Wilful infringement on the agenda for US Supreme Court
The US Supreme Court will rule on two cases concerning the “rigid” standards for determining wilful infringement.
Yesterday, October 19, the Supreme Court agreed to hear the Halo v Pulse and Stryker v Zimmer cases. The cases have been consolidated and will be heard at the same time.
Last October, the US Court of Appeals for the Federal Circuit rejected Halo Electronics’s claim that rival Pulse Electronics wilfully infringed three of its patents covering electronic transformers. In March, the federal circuit denied Halo’s request for a rehearing en banc.
Following the decision, Halo filed a writ of certiorari with the Supreme Court asking whether the federal circuit incorrectly applied a “rigid” two-part test for enhancing patent infringement as defined under section 284 of the US patent code.
Halo argued that the Supreme Court had already rejected this two-part test in its decision in Octane Fitness v ICON Health & Fitness last year.
Under the two-part system, the federal circuit firstly assesses whether a patentee shows by “clear and convincing” evidence that an infringer’s actions are objectively unreasonable.
Once answered in the affirmative, the federal conducts a de novo review of the infringer’s defence. Only afterwards does the federal circuit triple the damages award once it has determined the defendant’s infringement to be wilful.
In its writ, filed in June this year, Halo said: “District courts are unable to impose enhanced damages if a defendant presents a non-frivolous defence, even if it acted in bad faith before the suit by copying the patentee’s product, ignoring offers to licence, and failing to investigate or develop any pre-suit defence.
“Nothing in the statutory text justifies this ridiculous result, and Octane suggests just the opposite,” Halo added.
The dispute began in 2007 after Halo sued Pulse at the US District Court for the District of Nevada. The court accepted there had been infringement but rejected claims of wilful infringement.
Also in June, Medical device marker Stryker filed a similar request asking the Supreme Court re-evaluate how the federal circuit assesses wilful infringement under the two-part test.
In 2010, Stryker sued rival Zimmer at the US District Court for the Western District of Michigan for the infringement of three of its patents covering pulsed lavage devices. A jury found in favour of Stryker and awarded it $70 million in damages.
Afterwards, the Michigan court tripled the damages after it deemed the infringement to be wilful.
On appeal, the federal circuit determined that Zimmer’s defence was objectively reasonable and remanded the case back to the Michigan court to rule that there was no wilful infringement. The damages award was cut back to $70 million.
Stryker requested an en banc hearing at the federal circuit, but this was rejected in March 2015.
In its writ Stryker argued: “The federal circuit’s current wilfulness framework undermines the intended deterrent effect of section 284 by immunising infringers from enhanced damages so long as they present at least one plausible defence at the post-trial appellate stage.
“This case vividly illustrates the tension between the discretionary enhancement scheme envisioned by Congress and the impermissible barriers to enhancement erected by the federal circuit,” the medical device maker added.
Stryker declined to comment.
