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24 February 2016Patents

SCOTUS hearing: Halo and Stryker cases create ‘trolls v pirates’ debate

A US Supreme Court case that centres on enhanced damages in patent infringement cases may create a new characterisation of “trolls versus pirates”.

In oral arguments yesterday, February 23, the court heard the Halo v Pulse and Stryker v Zimmer cases.

The cases, which have been consolidated, should clarify how enhanced damages are calculated after parties win patent infringement lawsuits.

Both plaintiffs are seeking a ruling from the Supreme Court that rejects the US Court of Appeals for the Federal Circuit’s decisions to deny them enhanced damages.

The federal circuit rejected the claims because of 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, an electronics company, and medical device company Stryker complained that the test is too “rigid”.

In 2012, Halo was awarded $1.5 million in damages after the US District Court for the District of Nevada ruled against Pulse. Halo’s claim that the award should be higher was rejected by both the Nevada court and the federal circuit.

Stryker secured a $210 million award against Zimmer in 2013 after the US District Court for the Western District of Michigan ruled that the infringement was wilful.

But the award was reduced to $70 million after the federal circuit said Zimmer’s defence was reasonable.

Jose Patino, partner at law firm Foley & Lardner, told WIPR that the cases had brought about a new characterisation of “trolls versus pirates”—a battle between patent owners asserting purportedly valid patents and alleged infringers supposedly stealing hard-gained innovation for profit.

Patino said that after Carter Phillips, the counsel for Pulse, used the term, the court’s chief justice John Roberts also adopted the characterisation.

“It is one that may loom large in the forthcoming written decision,” Patino said.

Patino added that the court’s nine justices “did not appear” to view the case as an application of a previous Supreme Court decision in Octane Fitness v Icon.

In that decision, handed down in 2014, the court relaxed the standard for determining when to award attorney’s fees.

During proceedings, according to Patino, Justice Stephen Breyer suggested that the federal circuit was in the best position to provide guidance to trial courts because, unlike attorneys’ fees, the issue of patent damages is unique to patent law.

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More on this story

Patents
6 March 2016   WIPR readers have said the US Supreme Court should overturn lower court rulings in two patent infringement cases that centre on enhanced damages.
Patents
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.
Patents
14 September 2016   The US Court of Appeals for the Federal Circuit has affirmed an earlier district court ruling of wilful infringement but has remanded the award of triple damages in the latest patent case between medical devices companies Stryker and Zimmer.