Enhanced Damages

The United States Supreme Court issued a unanimous decision today in Halo Electronics Inc. v. Pulse Electronics Inc. relating to the ability of district courts to award treble damages in patent infringement proceedings, rejecting limits arising from Court of Appeal for the Federal Circuit decisions.

The decision (PDF) rejects the Seagate framework:

In In re Seagate Technology, LLC, 497 F. 3d 1360 (2007) (en banc), the United States Court of Appeals for the Federal Circuit adopted a two-part test for determining when a district court may increase damages pursuant to §284. Under Seagate, a patent owner must first “show 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 1371. Second, the patentee must demonstrate, 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.” Ibid. The question before us is whether this test is consistent with §284. We hold that it is not.

The CAFC had rejected treble damages in the cases at issue before the Supreme Court because the defendant had asserted “reasonable defenses” at trial.

The Supreme Court held that district courts have discretion in awarding enhanced damages:

Awards of enhanced damages under the Patent Act over the past 180 years establish that they are not to be meted out in a typical infringement case, but are instead designed as a “punitive” or “vindictive” sanction for egregious infringement behavior.