Halo and Stryker cases: SCOTUS relaxes standard for enhanced patent damages
The US Supreme Court has today decided to relax the US Court of Appeals for the Federal Circuit’s test for awarding enhanced damages in patent cases.
In February this year, WIPR reported that the Supreme Court had heard oral arguments in the Halo v Pulse and Stryker v Zimmer cases.
The cases, which have been consolidated, aimed to clarify how enhanced damages are calculated after parties win patent infringement lawsuits.
Halo and Stryker were both seeking a ruling from the Supreme Court after the Federal Circuit’s decision to deny them enhanced damages.
The Federal Circuit rejected the claims based on its two-part test for determining whether infringement has been wilful.
Under the two-part system, courts first assess whether a patentee can show by “clear and convincing” evidence that an infringer’s actions are objectively unreasonable.
Once answered in the affirmative, the court conducts a de novo review of the infringer’s defence. If the defence is deemed insufficient, the damages award can be tripled.
Halo and Stryker complained that the test is too rigid.
The Supreme Court unanimously found today that the standard is “unduly rigid, and … impermissibly encumbers the statutory grant of discretion to district courts", which can award enhanced damages where appropriate.
Chief Justice Roberts, who wrote the opinion, added: “Although there is no precise rule or formula for awarding damages … a district court’s discretion should be exercised in light of the considerations.
“Here, 180 years of enhanced damage awards under the Patent Act establish that they are not to be meted out in a typical infringement case, but are instead designed as a sanction for egregious infringement behaviour.”
Roberts criticised the Seagate test for “making dispositive the ability of the infringer to muster a reasonable defence at trial, even if he did not act on the basis of that defence or was even aware of it.
“Culpability, however, is generally measured against the actor’s knowledge at the time of the challenged conduct.
“In sum, §284 allows district courts to punish the full range of culpable behaviour. In so doing, they should take into account the particular circumstances of each case and reserve punishment for egregious cases typified by wilful misconduct,” he added.
The court also found that clear and convincing evidence is not required to secure enhanced damages, but rather parties must meet the preponderance of evidence standard.
The decision should make it easier for parties who have proven that their patents have been infringed to secure enhanced damages.
The ruling vacates the decisions in Halo and Stryker.
