On Monday, the United States Supreme Court, in a unanimous ruling, “eschew[ed] any rigid formula for awarding enhanced damages under § 284,” abandoned the prior “unduly rigid” Seagate test laid out by the Federal Circuit, and instead left the award of enhanced damages simply to the discretion of the district court. Halo Electronics, Inc. v. Pulse Electronics, Inc., No. 14-1513, slip. op. at 12 (June 13, 2016). This decision should serve to make it much easier, although not automatic, for a patentee to receive enhanced damages after a finding of infringement.
Under 35 U.S.C. § 284, a court “may increase the damages up to three times the amount found or assessed.” The Federal Circuit, in a prior ruling, had adopted a two-part test to allow for the award of such damages. This test, known as the Seagate test, required first, proof by “clear and convincing evidence that the infringer acted despite an objectively high likelihood that its actions constituted infringement of a valid patent.” Id. at 5 (citation omitted). The state of mind of the accused infringer was not taken into account at this step, and further, this objective recklessness could not be found if the accused infringer came up with a “substantial question as to the validity or noninfringement of the patent” during the infringement action itself. Id. (citation and punctuation omitted). If this objective recklessness were established, then “a patentee must show – again by clear and convincing evidence- that the risk of infringement was either known or so obvious that it should have been known to the accused infringer.” Id. (citation and punctuation omitted). If, and only if, both of these are satisfied, could a court then decide whether to actually award enhanced damages. Id. Continue reading