US Supreme Court hears arguments on enhanced damages
The US Supreme Court is set to hear the first patent case of the current term today, February 23.
Both the Halo v Pulse and Stryker v Zimmer cases, which have been consolidated, concern the issue of enhanced damages.
Both plaintiffs are seeking a ruling from the court that rejects the US Court of Appeals for the Federal Circuit’s two-part test when determining whether infringement has been wilful.
Under the two-part system, courts firstly 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 deemed insufficient, the damages award can be tripled.
But electronics company Halo and medical device company Stryker have said 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 rival Pulse. Halo’s claim that the award should be higher was rejected by both the Nevada court and the federal circuit.
Medical device company 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 ruled Zimmer’s defence was reasonable.
The arguments could be influenced by the Supreme Court’s 2014 ruling in Octane Fitness v Icon.
That dispute concerned the high threshold for granting attorneys’ fees in exceptional cases. In its ruling, the Supreme Court relaxed the standard for determining when to award fees.
Section 284 of the US patent code grants courts the right to triple damages, but does not explain what standard they should apply.
Robert Fischer, partner at law firm Fitzpatrick, Cella, Harper & Scinto said the issue is a “critical matter” for many businesses facing multiple infringement claims.
Fischer also noted the “unusual” intervention of Congressman Patrick Leahy and Lamar Smith. Both politicians, in an amicus brief filed on January 20, said the current requirement standard for awarding enhanced damages was understood to be part of the 2011 America Invents Act.
The US government has also filed an amicus brief urging the court to vacate both decisions.
In the brief, US Solicitor General Donald Verrilli said the “specific limitations that the court has imposed ... is to make enhanced damages unavailable for a significant class of infringing conduct that is properly viewed as especially egregious”.
On the other side of the argument are rights organisations the Electronic Frontier Foundation and Public Knowledge who, in another amicus brief, filed on December 15, argued that dismissing the two-part test “would only worsen those prospects of insurmountable costs and increase the abusive and unnecessary pressure placed on those companies”.
Predicting how the Supreme Court will vote has never been easy and the recent death of Justice Antonin Scalia arguably complicates this further, but a repeat of the Octane Fitness ruling would be a step in right direction for those challenging what they perceive as particular egregious forms of infringement.
