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Sue L. Robinson: Receipt of Escrow Funds Does Not Trigger Jury-Trial Right

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In a recent decision addressing a licensee’s right to a jury trial, District of Delaware Judge Sue L. Robinson granted a patentholder’s motion to strike a jury demand. The underlying complaint sought a declaration of non-infringement and invalidity. In lieu of damages, the parties agreed beforehand that the corpus of an earlier escrow agreement would be distributed according to the resolution of the litigation.

This arrangement, according to the Court, did not constitute a “money demand” sufficient to support a jury trial:

“[The escrow agreement] provides that when this action is concluded, Medtronic will cause distribution of the total amount in the [escrow account] . . . . If Medtronic wins, it can recover the portion of the escrow corresponding to non-infringing products. If MFV wins, Medtronic must continue to pay royalties. No damages are contemplated.”

For purposes of the Seventh Amendment jury trial right, the Court made a distinction between a monetary demand and the simple receipt of funds stemming from litigation: “The fact that, if it is successful, Medtronic may ultimately get money . . . does not render Medtronic’s claims ‘legal’ by their nature.”

In an IP landscape dominated by license agreements, this decision helps settle the boundaries of the Seventh Amendment in patent litigation.

Medtronic Inc. v. Boston Scientific Corp. et al., C.A. No. 07-823-SLR/LPS (D. Del. Nov. 21, 2008) (Robinson, J.).

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