Halo Elecs., Inc. v. Pulse Elecs., Inc.

In Patent Act infringement cases, courts may increase the damages up to three times the amount assessed, 35 U.S.C. 284. Under the Federal Circuit’s “Seagate” test for section 284 damages, a patent-holder had to demonstrate by clear and convincing evidence that the infringer acted despite an objectively high likelihood that its actions constituted infringement of a valid patent and that the risk of infringement “was either known or so obvious that it should have been known to the accused infringer.” The Federal Circuit reviewed objective recklessness de novo; subjective knowledge for substantial evidence; and the award of enhanced damages for abuse of discretion. The Supreme Court unanimously held that the Seagate test is inconsistent with section 284, which includes no precise rule for awarding damages. By requiring an objective recklessness finding, the test excluded from discretionary punishment many of the most culpable offenders, including the “wanton and malicious pirate” who intentionally infringes a patent, with no thoughts about its validity or defenses. A patent infringer’s subjective willfulness, whether intentional or knowing, may warrant enhanced damages, regardless of whether infringement was objectively reckless. Under Seagate, the ability of the infringer to muster a reasonable defense at trial was dispositive, even if he was not previously aware of the defense. Culpability is generally measured against the actor’s knowledge at the time of the challenged conduct. Seagate’s clear and convincing evidence requirement is also inconsistent with section 284, which imposes no specific evidentiary burden, much less such a high one. The Court also rejected the Federal Circuit’s tripartite appellate review framework. Section 284 commits the enhanced damages determination to the district court’s discretion; that decision should be reviewed for abuse of discretion. View "Halo Elecs., Inc. v. Pulse Elecs., Inc." on Justia Law