

An "accounting" includes the determination of a patentee's damages (7-2): The majority, joined by Judge Moore (and in its conclusion by Judge Reyna), first held that an accounting includes the determination of a patentee's damages.  This approach was consistent with both the historical meaning of an "accounting" and the legislative history for the predecessor statute to § 1292.  "The statute’s interpretation through history is clear. An “accounting” in the context of § 1292(c)(2) includes the determination of damages and cannot be limited to a traditional equitable accounting of an infringer’s profits."  Slip Op. at 13. 

Nor does the a request for a jury trial to establish damages change this result: "While we agree with Bosch that an accounting was historically available in equity, we do not agree that a trial on damages falls outside the scope of the accounting described in § 1292(c)(2)."  Id.  The court's summary of its rationale:

We base our conclusion on four points. First, in 1948, Congress expanded jurisdiction over interlocutory appeals from cases in equity to “civil actions for patent infringement which are final except for accounting.” Second, the issues which were historically decided in accountings are the same as those decided during damages trials today. Third, the reasons articulated by Congress for allowing interlocutory appellate jurisdiction over patent cases that are final except for an accounting apply with equal force to a modern damages trial. Finally, stare decisis militates in favor of allowing interlocutory appeals where liability has been established and a damages trial remains.

Slip Op. at 12-13.  The last point in particular caught my eye.  The majority's argument is that the principle of stare decisis should be given weight by the court sitting en banc even when the precedent consists of panel decisions, particularly when dealing with issues of statutory interpretation.

Nonetheless, “because [our precedent] represents the established law of the circuit, a due regard for the value of stability in the law requires that we have good and sufficient reason to reject it at this late date.” Bailey, 36 F.3d at 110. [D.C. Cir sitting en banc] Indeed, panel opinions, like en banc opinions, invoke the principle of stare decisis. Panel opinions are, of course, opinions of the court and may only be changed by the court sitting en banc. It has been the law of this court for at least twenty-five years that an “accounting” under § 1292 includes a trial for the determination of damages under § 284.

Slip Op. at 20.

An "accounting" includes willfulness determinations (5-4): The majority, this time without Judges Moore or Reyna, also concluded that Section 1292(c)(2) confers jurisdiction on the Federal Circuit to hear appeals from patent infringement liability determinations while willfulness issues are still outstanding.  As with damages, the court held that an "accounting" includes willful infringement determinations.  This, the majority wrote, was also consistent with the historical understanding of an "accounting."  "Long before the enactment of § 1292(c)(2)’s predecessor statute in 1927, accounting proceedings included the determination of willfulness by a special master."  Slip Op. at 23.  Post-1927 cases confirmed this view.  "Indeed, after the enactment of § 1292(c)(2)’s predecessor statute in 1927, courts continued to determine willfulness as part of an accounting, which occurred after the finding of liability." Id. at 24. 

Bifurcation is a decision within the district court's discretion: A common refrain in the court's opinion is its comment that it is deciding only the appellate jurisdictional issue; it is not issuing a broader decision on bifurcation of damages and willfulness.  For example, near the end of the opinion the court notes: 

Finally, we wish to make clear that district courts, in their discretion, may bifurcate willfulness and damages issues from liability issues in any given case. District courts have the authority to try these issues together or separately just as they have the authority to try all issues together at the liability stage. They 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. District court judges, of course, are best positioned to make that determination on a case-by-case basis. Today, we answer only the question of whether § 1292(c)(2) grants this court jurisdiction over appeals where the district court has exercised its discretion to bifurcate the issues of damages and willfulness from those of liability.

Judge O'Malley's Dissent: Writing in dissent, and joined by Judge Reyna, Judge O'Malley disagreed with the broad interpretation of Section 1292(c)(2) adopted by the majority.  "As an exception to the final judgment rule, § 1292(c)(2) is to be interpreted narrowly…Because I believe the term “accounting” only applies to a limited class of proceedings before special masters or to those instances in which the trier of fact has decided all matters relevant to a damages determination save the application of those decisions to an undisputed set of numbers, I do not believe § 1292(c)(2) justifies the exercise of jurisdiction over this appeal."  Slip Op. at 54-55. 

In the dissent's view, the majority erred by asking the wrong historical question.  "What we should ask is not what questions may be considered during the course of an “accounting” but whether the procedure that was an “accounting” as of 1927—the one contemplated in § 1292(c)(2)—is the same as or encompasses a jury trial on any of those same questions."  Id. at 56.  This distinction matters because the historical meaning of an "accounting" was tied to the determination by a special master not by a jury. With regard to the majority's historical argument, the dissent wrote:

The majority’s only attempt at a statutory analysis to support its holding is its claim that, by substituting the phrase “civil actions” for “suit[s] in equity” in the jurisdictional grant of § 1292, Congress somehow intended to expand the concept of an accounting to include jury trials on damages. The disregard for the importance of the right to a jury trial and misunderstanding of what a jury trial entails which is evident in this proposition is stunning.

Id. at 57.  Even less defensible, in the dissent's opinion, was the majority's conclusion as to willfulness.  Indeed, even requiring infringement and willfulness determinations to take place before separate juries may be impermissible in itself.  "A bifurcation order which requires that two different juries visit the interwoven issues and overlapping facts involving infringement and validity on the one hand and willfulness on the other would violate the defendant’s Seventh Amendment right to a jury trial."  Id. at 79.

Judges Moore and Reyna: Judges Moore and Reyna wrote separate opinions expressing their views that an "accounting" does not include a willfulness determination but can include the damages enhancement step that occurs following a willfulness determination.  The result is a court in relative agreement on the question of whether Section 1292(c)(2) confers jurisdiction while damages issues remain pending but sharply decided on the question of whether it confers jurisdiction when a willful infringement determination has yet to be made. 

22 thoughts on “Bosch v. Pylon: 1292(c)(2) CAFC Jurisdiction

  1. 7th Amendment is a right of both plaintiff and defendant (unlike the 6th Amendment, which is only the defendant’s right). I’m not sure that the CAFC has discussed the constitutionality of bifurcation. Even here, it seems to be an embedded issue that may have been waived.

  2. Guest, you and I are on the same wavelength on willfulness.

    On damages, it really depends on the particular case and whether in fact the issues are interwoven. I think, because a constitutional right is involved, that doubt should be resolved in favor of the constitutional right.

    Also, who has the right, the patent holder or the infringer or both? If it is the infringer, normally is is they who request bifurcation. They waive their right.

    But if the patent holder similarly has the right, and I think they do, then the 7th Amendment would caution against bifurcation if the patent holder objects.

    I wonder if there are any cases discussing this issue? Perhaps a closer reading of the en banc case will reveal them.

  3. With respect to damages, I think you can make a good argument that bifurcation doesn’t violate the 7th Amendment. The issues in a damages trial are not about what infringes specifically, but economic – how much value is there, what is a reasonable royalty, etc. I don’t think that bifurcation of damages and liability in other areas of the law is considered problematic under the 7th Amendment (although I am hardly an expert on those areas). The issue with a damages trial is mostly limited to whether it’s an accounting.

    Willfulness is completely different, particularly if you are dealing with inducement or contributory infringement, because the knowledge/intent are highly relevant to whether infringement is willful. There are far more intertwined issues on willfulness than on damages. The 7th Amendment issue there is one that I am sure a party will raise after seeing Judge O’Malley’s dissent.

  4. The dissents cite Gasoline Products Company v. Champlin And Company, 283 US 494 Supreme Court 1930 123 at page 500. In this case the Supreme Court said that a remand from an error in a trial to retry damages only was unconstitutional when the liability and damages were so interwoven “that the former cannot be submitted to the jury independently of the latter without confusion and uncertainty, which would amount to a denial of a fair trial.” Id., at 501.

    I think it’s quite obvious in the patent case that knowing exactly what infringement is and determining damages is interwoven to such a great extent that in the ordinary case they should be tried together to the same jury.

    Ditto in the extreme with respect to willfulness as pointed out by both dissents.

    I am somewhat convinced that the majority here is wrong.

  5. IWasThere, I’m not quite certain what you mean about giving power to the PTO. A holding of validity is not binding on the PTO.

    Moreover, an infringement defendant cannot bring an IPR by statute unless he brings it within one year of being served.

  6. Iwasthere, you might be right on the statutory construction issue. Accounting might be limited to the work of the special master such that an interlocutory appeal when there is still a trial be had on damages would be a violation of the final order rule. I make the assumption here that what Judge O’Malley said about separate juries is really, really important for the Seventh Amendment. Is there any Supreme Court cases discussing this issue, perhaps in criminal trials where guilt and punishment are tried separately, but perhaps the same jury as a constitutional requirement?

    Given the importance of the right to a jury trial, this case is constitutional implications and not mere statutory construction implications. This means to me that the Supreme Court will certainly take this case, they cannot duck it.

  7. Even worse – if that’s possible – the admin court itself – by it’s enabling statute – can have the commissioner himself – appoint himself as an admin ‘judge’ – and pick the other two ‘judges’ on the panel. This is a vestige of the policy making function of the board – apparently lost on the hill – which is attempting to remake the admin court into a substantive court.

    BTW – there is no other admin court – not tax court, contracts court, you name it – that is nearly has hostile to the ART III court as the PTO court. All the courts with the exception of PTO court – grant wide berth to the ART III courts – thru admin estopple (the admin version of collateral estopple and res judicata) full faith and credit and comity. Why on earth judge Bryson feels he needs to accommodate this constitutional anomaly is beyond my understanding.

  8. Now I am going to have to get back in (again?) that time machine and ‘copy’ this too from Rader and Quinn.

    Or did I already do that? (this time travel stuff can get a bit confusing…)

  9. LOL – it’s not the first time that the closeness of an Article 1 ‘judge’ to the direction and control of the ‘judge’s’ executive branch BOSS has impugned the constitutional imperative of separation of powers.

    The scope of the potential power grab here though is spectacular. The Agency writes its own laws, the agency judges what its own written laws means, the agency enforces its own judged-meant written laws, and the agency reconfigures any and all Article III courts interpretations to be what the agency says those interpretations to be.

    This fourth branch of the government wraps up ALL the other branches so nice and tidy.

    I think this though might actually get the attention of the Supremes as this abdication of power by Congress can very well impact the power of the Supremes and make dead letters of even the exceptions that the Supremes implicitly wrote into law (if the agency felt like going that way).

  10. I think the stage is set. PTAB loaded with stooges. Fed. Cir. with J. Lourie. Just expand the covered business method patent jurisdiction and you are all set to infringe. There has already been talk on Capital Hill of expanding the covered business method jurisdiction for the PTO.

  11. Hmmm,

    Maybe I will need to cut my gloating short and focus on this…

    Nah.

    Malcolm, ‘BOW’

    LOL

  12. No Ned I think you are wrong on this point. The accounting provision of the interloctory appeal statute – addressed one and only one issue. Unjust enrichment type equitable accounting – that used a theory of the infringers profits and apportionment or profits.

    The legal damages jury determination under the 7th amendment was never covered under this statute.

    BTW patent bar – this decision is a HUGE delegation of power from the courts to PTO, and the huge power grab by the serial infringers – to use their money and influence to overturn a patent at PTO after losing at trial. Let me explain, orders appealed under the interlocutory appeals statute is not a ‘final order’ of the courts. This, I believe, was the loop hole that allowed SCOTUS to overturn the Morris patents (or some other famous early communication patent). Since it is not a ‘final order’ of the court – subsequent adverse determinations concerning the patent by PTO by Commissioner or BOPAI (or whatever they are calling this ultra virus body now) would not violate Hayburn;s the separation of power issues (or at least muddies the water real good).

    Judge Bryson, of whom I have the greatest respect, is wrong to keep pushing to find a way to reconcile PTO jurisdiction with Article III power. Which is exactly what this decision represents.

  13. I don’t know that this case even goes up to SCOTUS (or that the merits panel issues an opinion, even). Pylon settled at the ITC with Bosch… are they going to settle here, too?

    If it does go up, I think it gets reversed on both grounds. Willfulness is definitely the majority’s weaker ground (particularly with the inherently and necessarily embedded 7th Amendment issue), but the evidence about what an accounting is in Judge O’Malley’s dissent seems to be well-founded and it’ll go a long way to convincing someone like Justice Scalia. I think she has it right – an accounting was a specific proceeding in front of a special master, nothing like a jury trial. The majority’s argument just cannot hold water given that the statute was created only for equitable proceedings, and never for legal proceedings with a jury trial.

    I don’t know how the procedure works now – does Bosch have to wait for an opinion from the panel on the merits before they have a right to file a cert petition, or are they permitted to file the cert petition after this decision? Seems to me that they would be harmed in some capacity by having to wait for the merits decision, because there’s no way a smart district judge wouldn’t follow the panel’s decision, even if SCOTUS were to vacate it for lack of jurisdiction.

  14. Prediction:

    The Supreme Court will reverse on willfulness, but affirm on damages. Accounting does seem to have the broader meaning the majority says it has given the historical context.

    Willfulness? You have got to be kidding.

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