En defendants brief:
UNITED STATES DISTRICT COURT
NORTHERN DISTRICT OF CALIFORNIA
OAKLAND DIVISION
GENENTECH, INC., a Delaware Corporation,
TERCICA, INC., a Delaware Corporation
Plaintiffs,
v.
INSMED INCORPORATED, a Virginia
Corporation, CELTRIX
PHARMACEUTICALS, INC., a Delaware
Corporation, and INSMED THERAPEUTIC
PROTEINS, INC., a Colorado Corporation
Defendants.
AND RELATED COUNTERCLAIMS
Case No. C-04-5429 CW (EMC)
DEFENDANTS’ TRIAL BRIEF UNDER
L.R. 16-10(B)(8) TO BIFURCATE THE
ISSUES OF WILLFUL INFRINGEMENT
AND DAMAGES
Case 4:04-cv-05429-CW Document 660 Filed 10/13/2006 Page 1 of 7
DEFENDANTS’ TRIAL BRIEF UNDER L.R. 16-10(B)(8)
.v
WASH_1704525.1
1
TO PLAINTIFFS AND THEIR ATTORNEYS OF RECORD:
PLEASE TAKE NOTICE THAT on October 27, 2006, at 1:30 p.m., or as soon thereafter as the matter may be heard in Courtroom 2 of the above-entitled Court, Defendants will move to bifurcate and separately phase the damages and willfulness phases after the jury renders a verdict on the liability phase of trial.
Good cause for bifurcation exists under Federal Rule of Civil Procedure 42(b) where to do so will avoid substantial prejudice to Defendants, will simplify issues for the jury’s convenience and may
conserve judicial resources in the event that the jury finds in Defendants’ favor for no liability of even one of the three asserted patents.
I. INTRODUCTION
Bifurcating the issues of willfulness and damages from liability will reduce the potential of prejudice to Insmed, Inc., Celtrix Pharmaceuticals and Insmed Therapeutic Proteins, Inc. (“Defendants”), simplify issues for the convenience of the jury, and promote judicial economy. Trying the issue of willfulness with liability will prejudice Defendants in at least two ways. First, testimony regarding the competence of Defendants’ opinions and the subjective inquiry into their due care is irrelevant to on the objective analysis of the liability issues. Balancing such testimony with those of liability will therefore confuse the jury. Second, hearing testimony regarding willfulness may unfairly taint the jury on the liability issues, harming Defendants’ ability to put together a clean defense to the
claims of infringement and validity. Conversely, Plaintiffs would suffer little or no prejudice from bifurcating the issues of willfulness and damages from liability. Because the willfulness and damages evidence do not substantially overlap with the liability claims, bifurcation would cause little harm or prejudice to Genentech, Inc. and Tercica, Inc.’s (“Plaintiffs”) presentation of their case in chief.
Bifurcation would moreover simplify and distill the jury’s consideration of complex liability issues without having to consider willfulness and damages testimony and evidence having no bearing
on the liability phase. The three asserted patents will require significantly different evidence for the liability phase alone. The fact that neither party has one expert witness who can alone testify with regard to all three asserted patents only underscores the complexity of the liability phase of trial.
Finally, bifurcation of the willfulness and damages issues would serve judicial economy in the event that the jury finds in favor of Defendants on some or all of the liability issues, in which case the issues relating to willfulness or damages may either be reduced or eliminated.
On balance, bifurcation makes sense. Defendants respectfully request this Court to bifurcate and phase the willfulness and damages inquiries after the liability phase of trial.
II. STATEMENT OF FACTS
Plaintiffs are asserting infringement by Defendants of three patents U.S. Patents Nos. 6,331,414 (the ’414 patent), 5,187,151 (the ’151 patent), and 5,258,287 (the ’287 patent). The three patents-insuit
all relate to complex biotechnology methods and compounds directed to promote growth in children suffering from Severe Primary Insulin-Like Growth Factor Deficiency (“IGFD”).
This Court previously construed disputed claim terms and phrases in all three asserted patents on June 30, 2006. In the same order, this Court granted Plaintiffs’ motion for summary judgment of infringement of the ’414 patent.1 The remaining issues for trial, therefore, are non-infringement of the ’414, ’151 and ’287 patents, invalidity of the ’414 and ’287 patents and unenforceability of the ‘151 patent, and damages and willfulness analyses for all three patents. Trial is scheduled for November 6-22, 2006.
On October 11, 2006, Magistrate Judge Edward Chen issued on order granting in part Defendants’ Motion to Strike the Second Expert Report of Keith Backman Ph.D. [Dkt. No. 648]. In that Order, the Magistrate held: “Plaintiffs may use the Second Backman Report only with respect to the issue of willfulness (i.e. not validity). The scope of Dr. Backman’s testimony on the issue of invalidity in the case in chief is defined by his first report.”
III. LEGAL STANDARDS
Federal Rule of Civil Procedure 42(b) provides, in relevant part: “[t]he court, in furtherance of convenience or to avoid prejudice, or when separate trials will be conductive to expedition and economy, may order a separate trial of any claim, cross-claim, counterclaim, or third party claim, or of any separate issue . . . .” This Court has “broad discretion in separating issues and claims for trial as
1 A portion of the Court’s determination of infringement of the ’414 patent is the subject of a pending motion for reconsideration.
part of its wide discretion in trial management. Gardco Mfg., Inc. v. Herst Lighting Co., 820 F.2d 1209, 1212 (Fed. Cir. 1987); see also 9 Charles Allan Wright & Arthur R. Miller, Federal Practice & Procedure § 2388 (2d ed. 2002) (Ultimately the question of separate trials under Rule 42(b) should be, and is, a matter left to the discretion of the trial court . . .”).
IV. ARGUMENT
A. Substantial Prejudice To Defendants Compels Bifurcation
“Prejudice is the Court’s most important consideration in deciding whether to order separate trials under Rule 42(b).” Laitram Corp. v. Hewlett-Packard Co., 791 F. Supp. 113, 115-115 (E.D. La. 1992). This case proves no exception. The parties’ expert reports illustrate that the willfulness consideration relates to two main issues: 1) the competence of Insmed’s opinions and 2) Insmed’s due care. See, e.g., Declaration of Larry L. Shatzer (“Shatzer Decl.”) Ex. 1 (Defendants’ Rebuttal Expert Report of D. Hoscheit, at ¶6); Ex. 2 (Plaintiff’s Expert Report of J. Forstner at ¶ 27).
Testimony on the competence of Insmed’s opinions and its state of mind and its diligent efforts to avoid infringing the asserted patents and Plaintiff’s criticisms of those opinions and efforts, however, simply has no relevance to the non-infringement, invalidity or unenforceability liability issues. Permitting such testimony will, therefore, not only distract and confuse the jury from deciding the liability issues before it, but may also unfairly influence the jury’s consideration of those liability issues:
It is well-settled that the issue of whether a defendant is liable for increased damages because it willfully infringed a patent is determined by the judge and not the jury.
Evidence of willfulness should be presented in an environment that insures the jury will not be influenced by it.
Accordingly, the Court finds that if it were to take evidence on all issues about liability, damages and willful infringement together, there would be a substant