Friday, March 25, 2022

Non-Standard Bifurcation Refused

Farmobile, LLC v Farmers Edge Inc 2022 FC 22 McHaffie J

            2,888,742

This decision relates to a motion by Farmobile seeking to amend its pleadings to allege that the defendant, Farmers Edge, continued to infringe the 742 patent even after a recent software update that was intended to implement a non-infringing alternative; as well as a motion by Farmers Edge seeking amendments in response, which included new invalidity defences. I don’t go into these issues, which turned on the facts. Of more general interest, Farmers Edge’s also moved for a non-standard bifurcation. Patent actions are commonly bifurcated between liability and damages [113]. The first phase normally deals with validity and infringement, as well entitlement to an injunction and the election between an accounting and damage, but does not deal with quantification. In this case Farmers Edge’s proposed a bifurcation in which the first phase would deal with pre-update infringement issues, certain validity issues and inventorship, and the second phase would deal with post-update infringement, remedies—including injunctive relief—and certain residual validity issues [115]. McHaffie J had refused to permit the amendments introducing the residual validity issues, and as a result the motion was effectively to request bifurcation between validity and pre-update infringement in the first phase, and post-update infringement and remedies in the second [134].

While McHaffie J noted a non-standard bifurcatrion is possible—“Rule 107 does not limit the Court to a particular approach to bifurcation, provided it will lead to the just, expeditious, and least expensive determination of the matter on its merits” [114]—he nonetheless refused to order the proposed bifurcation. In part this was because of factors unique to this case, such as scheduling, but in part his decision turned on more general considerations.

First, with respect to Farmers Edge’s originally proposed bifurcation, he noted that:

[133] Farmers Edge’s suggestion that it be permitted to pursue some invalidity arguments at the first trial, holding back other invalidity arguments to be made if and when it is found to infringe some of the claims, appears entirely unworkable and unfair. In addition to having to recall expert witnesses to address related issues, it would put the Court in the position of attempting to determine infringement of claims whose validity had not ultimately been determined, while Farmobile would have to face a serial approach to invalidity arguments.

As noted, McHaffie J had refused to permit amendments introducing the new validity argument, and the point was therefore moot [144], but the general observation may provide guidance in future cases.

On the pre-/post-update bifurcation, he noted

[135] I can see no efficiencies in having experts and lay witnesses reattend at a second trial to address further infringement allegations regarding related, and in some cases overlapping, patent claims and software and hardware systems that will largely be the same. The issues are clearly interwoven. Dividing the infringement issues would mean that witnesses, experts, counsel, and the Court would all have to get back up to speed on the same technologies and readdress some of the same issues, even assuming the same counsel and trial judge are involved at the second trial.

[137] It is certainly possible that one or more of the issues Farmers Edge proposes be decided at the first trial could obviate the need for a second trial entirely. If, for example, the Court concludes that Farmers Edge is the proper owner of the ’742 Patent, or that the entirety of the patent is invalid on grounds of anticipation or obviousness, no second trial would be necessary. However, while this does not alone justify a serial approach in which various arguments are raised at different stages. The opposite possibility that Farmers Edge is not successful on these issues, and the efficiencies of having to conduct a second trial in such circumstances, must also

For these reasons, in addition to various reasons turning on the facts, he refused to order bifurcation [138].

No comments:

Post a Comment