In intellectual property cases, parties often agree to split their proceeding between liability and subsequent quantification phases if they believe that a "bifurcation" would simplify the litigation. Bifurcation is justified when it is likely to reduce the complexity of the action and streamline an eventual damages assessment. The courts have held that bifurcation is not justified, however, when its sole rationale is the alleged lack of merit of claims or defences. Bifurcation in intellectual property cases is common, but it is not automatic, especially if one party objects to it. A recent Federal Court decision clarifies that, in such a case, the party asserting that bifurcation will reduce the complexity of the action must have pleaded the facts and claims (or defences) that establish this complexity in its pleading, failing which bifurcation may be denied.
The Federal Court's Decision
In 7299362 Canada Inc. (Alexa Translations) v. Amazon.com Inc., 2024 FC 695 the plaintiff, which operates as "Alexa Translations", a translation services provider, brought a trademark infringement action against various Amazon-related entities. Alexa Translations alleged that Amazon also offered translation services through its ALEXA virtual assistant, thereby infringing the plaintiff's trademark rights. After pleadings closed, Amazon brought a motion for a bifurcation order, which Alexa Translations opposed. Amazon contended that bifurcation was necessary given the complexity of the issues to be tried.
The Federal Court (Associate Judge Horne) disagreed with the Amazon defendants, because they had not pleaded the various factual scenarios upon which they relied to argue that the issues to be tried were complex. On the motion, Amazon argued that bifurcation was desirable because the trial judge could ultimately find the defendants liable, or not, depending on the many ways in which ALEXA users could solicit translation services, using different wake words (the most common such trigger word being to say "ALEXA" to "awaken" the service and begin to activate the request) and language commands to access the ALEXA technology. In Amazon's argument, given all these different, fact-specific potential liability outcomes, the action should be bifurcated, and the precise scope of any liability defined (if at all) before Amazon should be required to produce damages-related documents. However, the Court held that Alexa Translations' claim, as pleaded, did not turn on whether consumers used specific wake words or language commands; the claim hinged on whether Amazon infringed certain alleged trademark rights by providing translation services in association with words and trademarks that included the word "ALEXA". The Court also pointed out that Amazon had not defended the action on the basis that wake words and language command permutations affected liability. On these grounds, the Court found that Alexa Translations' claim was "straightforward," contrary to Amazon's position, and that Amazon (which as moving party bore the burden of establishing the point) did not show that bifurcation would simplify the action.
Key Takeaway
The success of contested motions for bifurcation depends on whether bifurcation is likely to simplify the action, and lead to the just, most expeditious and least expensive outcome of the proceeding. A party arguing for bifurcation would be well advised to show how splitting the proceeding will reduce complexity given the claims, defences and facts that were pleaded by the parties, rather than relying on speculation, untethered from the pleadings, about how the Court might ultimately decide the merits of the action.
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