Audio MPEG, Inc. et al v. Dell, Inc., et al

Filing 619

OPINION AND ORDER, entered and filed 5/31/17: This matter is before the Court on a #248 Motion to Dismiss Dell's Counterclaims I-X and Strike Dell's Seventh Affirmative Defense, and, in the alternative, a #253 Motion for a Separate Trial and Stay of Dell's Counterclaims I-X and Patent Misuse Affirmative Defense, both of which were jointly filed by Audio MPEG, Inc. ("Audio MPEG"), U.S. Philips Corporation ("Philips"), TDF SAS ("TDF"), Institute fur Rundfunktechnik GmbH {"IRT") (collectively, "Plaintiffs"), and Counterclaim Defendant Societa Italiana per lo Sviluppo dell'Elettronica S.p.A. {"SISVEL") (collectively with Plaintiffs, "Counter-Defendants"). The Court notes that Counter-Defendants' request to stay discovery on Dell's counterclaim is moot because discovery is already complete in this case. See Status Conf. Tr. 39, ECF No. 616 (notifying the Court that discovery is closed and the case is ready for trial). Dell alleged antitrust counterclaims against the patent owners and Audio MPEG, who were the original Plaintiffs in this case, and additionally joined SISVEL, the parent company of Audio MPEG, as a third-party defendant. Countercl. 28, 44. According to Dell, SISVEL administers the MPEG patent pool, with SISVEL alone having "responsibility for licensing non-U.S. Patents in the patent pool and SISVEL's wholly-owned subsidiary, Audio MPEG, ha[ving] sole responsibility for licensing U.S. Patents." Id. 44. Having evaluated the relevant factors and finding that each factor weighs in favor of bifurcation, the Court GRANTS Counter- Defendants' Motion for a Separate Trial of Dell's Counterclaims I-X and Patent Misuse Defense from trial of Plaintiffs' patent infringement claims. ECF No. 253; see Ricoh Co., 2005 WL 6965048, at *1 {"The Court has broad discretion in deciding whether to separate issues and claims for trial, in accordance with its broad power to manage its trial calendar."). The Court DISMISSES as MOOT Counter-Defendants' Motion to Stay discovery because discovery on both the patent infringement and antitrust claims is already complete. See Status Conf. Tr. 39. The Court TAKES UNDER ADVISEMENT Counter-Defendants' Motion to Dismiss Dell's Counterclaims I-X and Strike Dell's Seventh Affirmative Defense (patent misuse defense). ECF No. 248. Finally, while the Court appreciates the challenges for the parties resulting from continuance of their trial date, because the Court's docket was filled with many other trials already scheduled before this case was transferred to the undersigned Judge, the Court SETS trial on Plaintiffs' patent infringement claims to begin on December 5, 2017, and in the interest of judicial efficiency, the Court DIRECTS the parties to file all pretrial motions before July 31, 2017. (See Opinion and Order and Foot Notes for Specifics) (Signed by District Judge Mark S. Davis on 5/31/17). Copies provided as directed 5/31/17. (ecav, )

UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF VIRGINIA

Norfolk Division

AUDIO MPEG,

INC.,

et al. ,

Plaintiffs/
Counterclaim

Defendants,
and
SOCIETA ITALIANA PER LO SVILUPPO

DELL'ELETTRONICA S.P.A.,

Third-PartyDefendant,

Civil No.

V.

2:15cv73

(Lead Case)
Civil No.

2:16cv82

(Consolidated Case}
DELL INC.,

Defendant /
Counterclaimant /

Third-Party Plaintiff.

OPINION AND ORDER

This
Dell's

matter

is

before

Counterclaims

Defense,

ECF No.

248,

I-X

the

and

and,

Court

Strike

on

Dell's

a

Motion
Seventh

in the alternative,

a

to

Dismiss

Affirmative

Motion for a

Separate Trial and Stay of Dell's Counterclaims I-X and Patent

Misuse

Affirmative

Defense,^

ECF

No.

253,

both of

which were

^ The Court notes that Counter-Defendants' request to stay discovery on Dell's
counterclaims

is moot because

discovery is

already

complete

in this

case.

jointly filed by Audio MPEG,
Corporation

{"Philips"),

Rundfunktechnik
Counterclaim

GmbH

TDF

{«IRT")

Defendant

dell'Elettronica

Inc.

{«Audio MPEG"), U.S. Philips

SAS

(collectively,

Societt

S.p.A.

("TDF"),

per

"Counter-Defendants")For the

below,

Court

DISMISSES

as

MOOT

GRANTS
the

patent misuse defense,

the

Motion

Motion
to

Stay

lo

and

Sviluppo

(collectively

Plaintiffs,
the

fiir

"Plaintiffs"),

Italiana

{"SISVEL")

Institute

for

reasons
a

the

with

set

Separate

forth
Trial,

counterclaims

and

and TAKES UNDER ADVISEMENT the Motion to

Dismiss.
I.

This

FACTUAL AND PROCEDURAL BACKGROUND

patent

infringement

action

infringement by Defendant Dell Inc.

arises

out

of

alleged

("Defendant" or "Dell"),

of

the following audio technology patents: United States Patent No.

5,323,396

("the

5,777,992

("the

5,539,829

'396

("the

patents").

'992

Compl,

'829

patent"),
patent"),
patent")

19-46.

United
and

United

States

Patent

States

(collectively,

the

Patent

No.
No.

"asserted

Through compression of audio files

See Status Conf. Tr. 39, ECF No. 616 (notifying the Court that discovery is
closed and the case is ready for trial).

^ Dell alleged antitrust counterclaims against the patent owners and Audio
MPEG, who were the original Plaintiffs in this case, and additionally joined
SISVEL,
the
Countercl.

parent company of Audio MPEG, as a third-party defendant.
28, 44.
According to Dell, SISVEL administers the MPEG patent

pool, with SISVEL alone having "responsibility for licensing non-U.S. Patents
in the patent pool and SISVEL's wholly-owned subsidiary, Audio MPEG, halving]
sole responsibility for licensing U.S. Patents." Id. ^ 44.

using MPEG Standards^ to encode and decode digital audio signals,
the patented technologies

facilitate

other audio on electronic devices.

According

IRT

to

the

plaintiff
States

Audio

to

relating

MPEG

license,

to

offered

a

sue,

id.

"joint

audio patents,

expiration.

the

and

infringement

all Plaintiffs,

of

license"

expired on Jiine 21,

collect

on

2011,

right

in

costs,

of

the

TDF,

and

and

the

'396

flU

the
and

United
damages

on behalf

of

Patent Owners have
Patent

asserted patents,

id.

id.

asserted patents

all

The

and

H 24,

Philips,

fees,

Since 1996,

the

H 42.

exclusive

the

H 41.

including

Id.

plaintiffs

own the asserted patents,
has

music

Id. fH 2, 22.

complaint,

("Patent Owners")/

the playing of

Owners'

prior

to

MPEG

their

patent and the

'992

6,

'829 patent

30,

and the

patent

expired on July 23, 2013, id. 1 36.
On

February

complaint

20,

2015,

in the Norfolk Division of

Hewlett-Packard Company
See

generally

Plaintiffs

HP

filed

("HP")

Compl.,

a

the asserted patents.
I:15cvl674

filed

this

ECF

No.

1.

On

complaint

a

three-count

Court alleging that

infringed the

three-count

Alexandria Division of

Inc., No.

Plaintiffs

asserted patents.

December

against

21,

Dell

this Court alleging that Dell

2015,

in

the

infringed

Compl., Audio MPEG, Inc., et al. v. Dell,
(E.D. Va.

2015).

On February 22,

2016,

the

' MPEG Standards are worldwide industry standards for audio compression set by
the
MPEG/Audio Working
Group
of
Standardization ("ICS"). Compl. H 20.

the

International

Organization

for

Alexandria

Division

transferred

the

Dell

case

Division to be consolidated with the HP case.

No.

73.

Dell

On May 16,

as

the

3:22-4:16,

sole

ECF No.

2016,

asserted

patents

and/or

in

the

that

Dell

by

directly

Cyberlink

"manufacturing,

offering

PowerDVD

{such

for

sale

that

leaving
Hr'g Tr.

using,

products

as

Latitude

in

selling,

that

include

including,

but not

D530,

and Dell Precision M6300)

Latitude D630)."

allege

case.

ECF

Dell computers and electronic devices containing

Latitude D830,

as

2:15cv73,

infringed claims

capabilities required by the MPEG standards,

limited to[,]

Norfolk

136.

allege

importing,

No.

the

Plaintiffs and HP settled,

remaining defendant

Plaintiffs
the

to

Dell

Compl.

indirectly

HH 51,

D630,

or Roxio Creator

60,

infringed

Latitude

69.

{such

Plaintiffs also

claims

in

the

asserted

patents by inducing and contributing to infringement by others.
Id.

52-53,

continued

its

informed Dell,
products

61-62,

70-71.

infringing

Plaintiffs further allege that Dell

activities

no later than July 1,

incorporating

the

MPEG

even

2004,

Audio

after

Audio

MPEG

that "all Defendant's

encoding

and

decoding

capabilities required by at least one of the MPEG standards are
covered by [the asserted patents]."
Dell

issued,"

denies

Answer

that

47,

the

56,

Id.

patents

65,

52, 61,

were

ECF No.

"duly

184,

70.
and

legally

arguing that

the

patents are invalid because the inventors failed to satisfy the

conditions

of

patentability

specified

in

seg., Aff. Defenses 1 1, ECF No. 184.

35

U.S.C.

§ 100,

Further, Dell denies that

it has directly or indirectly infringed on the patents.
51-53,

60-62,

69-71.

history estoppel;
estoppel;

patent

exhaustion;
misuse;

limit on any damages.
In a

Dell

asserts

defenses

license;

waiver,

prosecution

et

laches;

of

Answer

prosecution

laches,^ and/or

and

argues

for

a

Aff. Defenses HH 2-22.

Counterclaim against Counter-Defendants,

violations of the Sherman Act,

Dell asserts

civil conspiracy under Virginia

state law,

common law conspiracy, breach of contract, promissory

estoppel,

waiver,

"antitrust

and

prosecution

claims").

Countercl.

laches

(collectively,

HI 152-224.

federal antitrust law and Virginia state law.
Counter-Defendants

are

direct

competitors

Arguing

the

both

Dell alleges that

with

each

other

but

have illegally pooled their patents together (the "SISVEL patent
pool"), which improperly restrains trade and creates a monopoly.
Id.

152-187,

196-203.

According to Dell,

Counter-Defendants

illegally pooled their patents together by including expired and
unrelated patents in the SISVEL patent pool and not varying or
reducing the

licensing fee

as patents within the pool expired,

and by not competing against each other in the marketplace due

* On March 21, 2017, in SCA Hygiene Products Aktiebolag v. First Quality BabyProducts,

LLC,

equitable

defense

damages

where

[statute]."

No.
the

15-927,

of

the

laches

infringement

137 S. Ct. 954,

United States

"cannot

967

be

occurred
(2017).

Supreme

interposed
within

the

Court

as

a

held that

defense

period

the

against

prescribed

by

to

their

Dell

patent

argues

that

injure Dell
and

pool

arrangement.

Id.

Counter-Defendants

131-147,

specifically

through license agreements with

"Co-Conspirator B,"

respectively,

169-172.

conspired

to

"Co-Conspirator A"

which required

"Counter-

Defendants to license the SISVEL patent pool to Dell or sue Dell

for infringement."
In
argues

addition
that,

standard,

to

improperly

because

MPEG

on

("FPAND

fair,

terms"),

According

to

competitive"
and

their

adopted

as

an

international

obligated

to

offer

were

reasonable,

but

Dell,

failed

and

to

do

Counter-Defendants

license
state

pooling

was

Counter-Defendants

licenses

federal

Id. HH 159, 189-195.

fee

law.

for

Dell

patent

nondiscriminatory
so.

HH

are

charging

the patent pool,

Id.

patents.

145-149.

terms

204-209.
a

"supra-

in violation of

Dell

asserts

that

it

has "suffered svibstantial injury to its business and property as
a

result

of

the

Counter-Defendants'

unlawful

conduct,"

id.

K 144, and asserts that Counter-Defendants' conduct "has caused,
and will continue to cause,

siabstantial anticompetitive effects

to competition generally, and specifically to competition in the
United States," id. H 179.
On August
Dismiss

Dell's

Affirmative

26,

2016,

Counter-Defendants

Coxmterclaims

Defense

I-X

(patent misuse

filed an alternative Motion for a

and

filed

Strike

defense),

a

Motion

Dell's

ECF No.

to

Seventh

248,

and

Separate Trial and Stay of

Defendant's

Defense,

Counterclaims

ECF

No.

253.

I-X

Patent

October

On

and

24,

response to Counter-Defendants'
and a

On November 4,
of

ECF No.

206.

2016,

329.

The case was

24,

parties

bifurcate

Counter-Defendants filed a

of

the Motion for

the

would

status

Court

explained

and

ECF No.

a

616.

The

bifurcation ruling,

334,

and a

Separate Trial,

conference with

reviewed

that

it

consult

the

would

with

Court

case

rule

the

Judge regarding the motions in limine.
ECF No.

reply brief in
reply-

ECF

No.

then reassigned to this Judge on March 20,

telephonic

2017,

and

a

308,

in support

April

filed

ECF No.

their Motion to Dismiss,

In a

Dell

Motion to Dismiss,

brief

2017.

2016,

Affirmative

to the Motion for Separate Trial,

response

support

Misuse

the

parties

status

with

the

motion

on

co-assigned
Status Conf.

recommended that,

on
the

to

Magistrate
Tr.

65-66,

after receiving its

the parties may wish to consider returning

to settlement discussions.

considered by this Court,

Id.

Having been fully briefed and

Counter-Defendants'

Motion to Dismiss

and Motion for a Separate Trial are now ripe for review.
II.

LEGAL STANDARD

Under Federal Rule of Civil Procedure 42{b),
order a

separate trial"

avoid prejudice,
Civ.

which

P.

42(b).

circuit

of coxinterclaims

"[f]or convenience,

or to expedite and economize.
As an initial matter,

law

controls

"the court may

.

.

."

Fed.

to

R.

the Court must determine

application

of

Rule

42 (b)

to

the

combined patent infringement and antitrust claims in this case.
While

there

is

little discussion of

this question in the case

law, it appears that the Court should look to precedent from the

United

States

Court

of

Appeals

for

the

Federal

Circuit

to

determine "[w]hether and under what sets of facts patent issues
should

be

matter,
[the

separated

for

it "implicat[es]

Federal

Innotron

Circuit]

the

the

800

Court

because,

while

a

procedural

the jurisprudential responsibilities of
in

Diagnostics,

Therefore,

trial,"

field

F.2d

primarily

of

1077,

will

patent

1084

look

law."

(Fed.

to

In

Cir.

Federal

re

1986).

Circuit

precedent in deciding whether to bifurcate trial of the patent
infringement claims from the antitrust claims.
Because a

trial court "has broad discretion with regard to

trial management,"

a

decision to bifurcate a

for an abuse of discretion.

1276

62

(Fed. Cir. 2007)

(9th

Cir.

Shum v.

trial is reviewed

Intel Corp.,

499 F.3d 1272,

(citing Danjag v. Sony, 263 F.3d 942,

2001)).

"In

the

context

of

patent

961-

cases,

'[e]xperienced judges use bifurcation and trifurcation both to
simplify

the

issues

manageability

of

presented to a
No.

CIV.A.

(quoting

jury.'"

02-212-JJF,

Thomas

Trifurcation,

L.

patent

cases

volume

the

in

and

complexity

Enzo Life Scis.,
2003

Creel

WL 21402512,

&

Robert

Opinions of Counsel,

P.

and

Inc.
at

to
the

of
v.
*5

maintain
evidence

Digene Corp.,
(D.

Taylor,

Del.

2003)

Bifurcation,

Privilege and Prejudice,

424

PLI/PAT 823,

826

not

limits.

without

(1995)).

However,

For

the Court's discretion is

example,

"[w]hen

deciding

whether

issues should be separately tried, trial courts must ensure that
a

litigant's

Shum,

499

constitutional

F.3d

convenience,

at

right

1276.

prejudice,

In

to

a

jury

examining

is
the

preserved."
factors

of

and judicial economy under Rule 42(b),

the United States Court of Appeals for the Federal Circuit has
stated

that

"the

major

consideration

choice most likely to result in a
litigation."
(citing

9

In

re

Charles

Innotron

Alan

A.

antitrust

bifurcate

Theodor

(Fed.

the

Groz

Cir.

recognized

toward

the

just final disposition of the

& Arthur

800
R.

F.2d

at

Miller,

1084

Federal

(1971)).

Bifurcation of Antitrust Counterclaims

When applying
and

directed

Diagnostics,

Wright

Practice & Procedure § 2388

is

this

principle

counterclaims,
issues

&

Sohne,

1992)

that

for

to

cases

district

trial.

See

F.2d

1352,

972

(table

"district

decision)

courts

with patent
courts

id.

at

1992

WL

(stating

may

claims

frequently

1084-85;

In

re

188908,

at

*2

that

generally

Innotron

favor

separation of patent and antitrust issues for trial"),®

the

However,

® Dell disputes this assertion from Federal Circuit dictum regarding the waycourts
"generally"
handle
cases
with
patent
claims
and
antitrust
counterclaims, arguing that bifurcation is the exception, not the rule.
Def.'s Resp. Br. 8, ECF No. 306 (citations omitted).
Whether bifurcation
under such circumstances is the way courts "generally" proceed, or is the
exception, is immaterial to the analysis here as this Court exercises its

discretion

on

the

facts

of

this

case,

rather

than

applying

a

rule

of

district courts are not required to bifurcate patent claims and
antitrust

claims,

and

retain

"considerable

discretion

in

determining whether the severance of antitrust and patent issues
would

best

prejudice,
& Sohne,

1084).
in

serve

the

convenience

1992 WL 188908,

at

*2

(citing

parties,

avoid

In re Theodor Groz

Innotron,

800

P.2d at

Courts have synthesized these bifurcation considerations

the

patent/antitrust

context

Co.

6965048,

V.

at

Katun

*1

Corp.,

(D.N.J.

and

conserve

jury's comprehension of

Ricoh

the

and minimize expense and delay."

"whether bifurcation will

the

of

judicial

considered

resources,

improve

the

issues,

and avoid prejudice."

No.

CIV.A.

03-2612

2005)

(citing

Montell N.V., 28 F. Supp. 2d 833, 837
In re Theodor Groz & Sohne,

specifically

2005

WL

Carbide

Union

WHW,

Corp.

v.

(S.D.N.Y. 1998)); see also

1992 WL 188908,

at *2

(noting that

district courts may consider the "commonality of the patent and

antitrust
make

issues

bifurcation

presented"

and

"\mworkable

whether

and

[an]

the

issues

presented

inefficient

use

of

judicial resources").
B.

Bifurcation of Patent Misuse Defense

When a defendant asserts a patent misuse defense along with
antitrust

counterclaims,

manage the litigation.

courts

See,

have

e.g.,

generality or exception.

W.L.

utilized

bifurcation

Gore & Assocs.,

to

Inc. v.

See In re Hamilton, 82 F.3d 432 (Fed. Cir. 1996)
{table decision) (refusing to issue a writ of mandamus to a district court to
bifurcate the patent and antitrust claims for trial).
10

Int'l Med.

(Fed.

Cir.

Prosthetics Research Assocs.,

1992)

(noting that

Inc.,

975 F.2d 858,

860

the district court bifurcated a

patent misuse defense together with the antitrust counterclaim) ;
Va.

Panel Corp.

1997)

v.

MAC Panel Co.,

133 F.3d 860,

863

(Fed.

Cir.

(noting that the lower court bifurcated the trial into a

standard "infringement"
claims were

patent

tried,

misuse

Trial

litigation

that

have

presentation

and an

defense

courts

of

trial,

in which the patent infringement

"antitrust"

and antitrust

have

utilized

noted

that

evidence

in which both the

counterclaim were

bifurcation

"when

the

trial,

to

considering

patent

misuse

tried).

manage

the

such

orderly

defense

is

more

appropriately tried along with the antitrust issues."

Va. Panel

Corp.

Va.

V.

Mac Panel Co.,

(explaining

that

demonstrating

the

887 F.

Supp.

patent

"expansion

of

880,

misuse
patent

884

(W.D.

defense
monopoly

may

1995)

include

rights

over

unpatented devices").
III.

As

an

alternative

Counter-Defendants

to

request

DISCUSSION

their
that

pending
the

Motion

Court

to

bifurcate

Dismiss,
Dell's

counterclaims I-X and patent misuse affirmative defense so that

they

may

be

tried

infringement claims.

separately

from

Plaintiffs'

patent

The Court will first consider bifurcation

of Dell's counterclaims I-X,

and then will evaluate bifurcation

of Dell's patent misuse defense.
11

A.

Bifurcation of Dell's Co\mterclaims I-X

1. Convenience and Judicial Economy
The

Court

first

conserve

judicial

parties,

witnesses,

that

bifurcation

because

Dell's

evaluates

resources
and

is

and

the

in

whether

be

more

Court.

"the

counterclaims

convenient

of

judicial

infringement

Br.

5.

Dell

argues

that

the

defenses

evidence

the
argue

economy,

unrelated issues that will require different evidence."
Reply

would

for

Counter-Defendants

interest

and

bifurcation

raise
Pis.'

regarding

the

"patent issues" and Dell's antitrust counterclaims overlaps, and
therefore i t would be more convenient and expedient to hear the

patent

infringement

trial.
Court

and

Def.'s Resp.
orders

witnesses

antitrust

Br.

13-14.

separate

will be

trials,

counterclaims

all

of

these

that a

the

Court

[completed]

simplify some of
later trial.

the

factors

considers

of

CIV.A 09-80-JJF-MPT,

2010

v.

and

expert

Id. at 14.

there

is

trial on [the plaintiffs']

Masimo Corp.

"[i]f the

and two separate

convenience

whether

(the defendant's]

single

their credibility and the

weight to be given to their testimony."

economy,

fact

required to testify twice,

assessing

a

According to Dell,

juries will be required to evaluate

In

in

and
a

judicial

"possibility

patent claims will

antitrust counterclaims" in a

Philips Elecs.

WL 925864,

at

*2

N.

(D.

Am.

Corp.,

No.

Del.

2010);

see

also Otsuka Pharm. Co. v. Apotex Corp., 143 F. Supp. 3d 188, 197
12

{D.N.J.

2015)

infringement

(noting

issue

that

might

when

moot

a

resolution

of

counterclaim,

a

it

patent

is

in

interest of judicial economy to bifurcate the trial);
Int'l

Inc.

756766,

so

V.

at *4

long

as

Tech.

(D. Del.

some

simplified,
be

New

.

.

implicated

of

Co.,

1996)

the

No.

CIV.A.

96-272

the

Dentsply

MMS,

1996

WL

("Separate trials may be warranted

issues

in

a

second

trial

would

be

. all of the issues in a second trial need not

in

the

first."

(citing Akzona,

Inc.

v.

E.I.

Du

Font de Nemours & Co., 607 P. Supp. 227, 232 (D. Del 1984))).
Here,

than

Dell's

antitrust

Plaintiffs'

patent

antitrust claims

pool

are

licensees

knowledge

about

antitrust

against

both

claims.

substantial
regarding

there

and

new
the

any

may be
the

Dell's

and

(4)

some

patent

efficiency

interest

the

(2)

include a
(Dell),

include ten unique claims

See generally Countercl.
overlap

of

infringement

evidence

infringement

scope

because

single licensee

counterclaim

additional

patent

claims

in

the patents in the SISVEL

instead of a

based upon federal and state law.®
while

greater

three patents-in-suit,

cover a worldwide market,

Therefore,

much

infringement

include all of

instead of only the

large number of
(3)

(1)

claims

witnesses
claims

appears

beyond

claims,

in hearing

the

to

require

the

evidence

thus

all

and

with

of

militating

the

claims

® Counter-Defendants did not request the Court to bifurcate Count XI of Dell's
counterclaim.

13

together in a

Co.,

318

F.

single trial.

Supp.

959,

See Components,

966

("Pursuant to Rule 42(b)

(D.

Me.

1970)

Inc.

v.

W.

Elec.

(collecting cases)

the courts have frequently found it to

be in the interest of economy and convenience, both to the court

and to the parties,
disposition

of

and in furtherance of the most expeditious

complex

litigation of

this

kind,

antitrust and misuse issues from the issues of

and

infringement.").

Moreover,

to

sever

[patent]

resolution

of

the

validity

the

patent

infringement claims could resolve one or more of the antitrust
claims

because

several

of

Dell's

counterclaims

are

listed

as

alternative arguments depending on the resolution of the patent

infringement claims.'
not infringed,
(Breach of
and Count X

that

the

favor

of

If the patents are found to be invalid,

or \inenforceable.

RAND

Obligations),

(Waiver)

factors

of

bifurcating

Dell's counterclaim Count VIII

Count

IX

would all be moot.

(Promissory
Thus,

Estoppel),

the Court finds

judicial economy and convenience weigh in
the

patent

infringement

claims

from

the

a n t i t r u s t claims.

' See Countercl.
are

H 208

found valid,

(Count VIII:

infringed,

"In the event that the Asserted Patents

and enforceable,

Counter-Defendants have

to comply with their RAND obligations."); H 213

failed

(Count IX: "In the event that

the Asserted Patents are found valid, infringed, and enforceable. Dell has
result of its reasonable reliance and Counter-Defendants'

been damaged as a
failure

to

offer

a

license

to

the

Asserted

Patents

on

reasonable

and

non-

discriminatory terms and conditions."}; H 217 (Count X: "In the event that
the Asserted Patents are found valid, infringed, and enforceable. Dell has
been damaged as a result of its reasonable reliance and Counter-Defendants'
waiver of its [sic] rights to seek licensing fees beyond those fees that are
reasonable and non-discriminatory.").
14

2. Jury Confusion

Next,

patent

Counter-Defendants

infringement

"significantly

claims

reduce

the

argue

from
risk

that

the
of

Dell

argues

that

antitrust

juror

Opening Br. 10-11 {citing Masimo Corp.,
In response.

bifurcation

of

claims

the

would

confusion."

Pis.'

2010 WL 925864, at *2).

Counter-Defendants'

concerns

are

only "generalized concerns about juror confusion," which cannot
justify

separate

trials.

Def.'s

Resp.

Br.

16.

Moreover,

according to Dell, at most, concerns about juror confusion would
only justify separate trials,
antitrust claims.

In the
the

ultimate

at

just disposition of

the

consider whether bifurcation would

comprehension

6965048,

at 16 n.6.

interest of a

Court must

jury's

Id.

not a stay of discovery on Dell's

*1.

of

the

"[N]either

objective

[of

issues."

litigation,
"improve the

Ricoh

Co.,

2005

nor

economy

is

convenience
bifurcation]:

' [A]

WL
the

paramount

consideration at all times in the administration of justice is a

fair

and impartial

economy of time,
thereto.'"

{E.D.

La.

(S.D.N.Y.

trial

1951)).

litigants.

Considerations of

money and convenience of witnesses must yield

LoCicero v.

1971)

to all

Humble Oil

(citing Baker v.
Thus,

& Ref.

Co.,

Waterman,

52 F.R.D.

11 F.R.D.

28,

440,

in deciding whether to bifurcate,

29

441
"the

major consideration is directed toward the choice most likely to

15

result in a
Innotron,

just final disposition of the litigation,"

800 F.2d at 1084.

Here,

Coxmter-Defendants

raise

concern over juror confusion.

the

patents-in-suit

matters

the

of

fact

average

actions

In re

and

for personal

Ricoh Co.,

2005

"patent

cases

law that

juror as

more

"generalized"

in

Br.

WL 6965048,

at

*1.

product,

and

claims

no

general,

are not

Unlike

195 F.R.D.

as

the

618,

intuitive

three

such as

cited by

{N.D. 111.

one allegedly
instant

patents

to

would be."

622

the

Both

involve

case

one claim,

counterclaim,

involve

16.

common actions,

2000), which involved a single patent,

infringement

a

injury or breach of contract,

Dell, Real v. Bunn-O-Matic Corp.,

infringing

than

See Def.'s Resp.

and issues of

reasonable

more

with

patent

detailed

technological questions related to software programing, multiple
allegedly
involving

infringing
both

products,

Federal

additional

patents,

Countercl.;

see

and

see

also

and

state

ten

law

generally

Masimo

antitrust

claims,

and

Compl.;

Corp.,

2010

see

WL

claims
numerous

generally

925864,

at

*2

("Explanation and presentation of the existence and relevance of

these

non-asserted

complicate
Thus,

while

trial

patents

and

in Real,

to

the

inevitably
the court

jury

lead

found

to

would

only

further

juror

confusion.").

"no compelling reason to

conduct separate trials" on the issues of liability and damages,
Real,

195

F.R.D.

at

622,

the
16

instant

case

involves

complex

issues

that,

confusion,

as

of

if

tried

the

telephonic

exhibits,"

status

exhibit

conference

list was

issues

Ricoh Co.,

2005

interest

bifurcating

the

on

April

juror
trial

WL 6965048,

comprehension

because

jury

24,

2017,
6,000

"in the range of 800 to
at

to patent issues would pose a

of

create

"something north of

for even the most astute of juries.").
the

likely

(notifying the Court that,

and Dell's exhibit list was

documents");

antitrust

would

see Status Conf. Tr. 38-39

Counter-Defendants'

850

together,

*1

{"[T]o add

difficult

task

The Court concludes that
weighs

bifurcation

in
the

of

favor

of

antitrust

claims and patent infringement claims "will surely enhance jury

decision making in two ways:

(1) by presenting the evidence in a

manner that is easier for the jurors to understand,

and

(2)

by

limiting the number of legal issues the jury must address at any
particular

Pharm.

Co.,

antitrust
complex

time."

143

and

Ricoh

F.

patent

patent

Co.,

Supp.

2005

WL

at

197

3d

696504 8,

claims

*1;

("Bifurcation

misuse] Counterclaims

infringement

at

from

further

the

of

Otsuka

[the

already-

enhances

*the

parties' right to jury trial by making the issues the jury must
consider less complex.'"
Pharm.
*11

Co.,

(D.N.J.

Nos.

98-2749,

(quoting Warner Lambert Co. v. Purepac
99-5948,

2000))).

17

00-2053,

2000

WL 34213890,

3. Prejudice

Finally,
prejudice

the parties both assert that they will experience

if

request.

the

Court

does

Counter-Defendants

not

proceed as

argue

that

a

they

respectively

single

trial

will

prejudice them by the jury hearing the allegations that CoxinterDefendants

jury

is

Pis,'

have

engaged

evaluating

Opening

allegations
market"

for

licensees,

Plaintiffs'

Br.

of

and

and

consumers.
have

consumers

of

in

counterclaims

include

behavior

such

Countercl.

allegations

in

the

with

technology

106-107.
vast

that

"worldwide

"[1]icensors,
.

.

.

located

In this worldwide

number

include

anticompetitive

the

claims.

technology,

Counter-Defendants'

Dell's

engaged

MP3

behavior while

infringement

Dell's

Counter-Defendeuits'
MP2

with

patent

10-11.

throughout the world."
context,

in anticompetitive

of

licensees

and

Counter-Defendants

conspiracies,

improper

market

monopolization, and "have breached the promises they made to the
MP3

Standard body."

argues

98,

121,

resolution

of

Dell's

In response.

Dell

i t because bifurcation

counterclaims.

Def.'s

Resp.

15-16.

Under Federal Rule of

Civil Procedure 42(b),

bifurcate a trial "to avoid prejudice."
"The

131.

that bifurcation would prejudice

would delay
Br.

Id.

inevitable

effect

prejudicial evidence

[is]

of

the

introduction

to deny
18

Fed. R.
of

a

court may

Civ.
.

.

[the opposing party]

P.

42(b).

.

highly

the fair

trial

to

which

it

Inc.,

990 F.2d 1440,

non-patent case,

court

to

claims

deny

irrelevant

entitled."

1445

(4th Cir.

motion
"expos [ed]

to

it

v.

CSX

Transp.,

{holding that,

the

jury to

Here,

conspiracies,

claims

evaluates

the

improper

patent

. . .

Dell's

and breach of promises could bias the
when

Dixon

1993)

bifurcate

evidence")-

anticompetitive

See

it was an abuse of discretion for a

a

together

was

when

in a

district

trying

inflammatory and
allegations

market

Corp.,

defendant's]

2010

WL

925864,

jury against Plaintiffs

infringement

at

of

monopolization,

claims,

thus

preventing a fair trial on the patent infringement claims.
Masimo

the

*2

("[A]t

trial,

See
[the

allegations of monopolization could bias the

jury

when it evaluates [the plaintiffs'] patent claims.").
The Court

next considers Dell's

argument

that bifurcation

would cause it prejudice by delaying resolution of its antitrust
claims.

As

Counter-Defendants

allege,

and

Dell

does

not

dispute, Dell waited twelve years (from the time that Audio MPEG
first requested that Dell license the asserted patents)

to bring

the instant antitrust claims against Counter-Defendants.
Resp. Br. 15.

argument

that

resolution of
that Dell

is

Def.'s

Such delay in bringing suit weighs against Dell's

it

would

suffer

prejudice

its counterclaims.

Moreover,

without

the

swift

i t does not appear

faced with any ongoing anticompetitive conduct by

Counter-Defendants,

such that damages would be mitigated by an
19

earlier

patent

trial

pool

date,

will

because

have

all

of

expired

the

patents

before

trial

regardless of whether the trial is bifurcated.

in

the

will

SISVEL

commence,

Countercl. H 77

("[T]he last expiration date of any patent in the SISVEL Patent
Pool

.

.

.

that

Dell

expires on July 2,
will

not

be

2017.").

Thus,

the Court finds

unduly prejudiced by any minimal

delay

resulting from bifurcation.
Having considered the

factors

above and finding

factor weighs in favor of bifurcation,
Defendants'

Motion for a

that each

the Court GRANTS Counter-

Separate Trial of Dell's Counterclaims

I-X from trial of Plaintiffs' patent infringement claims.
B.

Bifurcation of Dell's Patent Misuse Defense

Counter-Defendants
Dell's

patent

also

misuse

request

defense

that
from

the

(citing Va.
defense,

antitrust

Panel Corp.,

patent

issues."

887 F.

misuse.

Dell

Supp.

patent

"more appropriately
Pis.'

at 884).

alleges

bifurcate

Plaintiffs'

infringement claims because this defense is
tried along with the

Court

that

Opening Br.

8

In its seventh

Coxmter-Defendants

"have sought to illegally extend the patent life of the patents
that

Plaintiffs

claim

essential patents

.

patents

not

that

are

expire years later,

.

are
. ,

essential

by

tying

these

claimed

which expired in 2010 and 2011,

claimed

to

be

essential

and

are

with

set

to

resulting in an anticompetitive requirement

for licensees to pay royalties for licenses relating to patents
20

past their expiration."
Counter-Defendants

Patents

beyond

Answer H 15.

"have

their

also

Dell further alleges that

sought

original

and

to

enforce

proper

scope

improper application of industry standards."
"Patent

misuse

infringement,"
'patent's
derive

benefit

teachings,'
products

that

2005)

395 U.S.

not

do
v.

the

'extend

use

the

(1969)).
the

grant

anticompetitive
1171,

and

1182

(Fed.

anticompetitive behavior,

his

of

the

patent

the

to

patent's

royalty on

patent."

F.3d 1179,

U.S.
(Fed.

Hazeltine Res.,

v.

1184

Inc.,

the

has

is whether "the patentee

physical

done

so

or

in

Sanofi-Aventis
Cir.

2011).

temporal

scope

of

a

manner

that

has

v.

Apotex

Inc.,

659

Due

to

the

focus

on

"the doctrine of patent misuse closely

tracks antitrust law principles in many respects."
Corp.,

the

In determining if a patentee has

"key inquiry"

effects."

of

patent

using

to pay a

of

424

means

to

"from

use

licensee

Int'l Trade Comm'n,

135-36

the

teaching

by

defense

monopoly of
to

Asserted

Id. H 16.

patentee

the

requiring a

impermissibly broadened

F.3d

a

{citing Zenith Radio Corp.

100,

patent

equitable

attributable

not

misused its patent,
has

an

prevents

to

such as

Philips Corp.

Cir.

which

leverage'

a

is

the

U.S. Philips

424 F.3d at 1185-86.

The Court finds that it is appropriate to bifurcate Dell's
patent misuse defense along with Dell's antitrust claims because
of the significant overlap in alleged facts and legal arguments.
21

In

its

patent

misuse

defense,

Dell

argues

that

Counter-

Defendants are attempting to "illegally extend the patent life
of

the patents

...

by tying"

the essential asserted patents

with non-essential patents in a patent pool.
Dell's

Counterclaim,

Covinter-Defendants

have

Counter-Defendants

...

is

Count

to

(Tying),

violated

"have

essential

III

tied

federal

the

Answer H 15.
Dell

alleges

antitrust

license

of

law

In
that

because

technology

that

the practice of MP2 Decoding Technology

and MP3 Decoding Technology, with patents that are not essential

to the practice" of these technologies.
Dell's
III

patent

(Tying),

Thus,

misuse

defense

allege

very

because of

the

and

similar

legal

and

Countercl. Ill69.

antitrust
facts

factual

counterclaim

and

legal

Both
Count

argument.

overlap between Dell's

patent misuse defense and antitrust counterclaim Count III,

Court

GRANTS

patent misuse

Counter-Defendants'

request

defense

can be

so

that

it

antitrust counterclaims.

See Va.

884

the

("[W]hen

considering

to

bifurcate

Dell's

heard along with

Panel Corp.,

887 F.

orderly presentation of

the

Supp.

the
at

evidence

the patent misuse defense is more appropriately tried along with
the antitrust issues.").
IV.

CONCLUSION

Having evaluated the relevant factors and finding that each
factor weighs in favor of bifurcation,

Defendants'

Motion for a

the Court GRANTS Counter-

Separate Trial of Dell's Counterclaims
22

I-X and Patent Misuse Defense from trial of Plaintiffs'

infringement

claims.

6965048,

*1

at

ECF

{"The

No.

Court

has

253;

see

broad

Ricoh

Co.,

discretion

whether to separate issues and claims for trial,

2005

in

WL

deciding

in accordance

with its broad power to manage its trial calendar.").
DISMISSES as MOOT Counter-Defendants'

patent

The Court

Motion to Stay discovery

because discovery on both the patent infringement and antitrust
claims is already complete.
TAKES

UNDER

Dell's

ADVISEMENT

Counterclaims

Defense

I-X

See Status Conf. Tr. 39.

Counter-Defendants'
and

Strike

(patent misuse defense).

Dell's

ECF No.

Motion

to

Seventh

248.

The Court
Dismiss

Affirmative

Finally,

while

the Court appreciates the challenges for the parties resulting
from continuance of their trial date,

because the Court's docket

was filled with many other trials already scheduled before this
case

was

trial

on

transferred to

Plaintiffs'

December 5,
the

Court

2017,
DIRECTS

the

patent

and in the
the

undersigned Judge,

infringement
interest of

parties

before July 31, 2017.

23

to

file

the

claims

Court

to

SETS

begin

on

judicial efficiency,
all

pretrial

motions

The Clerk is REQUESTED to send a
Order to counsel
IT

IS

copy of this Opinion and

for Counter-Defendants and to counsel

SO ORDERED,

Mark S.
UNITED

Norfolk, Virginia

May SI

for Dell.

2017

24

STATES

Davis

DISTRICT

JUDGE