Zen Design Group, Limited v. Scholastic, Inc.
OPINION AND ORDER DENYING 21 MOTION to Bifurcate Trial and Stay Discovery as to Willful Infringement filed by Scholastic, Inc., DIRECTING Defendant to Produce Discovery and Rescheduling ( Claim Construction Hearing for 7/20/2017 09:30 AM before District Judge Robert H. Cleland) Signed by District Judge Robert H. Cleland. (LWag)
UNITED STATES DISTRICT COURT
FOR THE EASTERN DISTRICT OF MICHIGAN
ZEN DESIGN GROUP, LIMITED,
Case No. 16-12936
OPINION AND ORDER 1) DENYING DEFENDANT’S MOTION TO BIFURCATE
TRIAL AND STAY DISCOVERY AS TO WILLFUL INFRINGEMENT; 2) DIRECTING
DEFENDANT TO PRODUCE DISCOVERY; AND 3) RESCHEDULING CLAIM
Pending before the court is Defendant’s Motion to Bifurcate Trial and Stay
Discovery as to Willful Infringement. (Dkt. #21.) After the motion was briefed by both
sides, the court held a hearing on June 8, 2017. For the following reasons, the court will
deny Defendant’s motion, direct Defendant to produce relevant discovery, and
reschedule the claim construction hearing for an earlier date.
Plaintiff is the owner of U.S. Patent No. 6,860,616 (“the ‘616 Patent”) entitled
“Ultraviolet Light Writing System.” The patent purports to describe a pen capable of
writing with a type of ink invisible under normal conditions, but with a tendency to
fluoresce when exposed to ultraviolet light. To this end, the pen also includes an
embedded bulb that emits light of the requisite wavelengths. Plaintiff alleges that
Defendant sold a suite of over fifty infringing products (the “Accused Products”).
Pursuant to Markman v. Westview Instruments, Inc., 517 U.S. 370 (1996), the court has
scheduled a claim construction hearing for August 16, 2017.1
Defendant now asks the court for an order bifurcating the issue of willfulness of
infringement and staying discovery on that question2 until after completion of a trial on
the threshold question of liability. The court’s scheduling order, entered on December 2,
2016, already contemplates the bifurcation of the damages and liability portions of trial.
Defendant argues that the same logic underlying this bifurcation applies to the issue of
the willfulness of infringement. It is concerned that the jury may confuse evidence of
willfulness for evidence of infringement. Moreover, Defendant insists that discovery into
willfulness will impose a burden by forcing it to either produce documents evincing
communications with counsel and thus waiving attorney-client privilege or else accept
an adverse inference as to the contents of the documents withheld. Defendant offers
bifurcation as an alternative consistent with policies favoring minimization of prejudice
and service to judicial economy.
Plaintiff, meanwhile, responds that bifurcation is generally treated as the
exception rather than the rule, and that Defendant has offered no reason to believe that
special circumstances here justify its implementation. It points to the fact that Defendant
had not raised the specter of bifurcation on this issue until months after their Federal
As this court has not held a Markman hearing in this case, this short summary of
the patented invention is made only for background purposes and without any
meaningful consideration of, and therefore should not be understood to have any res
judicata effect on, any claim construction arguments by either party.
Defendant had initially also requested that the court stay discovery into
damages, but it rescinded that request in its reply brief. Thus, the court will not address
Rule of Civil Procedure 26(f) conference and entry of the court’s scheduling order.
Plaintiff also argues that, far from promoting judicial economy and avoiding prejudice,
bifurcation would do just the opposite, not only because it will result in the need for
multiple depositions of the same people, but also because willfulness evidence may be
relevant to the question of whether Defendant infringed by flagrantly copying the
patented invention or knowingly induced others to infringe. Additionally, it contends that
willfulness evidence may go to Defendant’s affirmative defenses of invalidity, relating to
whether the invention was copied and thus non-obvious, and equitable defenses of
implied license and equitable estoppel, relating to whether the court should employ the
doctrines in light of Defendant’s state of mind.
Attacking the premise behind Defendant’s argument about the burdensomeness
of providing willfulness evidence, Plaintiff has identified Federal Circuit case law holding
that disclosure of such evidence does not operate as a blanket waiver of privilege, nor
does withholding it justify an adverse inference at trial. After all, Plaintiff claims, the
decision of whether to use evidence of reliance on counsel in their defense is merely a
strategic decision that defendants must weigh. As such, Plaintiff asks that the court
order Defendant to immediately indicate whether it intends to rely upon evidence of that
sort, and, if so, to produce all of the relevant associated documents.
In turn, Defendant’s reply brief introduces the argument that bifurcation will be
necessary because Plaintiff “has recently made it clear that it intends to pepper its
briefs and arguments before the Court with repeated references to Scholastic’s
alleged copying[.]” (Dkt. #29, Pg. ID 599.) It also argues that no overlap exists between
the issues of infringement and whether Defendant intends to rely on its having sought
advice of counsel in light of 35 U.S.C. § 298, which states that:
The failure of an infringer to obtain the advice of counsel with respect to
any allegedly infringed patent, or the failure of the infringer to present such
advice to the court or jury, may not be used to prove that the accused
infringer willfully infringed the patent or that the infringer intended to
induce infringement of the patent.
35 U.S.C. § 298.
As to its equitable affirmative defenses, Defendant “agrees that [its] knowledge of
the patent-in-suit is a proper area of inquiry[,]” but that “Plaintiff should not be allowed to
use [it], however to prejudice . . . and taint [Defendant] in the eyes of the jury with
respect to liability[,]” as “[t]he issues are completely separate and should remain
separate.” (Dkt. #29, Pg. IDs 602-603.) As to validity, Plaintiff argues that copying is
legally irrelevant unless Plaintiff can first show that Defendant’s pens embody the claims
of the ‘616 Patent. Defendant offers that any additional discovery that results from
bifurcation of discovery and the trial will only occur if the jury finds that the Accused
Products infringe one of the claims of the ‘616 Patent.
Assuming arguendo that bifurcation were desirable in this case, Defendant
should have asked for it sooner. On October 28, 2016, the parties filed a Joint Federal
Rule of Civil Procedure 26(f) Report and Proposed Scheduling Order, stating that
“[d]iscovery shall include any relevant opinions of counsel if Defendant intends to rely
upon an opinion of counsel as a defense to a claim of willful infringement.” (Dkt. #16,
Pg. ID 126.) The court held a Scheduling Conference on November 3, 2016, and it
entered a scheduling order a month later. (Dkt. #18.) That scheduling order, far from
being consistent with Defendant’s envisioned scheme of two-phased discovery, stated
in relevant part that:
The trial of the liability portion of the case will normally be bifurcated from
the damages portion. If the jury finds liability, the Court will continue the
trial as to the damages issues before the same jury. The liability and
damages portions of the trial will only be separated by a short period of
time, likely around a week, depending on the availability of the jurors and
the Court’s schedule.
(Dkt. #18, Pg. ID 171 (emphasis added).) It also stated that fact discovery, to be
completed by July 28, 2017, “shall include any relevant opinions of counsel if Defendant
intends to rely upon an opinion of counsel as a defense to a claim of willful
infringement.” (Id., Pg. ID 161.)
These materials contemplated in plain language that Defendant would supply the
contested materials in the normal course of discovery if it resolved itself to relying upon
the specified defense, and that only a short period between stages in trial would be
permitted. Defendant’s delay in raising this issue is clearly prejudicial to Plaintiff and not
justified by a generalized concern over Plaintiff’s “peppering in” references to alleged
willful infringement in its filings.3 Even if it were, “[a]rguments raised for the first time in a
reply brief are waived.” United States v. Owens, 458 F. App’x 444, 446 (6th Cir. 2012).
Defendant’s reply does not offer any rebuttal to Plaintiff’s characterization of the
Federal Circuit’s decisions in Knorr-Bremse Systeme Fuer Nutzfahrzeuge GmbH v.
Dana Corp., 383 F.3d 1337 (Fed. Cir. 2004), and In re Seagate Tech., LLC, 497 F.3d
Defendant’s ire is aimed at such unremarkable statements as “Scholastic had
copied its patented pen design with a pen identical to the one made by its licensee.”
(See Dkt. #29, Pg. ID 599.)
1360 (Fed. Cir. 2007), having mitigated the prejudice otherwise inherent in expecting
Defendant to decide whether it will argue reliance upon counsel’s advice and supply the
relevant documents during normal fact discovery. Nor does it address the study cited by
Plaintiffs, finding that between 2004 and 2010 bifurcation was rather uncommon. See
Christopher B. Seaman, WILLFUL PATENT INFRINGEMENT AND ENHANCED
DAMAGES AFTER IN RE SEAGATE: AN EMPIRICAL STUDY, 97 Iowa L. Rev. 417,
463-64 (2012) (“The data reveal that the willfulness was bifurcated in almost a fifth
(18.6%) of cases studied. Bifurcation was much more common when a judge finally
decided the issue of willfulness (45.7%, 16 of 35 cases) compared to juries (4.5%, 3 of
Meanwhile, Defendant’s argument on the other side of the coin, that prejudice to
Plaintiffs will be minimal because 35 U.S.C. § 298 precludes overlap, is mistaken. The
language of that provision merely says that the failure of the accused infringer to
produce such evidence may not be used to prove infringement. This does not foreclose
the possibility that documents Defendant produces in the hopes of succeeding in its
reliance on counsel defense on the question of willfulness end up supporting Plaintiff’s
arguments on the question of infringement. Moreover, it amounts to little more than a
memorialization of the holding of Knorr-Bremse that:
A defendant may of course choose to waive the privilege and produce the
advice of counsel. However, the assertion of attorney-client and/or
work-product privilege and the withholding of the advice of counsel shall
no longer entail an adverse inference as to the nature of the advice.
383 F.3d at 1345.
The court is not convinced that bifurcation is warranted in this case. It is clearly
within the discretion of this court to make the determination to set these issues for trial
together, as explained by the Federal Circuit:
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.
Robert Bosch, LLC v. Pylon Mfg. Corp., 719 F.3d 1305, 1319–20 (Fed. Cir. 2013).
Having presented this court with nothing of substance that would justify a prejudicially
late and uneconomical decision to substantially amend the scheduling order in this
case, Defendant cannot succeed on its motion.
The court will also order Defendant to disclose whether it intends to rely upon an
advice of counsel defense to willfulness and produce associated documents to Plaintiff
by July 7, 2017. As mentioned above, the scheduling order contemplated that these
materials would be exchanged in normal discovery, and with fact discovery set to close
anyway on July 28, 2017, this deadline should not impose any extraordinary additional
burden upon Defendant.
Finally, at the hearing counsel for both parties agreed that they were amenable to
an adjustment in the scheduling order moving the claim construction hearing to an
earlier date in light of the fact that briefing has already been completed. Thus, the court
will reschedule the Markman hearing currently set August 16, 2017, for July 20, 2017 at
9:30 a.m. Should the parties determine that an adjustment to this date is warranted,
they are directed to confer with one another then request a status conference with the
court’s case manager.
IT IS ORDERED that Defendant’s Motion to Bifurcate Trial and Stay Discovery
as to Willful Infringement (Dkt. #21) is DENIED.
IT IS FURTHER ORDERED that Defendant shall disclose whether it intends to
rely upon an advice of counsel defense to willfulness and produce associated
documents to Plaintiff by July 7, 2017.
IT IS FURTHER ORDERED that the claim construction hearing currently set
August 16, 2017, is rescheduled to July 20, 2017 at 9:30 a.m. at the Federal Building
and United States Courthouse, 526 Water Street, Port Huron, MI.
s/Robert H. Cleland
ROBERT H. CLELAND
UNITED STATES DISTRICT JUDGE
Dated: June 15, 2017
I hereby certify that a copy of the foregoing document was mailed to counsel of record
on this date, June 15, 2017, by electronic and/or ordinary mail.
Case Manager and Deputy Clerk
S:\Cleland\JUDGE'S DESK\C2 ORDERS\16-12936.ZENDESIGN.denybifurcatewillfullness3.bss.wpd
Disclaimer: Justia Dockets & Filings provides public litigation records from the federal appellate and district courts. These filings and docket sheets should not be considered findings of fact or liability, nor do they necessarily reflect the view of Justia.
Why Is My Information Online?