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14 June 2016Patents

SCOTUS decision in Halo and Stryker not a ‘clear cut’ victory for patentees, lawyers say

The US Supreme Court’s decision yesterday in the Halo and Stryker cases is not a “clear cut” victory for patentees, lawyers have told WIPR.

Yesterday, June 13, the Supreme Court decided to relax the US Court of Appeals for the Federal Circuit’s test for awarding damages in patent cases.

The Supreme Court was ruling in the Halo v Pulse and Stryker v Zimmer cases. The disputes, 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’s unanimous decision yesterday found that the standard is unduly rigid and “impermissibly encumbers the statutory grant of discretion to district courts”, which can award enhanced damages where appropriate.

The ruling vacates the decisions in Halo and Stryker.

The decision has sparked different reactions from US patent lawyers.

Michael Hawes, partner at Baker Botts, said that the decision “was not a clear cut victory for patentees”.

He said that while the Supreme Court removed one requirement for enhanced damages, known as the objective prong, and took away the ability for defendants to rely on defences only developed for trial, it emphasised the high bar required for the other requirement, known as the subjective prong.

Dan Bagatell, chair of the Federal Circuit patent appeals practice at Perkins Coie, said that from a practical perspective, the decision “means that it will be much more difficult for accused infringers to win summary judgment [by] taking enhanced damages and bad documents off the table”.

Aaron Charfoos, partner at Dykema, also said that within several years appellate decisions by the Federal Circuit will bring some uniformity and predictability in determining whether enhanced damages will be awarded. He added that in the long term, he expects damages will be awarded “more often” than under the previous standard.

Cynthia Kernick, partner at law firm Reed Smith, said that the intention of 35 US Code, section 284 had been tortured for “too long” and that the Supreme Court is “fixing that” by “recognising the discretion that inherently should be due to district court judges, and telling the Federal Circuit to stop ignoring the wisdom of the district court judges when they exercise their discretion.

“It also makes a more level playing field here between patentees and accused infringers so that the test for awarding enhanced fees in either direction is essentially based on the same logic, that is, were knowingly bad acts engaged in as measured at the time the acts occurred?” she added.

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13 June 2016   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.
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