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Zen Design Group, Ltd. v. Scholastic, Inc.

United States District Court, E.D. Michigan, Southern Division

June 15, 2017

SCHOLASTIC, INC., Defendant.



         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.

         I. BACKGROUND

         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 question[2] 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 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, ...

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