Supreme Court decision loosens standard for awarding enhanced damages

If you own a patent, how can you increase the amount that infringers must pay?

In patent law, a court may award a patent owner enhanced damages of up to three times the amount assessed to infringing activity. This increase is available when an infringer is found to be a “willful infringer.” This means that the court could award a patent owner up to three times the actual damages that the infringer inflicted on the patent owner for the infringers bad acts.

Earlier today, a unanimous Supreme Court overturned a rigid test for willful infringement that was set forth in In re Seagate Technology, LLC, 497 F. 3d 1360, 1371 (2007). Specifically, Chief Justice John Roberts delivered a decision in Halo Electronics, Inc. v. Pulse Electronics Inc., et al. The decision expressly overturned Seagate’s two-part test for willful infringement because it was “unduly rigid.”

Under Seagate, as a patent owner you had to prove:
  1. “By clear and convincing evidence that the infringer acted despite an objectively high likelihood that its actions constituted infringement of a valid patent;” 
  2. By clear and convincing evidence, that the risk of infringement “was either known or so obvious that it should have been known to the accused infringer.”

Today’s decision relaxes this standard and allows courts to use their discretion to award enhanced damages. Chief Justice Robert’s opinion did caution that courts should only award damages in egregious cases, which typically include when the infringer exhibits “willful, wanton, malicious, bad-faith, deliberate, consciously wrongful, flagrant, or – indeed –characteristic of a pirate.” This result does not come as a surprise given the Supreme Court’s recent trend in cases like Octane Fitness, LLC v. ICON Health & Fitness, Inc., 134 S. Ct. 1749 (2014).

The result of the Halo decision means that you do not need to meet a rigid test to be eligible to receive enhanced damages. Many high profile patent infringement cases demonstrate the extraordinary amounts of money at risk in litigation. Armed with today’s decision, you can leverage your position to potentially triple these amounts. You can also use this relaxed standard to push for settlements and to avoid costly litigation.

For more information on protecting your patents, contact one of the attorneys listed below.

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