CORDANCE CORP. v. Amazon. com, Inc.

696 F. Supp.2d 445

CORDANCE CORPORATION, Plaintiff, v. AMAZON.COM, INC., Defendant.

Civil Action No. 06-491-MPT.

United States District Court, D. Delaware.

March 19, 2010.

Steven J. Balick, Ashby & Geddes, Wilmington, DE, for Plaintiff.

John G. Day, Ashby & Geddes, Wilmington, DE.

Tiffany Geyer Lydon, Ashby & Geddes, Wilmington, DE.

Jeffrey C. O'Neill, Pro Hac Vice.

Michael A. Albert, Pro Hac Vice.

Robert M. Abrahamsen, Pro Hac Vice.

Richard L. Horwitz, David Ellis Moore, Potter Anderson & Corroon, LLP, Wilmington, DE, for Defendant.

Carolyn Chang, Pro Hac Vice.

Darren E. Donnelly, Pro Hac Vice.

Lynn Pasahow, Pro Hac Vice.

Ryan J. Marton, Pro Hac Vice.

Saina S. Shamilov, Pro Hac Vice.

MEMORANDUM ORDER

MARY PAT THYNGE, United States Magistrate Judge.

I. INTRODUCTION

On March 10, 2010, Plaintiff Cordance Corporation ("Cordance") and defendant Amazon.com, Inc. ("Amazon") jointly filed a letter containing each party's proposed schedule for resolution of the outstanding issues in this case.¹ In deciding which proposed schedule to adopt, the court was called upon to answer two questions: (1) Prior to Federal Circuit review pursuant to 28 U.S.C. § 1292(c)(2), does the court have to hold a damage trial or rule on Amazon's equitable defenses and Cordance's request for equitable relief? (2) Can the court certify for Federal Circuit review Amazon's claims for declaratory relief pursuant to Rule 54(b)? The parties addressed these issues in their March 10 joint letter, that letter's supporting memoranda, in Cordance's motion for leave to file a reply, and in Amazon's opposition to that motion. For the reasons explained below, the court grants Cordance's motion for leave to file a reply, but orders that Amazon's proposed schedule be adopted as revised by the court.

II. PROPOSED SCHEDULES

Cordance urged the court to adopt the following schedule:

1. A three-day jury trial on damages, followed immediately by;

2. A one-day bench trial on Amazon's equitable defenses, followed immediately by;

3. A hearing to determine the form of any equitable relief to which Cordance is entitled;

4. Any appeal a party wishes to bring.

Amazon proposed the following schedule:

1. A two-day bench trial on Amazon's equitable defenses to be held before June 8, 2010 (when Dr. Alvisi goes to China), followed by;

2. A hearing on Cordance's request for equitable relief;

3. Appeals

III. DISCUSSION

A. Ripeness under 28 U.S.C. § 1292(c)(2)

Cordance argues that three separate yet-to-be-resolved issues in this case preclude federal circuit review pursuant to 28 U.S.C. § 1292(c)(2): (1) Cordance's request for injunctive relief (in the form of an injunction or compulsory license); (2) Amazon's equitable defenses; and (3) Cordance's request for damages. Cordance is correct with respect to Amazon's equitable defenses and Cordance's request for equitable relief.

Pursuant to 28 U.S.C. § 1292(c)(2), the Federal Circuit may hear appeals in patent cases where judgment "is final except for an accounting." "`Accounting,' as used in the statute, refers to infringement damages pursuant to 35 U.S.C. § 284."² Thus, Cordance's unresolved request for damages will not preclude Federal Circuit review. Amazon's equitable defenses and Cordance's request for equitable relief will, however, provide grounds for the Federal Circuit to dismiss an appeal in this case as premature.³ Cordance and Amazon agree that the court should rule on Amazon's equitable defenses and Cordance's request for equitable relief. The parties disagree, however, with regard to how the court should address Cordance's request for equitable relief.

Cordance seeks a permanent injunction, or, in the alternative, imposition of an ongoing royalty. Cordance correctly asserts that the court must rule on this request. Cordance, however, goes further and urges the court to hold a damages trial, arguing that a damages trial will help inform the court's decision as to the amount of any ongoing royalty or compulsory license. As the court noted above, however, a damages trial is not needed to ensure jurisdiction in the Federal Circuit-Amazon correctly argues that 28 U.S.C. § 1292(c)(2) expressly authorizes district courts to defer a separate jury trial on damages until after the parties have appealed and finalized the judgment on liability.⁴ As Amazon contends, a damages trial is not a necessary predicate to the court's ruling on a request for equitable relief.

Amazon argues that the court should first rule on Cordance's request for permanent injunction. Then, Amazon asserts, if the court chooses to deny Cordance's request for permanent injunction, the court may deny the alternative request for compulsory license without prejudice to be revisited after the appeal on liability issues and a subsequent jury damage trial, if such a trial is required. In support of its argument that such action is appropriate, Amazon cites two cases: IMX, Inc. v. LendingTree, LLC⁵ and Cordis Corp. v. Boston Sci. Corp.⁶ Cordance maintains that neither case is on point.

1. IMX, Inc. v. LendingTree, LLC

In LendingTree, the court denied a request for permanent injunction and also decided not to "effectively impose a ten-year compulsory license on defendant absent more information, for example, the effects of defendant's infringement on plaintiff's business and of a potential permanent injunction on the public and the marketplace."⁷ Cordance argues that LendingTree fails to support Amazon's above argument because (1) prior to the LendingTree court's opinion, the amount of damages was decided by a jury and (2) there is no evidence that the parties in LendingTree briefed whether an appeal could be taken while injunctive relief was pending and the appeal was dismissed prior to any substantive ruling by the Federal Circuit. Cordance's first argument fails to persuade the court that denying Cordance's request for equitable relief without prejudice would be inappropriate. The LendingTree court's decision to deny both a permanent injunction and the imposition of a compulsory license in a case where a damages jury trial had taken place cuts in favor of this court deciding to do the same where no jury trial has occurred. Cordance's second argument is equally unpersuasive, at least in part because it is unclear what requested injunctive relief Cordance believes was still pending following the LendingTree court's decision. Cordance asserts that, had LendingTree not been dismissed prior to Federal Circuit review, the Federal Circuit would have been constrained to dismiss it as premature as required by Bard Peripheral Vascular, Inc. v. W.L. Gore & Assocs., Inc.⁸ Contrary to Cordance's assertions, however, Bard Peripheral does not indicate that the Federal Circuit would have been constrained to dismiss as premature a case, like LendingTree, where a successful patentee plaintiff was denied without prejudice a permanent injunction and an ongoing royalty or compulsory license.

Cordance consistently overemphasizes and overextends Bard Peripheral, a two-page, unpublished opinion. In Bard Peripheral, following a patent trial in which the patentee prevailed, the district court denied the patentee plaintiff's motion to permanently enjoin the defendant's infringement, but granted the plaintiff's request for a compulsory license for the defendant's future infringement.⁹ When the Federal Circuit reviewed the case, proceedings to determine the terms of the license agreement were ongoing in the district court.¹⁰ The Federal Circuit therefore concluded: "Because proceedings concerning the license are still pending before the district court, we deem the better course is to dismiss the appeal as premature."¹¹ Nowhere in this decision does the Federal Circuit indicate either (1) that a district court must determine a compulsory license for future infringement prior to Federal Circuit review, or (2) that it would be inappropriate for a district court to deny without prejudice a request for such relief pending appeal of claims relating to issues of liability.

2. Cordis Corp. v. Boston Sci. Corp.

Amazon cites Cordis Corp. in support of the proposition that consideration of post-judgment damages can be deferred until after liability issues are resolved. Cordance asserts that Amazon mischaracterizes the Cordis Corp. decision and that Cordis Corp. is irrelevant to the present case because the Cordis Corp. court addressed only damages for past infringement, not equitable relief for ongoing infringement. However, as Amazon points out, the court in Cordis Corp. expressly states that post-verdict damages would remain pending until relevant liability issues were resolved:

Recognizing that a new damages trial may be necessary, as discussed above, the court will defer consideration of prejudgment interest and post-verdict damages until the damages issues have been finally resolved. At that time, the relevant liability and damages issues will have been sufficiently resolved to allow the court to address at one time all matters with respect to the calculation of damages.¹²

Cordance's assertion that Amazon misrepresents the law explained in Cordis Corp. is therefore misguided. The case may properly be cited as an example of an instance in which a court deferred consideration of post-judgment damages.

3. An Ongoing Royalty or Compulsory License

Cordance asserts that "Courts typically impose an ongoing royalty as equitable relief where they have declined to enter a permanent injunction."¹³ In support of that assertion, Cordance cites Paice LLC v. Toyota Motor Corp.¹⁴ and Innogenetics, N.V. v. Abbott Labs.¹⁵ Neither case, however, supports Cordance's above assertion.

Cordance cites Paice to support its contention that the Federal Circuit would remand the present case should the court fail to establish an ongoing royalty rate for Amazon's infringement. In Paice, the Federal Circuit did remand a case to the district court for "the limited purpose of having ...