Court seeks balance in Parallel Networks cases

By Anthoula Pomrening | Apr 8, 2011


In Parallel Networks LLC v. Abercrombie & Fitch et al., the U.S. Court of Appeals for the Federal Circuit took atypical measures to manage four cases filed by Parallel Networks LLC.

Each case alleges infringement of U.S. Patent No. 6,446,111, titled "Method and Apparatus for Client-Server Communications Using a Limited Capability Client Over a Low Speed Communications Network."

These cases were before U.S. District Judge Leonard E. Davis on Motions to Bifurcate Liability and Damages, Motions to Sever and Transfer and case management issues.

By way of background, the Court confirmed that Parallel Networks had sued about 124 defendants across the four cases, the strategy being "to go after a lot of defendants, get those issues resolved, hopefully by settlement."

Parallel Networks had made settlement offers to a number of the defendants, based upon "a small fraction of what it believe[d] it could acquire through trial using a reasonable royalty damage analysis."

Defendants then sought "a cost-effective way to defend themselves [...] without being forced to settle based upon cost of defense."

Initially, the Court consolidated the cases to help its staff and the clerk's office manage them. The Court then found that the Patent Rules and the Court's standard docket control order would not achieve their intended purpose of moving the cases toward an efficient and timely resolution on the merits, but instead would make defending the cases almost cost prohibitive.

The Court concluded it was necessary to depart from the Patent Rules and the standard docket control order to meet the "parties' objectives in the most cost effective manner."

To do so, the Court turned to the claim construction process. Defendants had argued that there were three claim terms affecting all the defendants that, if construed, would be case dispositive.

Because of the plaintiff's acknowledgement that certain claim terms were important to the infringement case, the Court set a Markman and summary judgment hearing focused on the three claim terms to be identified by the defendants. The Court then stayed all discovery not related to the narrow Markman and summary judgment motions. All parties are to be bound by the construction of these terms.

As for bifurcation, parties in favor argued that "liability drives the dispute from all parties' perspectives." Those against bifurcation contended that "discovery about damages and Plaintiff's damage model is necessary for Defendants to evaluate their case."

In view of the large number of defendants, the Court did not find that bifurcation of liability and damages was a proper way to efficiently manage these cases and thus denied the motions.

"Each party needs discovery related to damages to fully and fairly evaluate its case for settlement purposes."

This decision represents a reasoned attempt by the Court to balance the parties' respective objectives in the litigation against the need to efficiently and timely manage such unwieldy cases.

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