The U.S. Supreme Court has set a new standard for determining when courts may award enhanced damages in patent disputes.On June 13, 2016, the Court issued its unanimous opinion in Halo Electronics, Inc., v. Pulse Electronics, Inc. 597 U.S. __ (2016), ruling that the decision to award or deny enhanced damages under 35 U.S.C. section 284 lies within the district court’s discretion. This ruling overturned the precedent set by the Federal Circuit in In re Seagate Technology, LLC, 497 F.3d 1360 (Fed. Cir. 2007).

On June 13, 2016, the U.S. Supreme Court ruled unanimously that “there is no precise rule or formula” for awarding enhanced patent damages under 35 U.S.C. § 284. Halo Electronics, Inc. v. Pulse Electronics, Inc., No. 14-1513, slip op. 579 U.S. ____ (June 13, 2016). And, determining that discretion is explicitly permitted under 35 U.S.C. § 284, the Supreme Court found that the U.S. Court of Appeals for the Federal Circuit’s two-part test in In re Seagate Technology, LLC, 497 F. 3d 1360, 1371 (2007) (en banc) was “unduly rigid” and could have the effect of “insulating some of the worst patent infringers from any liability for enhanced damages.”

Commonwealth Scientific and Industrial Research Organisation (CSIRO), a national research organization of Australia, recently filed a petition for certiorari with the Supreme Court. CSIRO presents the following question: Is the Federal Circuit’s promulgation of rigid legal rules to control the weight to be given by the trier of fact to evidence of patent infringement damages proper under 35 U.S.C. § 284?[1]HISTORY OF THE CASECSIRO owns U.S. Patent No. 5,487,069 (the ’069 patent), which covers technology designed to solve the problem of multipath interference in wireless communications.[2] The ’069 patent was incorporated into several of the 802.11 series of wireless communication standards, including 802.11a and 802.11g.

CAFC Opinion, CAFC ArgumentWilmerHale represents petitioners PNC Bank National Association et al.WesternGeco LLC v. ION Geophysical Corp., No. 16-1011Questions Presented:Under 35 U.S.C. § 271(f), it is an act of patent infringement to supply “components of a patented invention,” “from the United States,” knowing or intending that the components be combined “outside of the United States,” in a manner that “would infringe the patent if such combination occurred within the United States.”Under 35 U.S.C. § 284, patent owners who prevail in litigation are entitled to “damages adequate to compensate for the infringement.”In this case, despite affirming that Respondent was liable for infringement under § 271(f), the majority of a divided panel of the court of appeals held that Petitioner was not entitled to lost profits caused by the proscribed combination.

CAFC Opinion, CAFC ArgumentWilmerHale represents petitioners PNC Bank National Association et al.WesternGeco LLC v. ION Geophysical Corp., No. 16-1011Questions Presented:Under 35 U.S.C. § 271(f), it is an act of patent infringement to supply “components of a patented invention,” “from the United States,” knowing or intending that the components be combined “outside of the United States,” in a manner that “would infringe the patent if such combination occurred within the United States.”Under 35 U.S.C. § 284, patent owners who prevail in litigation are entitled to “damages adequate to compensate for the infringement.”In this case, despite affirming that Respondent was liable for infringement under § 271(f), the majority of a divided panel of the court of appeals held that Petitioner was not entitled to lost profits caused by the proscribed combination.

This page contains a consolidated list of all recently granted petitions, organized in reverse chronological order by date of certiorari petition.Recently pending, granted and denied certiorari petitionsWesternGeco LLC v. ION Geophysical Corp., No. 16-1011Questions Presented:Under 35 U.S.C. § 271(f), it is an act of patent infringement to supply “components of a patented invention,” “from the United States,” knowing or intending that the components be combined “outside of the United States,” in a manner that “would infringe the patent if such combination occurred within the United States.”Under 35 U.S.C. § 284, patent owners who prevail in litigation are entitled to “damages adequate to compensate for the infringement.”In this case, despite affirming that Respondent was liable for infringement under § 271(f), the majority of a divided panel of the court of appeals held that Petitioner was not entitled to lost profits caused by the proscribed combination.

Supreme Court’s Decision The Supreme Court reversed the Federal Circuit. Justice Thomas wrote the majority opinion, focusing on 35 U.S.C. § 284, the provision that provides a general damages remedy for the various types of infringement identified in § 271. He reasoned that “[t]he portion of § 284 at issue here states that ‘the court shall award the claimant damages adequate to compensate for the infringement.’ We conclude that ‘the infringement’ is the focus of this statute.

The 7-2 decision in WesternGeco LLC v. ION Geophysical Corp. overturned the Federal Circuit’s opinion, which relied on the presumption against extraterritorial application of U.S. law to vacate a jury’s award of $93.4 million in profits that the patent owner would have earned on overseas contracts.In the opinion, the Supreme Court soundly rejected the Federal Circuit’s view that profits lost outside the United States are categorically unavailable as a matter of United States patent law. But the Court declined to go as far as the patent owner requested and find that the “presumption against extraterritoriality should never apply to statutes, like 35 USC § 284 [the patent damages statute], that merely provide a general damages remedy for conduct Congress has declared unlawful.” (For more details on the Federal Circuit decision and briefing, see our prior posts here and here.)

On June 13, 2016, in a much-anticipated joint holding in Halo/Stryker, [1] the Supreme Court unanimously overturned the Federal Circuit’s rigid test for willful infringement under Seagate and conferred discretion on district courts, “narrowed” by nearly 200 years of judicial practice, to award enhanced damages to patent owners under 35 U.S.C. § 284 for “egregious cases of culpable behavior.” The High Court’s opinion was authored by Chief Justice Roberts, with Justices Breyer, Kennedy and Alito concurring.Although the possibility of enhanced damages on a theory of willful infringement would strike fear into the heart of any accused infringer, the two-pronged test for willful infringement previously promulgated by the Federal Circuit proved challenging in practice for patent owners.

AbstractUnder 35 U.S.C. § 284, infringers may be liable for lost profits or a reasonable royalty. A separate category of damages also exists for design patents.