By Jason Rantanen
Halo Electronics, Inc. v. Pulse Electronics, Inc. (Fed. Cir. 2015) (denial of rehearing en banc) Halo Order
The Federal Circuit denied Halo’s petition for rehearing en banc today over the dissent of Judges O’Malley and Hughes. (For background, Dennis and I previously wrote about the opinion and the petition for rehearing). The concurrence and dissent focused solely on the issue of willfulness, which Halo had framed as:
Willfulness: Whether an infringer who subjectively knew pre-suit that it was infringing a valid patent (after being given notice of the patent, and failing to design around, seek a license, or stop infringing) can use an unsuccessful defense developed post-suit as a per se bar to liability for pre-suit willful infringement, despite the flexible text of 35 U.S.C. § 284.
This is not the right case: Concurring in the denial of the rehearing en banc, Judge Taranto, joined by Judge Reyna, wrote separately to explain that the denial was appropriate because “Halo raises only one question about the enhanced-damages provision of the Patent Act, 35 U.S.C. § 274, and I do not think that further review of that question is warranted.” Concurrence at 4. In the concurrence’s view, “[t]he only enhancement-related question that Halo presents for en banc review is whether the objective reasonableness of Pulse’s invalidity position must be judged only on the basis of Pulse’s beliefs before the infringement took place.” Id. at 5. In Judge Taranto’s view, “Halo has not demonstrated the general importance of that question or that the panel’s assessment of objective reasonableness is inconsistent with any applicable precedents or produces confusion calling for en banc review.” Id. Nor is the requirement of objective recklessness affected by Octane Fitness.
Nevertheless, the concurrence observed, there are many aspects of the court’s § 284 jurisprudence that could bear revisiting en banc, including “whether willfulness should remain a necessary condition for enhancement under § 284’s “may” language,”” the proper standards for finding willfulness,” “who makes which decisions and what standards of proof and review should govern those decisions,” whether “a judge or jury decide willfulness, in full or in part,” whether “willfulness (or, rather, its factual predicates) have to be proved by clear and convincing evidence,” and “what standards govern appellate review”? In Judge Taranto’s words, “Whether such questions warrant en banc review will have to be determined in other cases.” Id. at 1.
The Willfulness Jurisprudence Should be Reevaluated: Judge O’Malley, joined by Judge Hughes, disagreed for the same reasons provided in her dissent to the original opinion (discussed here). The court’s “jurisprudence governing the award of enhanced damages under § 284 has closely mirrored our jurisprudence governing the award of attorneys’ fees under § 285.” Dissent at 2. But “[w]e now know that the artificial and awkward construct we had established for § 285 claims is not appropriate. We should assess whether the same is true with respect to the structure we continue to employ under § 284.” Id. at 4. Both the court’s framework for assessing willfulness and the framework for attorneys’ fees were predicted on its interpretation of Professional Real Estate Investors, Inc. v. Columbia Pictures Industries, Inc., 508 U.S. 49 (1993). But in Octane Fitness, the Supreme Court held that the Federal Circuit had misunderstood PRE for its attorneys’ fees inquiry. Consequently “[w]e should now assess whether a flexible test similar to what we have been told to apply in the § 285 context is also appropriate for an award of enhanced damages.” Id. at 5.
Beyond the effect of Octane Fitness, Judge O’Malley identifies additional issues with the current willfulness framework: its requirement of clear and convincing evidence, the court’s imposition of de novo review, which was rejected for fee awards by the Court in Highmark, and who should be making the decision to enhance damages: the judge or the jury?
The Unsettled Standard of Review: Shortly after releasing its denial of rehearing en banc in Halo, the court issued a revised opinion in Stryker v. Zimmer, in which it added a new footnote:
6 This court has not yet addressed whether Octane Fitness, LLC v. ICON Health & Fitness, Inc., 134 S. Ct. 1749 (2014), or Highmark Inc. v. Allcare Health Mgmt. Sys., Inc., 134 S. Ct. 1744, 1746 (2014), altered the standard of review under which this court analyzes the objective prong of willfulness. However, as the district court failed to undertake any objective assessment of Zimmer’s specific defenses, the district court erred under any standard of review and thus this court need not now address what standard of review is proper regarding the objective prong of willfulness.
Combined with the additional language in Stryker v. Zimmer, the court may be gearing up to take on a compromise issue in willfulness: namely, whether a modified standard of review is appropriate. That said, it is entirely possible that the Supreme Court will take on the bigger question that Judge O’Malley raises in dissent. Halo remains an appeal to watch.
There is something I do not understand. The court seem to see a parallel between 284 and 285. If this parallel is true, then I could understand that Octane Fitness could alter the standard of review of award or enhanced damages. However, I do not understand how the parallel implies that the determination and review of willfulness could be impacted. 284 is about awarding enhanced damages, and not about determination of willfulness. The criteria to award enhanced damages are I believe in Read Corp. v. Portee (1992). They are not identical to a determination of wilfulness. Am I missing something?
Hey NWPA, you’ll love this new article from Lemley doing research on whether the patent system’s licensing activity actually helps anyone.
link to papers.ssrn.com
Spoiler:
“Based on our preliminary evidence, the theory that NPEs facilitate innovation either through the creation of new products or by delivering actual technical know-how from inventors to implementers doesn’t hold water. NPEs almost never actually provide any valuable information to their licensees, and they rarely, if ever, prompt the development of any new products. Licensees are paying for freedom to operate — the right not to be sued for implementing technology they developed on their own but which someone has asserted will fit within their patent rights. Thus, the study does not support the efficient middleman hypothesis for characterizing the role of NPEs.”
^based on evidence and all that lol.
Old news 6, as that paper has already been torn apart for its lack of integrity and value.
“anon” :that paper has already been torn apart for its lack of integrity and value
Sure it has, “anon.” I’m sure some really, really serious people “tore it apart.”
No doubt the same super serious people who still can’t figure out Prometheus v. Mayo and choose to endlessly whine and cry about it instead. But they’re very serious people! We must pay attention to them or they will take away their football and we will return to the “iron age.” They told us so!
LOL
Google bucks at work.
Ahhh, it lacks “integrity” and “value”. But it does have solid evidence?
No.
The articles addressing the flaws already pointed that out.
Well where are these articles? And do they have better evidence?
Silly question 6, as I know that you (still) follow the Quinn blog.
There, a series of four articles discussing the paper have been written, starting with Quinn on February 22, then an article by Aron Katznelson on February 24 (Mr. Katznelson has debunked other Lemley – and other anti-patent writers’ – articles consistently), then a tangent post by Qualcomm’s Laurie Self (an excerpt from a congressional hearing delivered February 26), the article being presented on March 1, and a fourth article by Joseph Allen on March 17.
Yes, they have better “evidence” as you are using that term.
I don’t follow it that closely anymore. At this point they’re just shameless patent “shills” so far as I can tell.
“as far as I can tell”
Yet another instance of 6 letting his Belieb system get in the way…
I’m sure there’s some really deep analysis over there at the Patent Worshipper’s Support Group.
That’s the same blog where “big companies don’t innovate” … except when they do which apparently is every other day.
” is every other day.”
more like every day
>>they developed on their own but which someone has asserted will fit within their patent rights.
So, in other words, please disclose your invention and if our engineers happen to copy it, well, can you prove we copied.
My prediction: Lemley’s reputation will fall very far from what it is now as the years pass and his excess become more fully understood. But, who knows, as I have said money, money, money. Google bucks doesn’t want patents and money has a way of getting what it wants.
By the way, for you people that say I am a sky is falling person: more than 10 years ago I wrote a paper on 101. One professor I spoke with said that it was a dead issue and that it was a total waste of time. I told him that I thought a few that were fanning the few burning embers and that I thought it was a path that big corp may use rather than legislation. Guess what? I was right. The professor never admitted his mistake.
My crystal ball does not see a good future for patents. Money doesn’t want it. The SCOTUS has always done what money wants.
It’s ridiculous to state in any reality that engineer’s are reading patents to copy them (as if they’re comprehensible guides of technical disclosure.) Patents are sometimes read to avoid infringement, and often handed down as a guide to work around. It’s actual products that get reversed engineered (legitimately and illegitimately) and occasionally the mere unscrupulous literally copy.
Lest you forget, there is an “expected skill” set in the functional ordinariness of the artisan. Consider the Honorable G. Rich’s words in The Principles Of Patentability where wrote that there was a indeed a “subjective decision” aspect of patentability, moved from vagaries of invention to the “knotty” determination of obviousness in terms of the ordinary artisan’s skill set. He clearly stated that patents were for “unobvious developments which would not occur spontaneously from the application of the artisans skill,” this he contrasted with “improvements [that] are never patentable…because they will made anyway, without the fuel of interest which the patent system supplies.”
Look deeper.
Kappos + IBM =power money. Consider and reference listed patents of IBM’s current “master inventors;”. A far cry from Big Blue’s innovative THINK era. Not fanning Google either.
>It’s ridiculous to state in any reality that engineer’s are reading patents to copy them
That isn’t the way it works. Your statement evinces such an ignorance of the culture of technology that you should stop presenting any opinion of your own before educating yourself.
What the patent does do (now learn) is enable the engineers and scientist to share the information freely in journals, online, etc. That is how it works.
I was a programmer before patents. You know what? Everything was a secret. You had to sign non-compete agreements and non-disclosure agreements where you couldn’t discuss any of your work nor take another job in the area you were working in for three years. That is how it was before patents.
I could go on, but seriously. Shouldn’t you educate yourself before making any more ridiculous statements?
We have no ignorance of the culture of technology.
Admittedly we inferred, by context, you to mean patent disclosure alone. Thanks for clarifying your intended meaning. Certainly public disclosure by other means is protected, even though in practicality without clear disclaimer one cannot know what is or is not available. If say an engineering college textbook, or a technical periodical disclosed (taught) patent protected stuff interspersed with the other stuff taught, would application of that knowledge be “copying” even though it may be infringing? We hold “copying” as an intentional (My Sweet Lordy no) act. This like “theft” is not what defines infringement, and it is generally misleading to argue it as such.
We in CA don’t have the non-compete job issue per se, but we agree it is problematic. Your (over)statement that “everything was a secret” is simple not true. Most everything still is, it may not be trade secret, it may or may not be about technical novelty but it still is business 101 to keep strategies confidential and the competition in the dark. NDA and Non Compete is about business interests. To a point patents can offer a sort of immunity but the incentive is not always the tech. A broader storehouse of non-obviousness also protects the technical job changer. It will still always reduce to how to legitimately protect business plans/work products at the corporate level and down.
What do you mean “before patents”?
peeps: Most everything still is, it may not be trade secret, it may or may not be about technical novelty but it still is business 101 to keep strategies confidential and the competition in the dark.
It’s always worth reminding people of this basic, fundamental fact (even after its been spelled out for them a zillion times).
Likewise it’s worth reminding people that the vast majority of “innovation” is not patented and most businesses — including “innovative” businesses — have no need whatsoever for patents, and that’s the way it should be.
That’s a nice strawman as no one ever said that the patent system was not a voluntary system.
And you really should look into getting into a field in which you can believe in the work product you (supposedly) produce. Your animus against patents must create some serious cognitive dissonance for you.
>He clearly stated that patents were for “unobvious developments which would not occur spontaneously from the application of the artisans skill,”
Everyone agrees on this point. The step size is something people don’t agree on. The SCOTUS would award about 5 patents in the last 100 years and then really none since advances aren’t like they are depicted in Disney movies.
Innovation occurs by tiny little steps. This is it baby. You guys are so arrogant that you look at the greatest innovation engine every created and think you know better. Ridiculous. Like Posner: those people just naturally invent things. You don’t have to give them anything but a pizza. Gingsburg, Soot-in-my-ears, Stevens: inventions are for organizing human behavior (perhaps the most ignorant statement every made about technology).
Etc.
Your point about IBM has some merit. If it weren’t for IBM and pharma we would not have a patent system now. The AIA would have wiped it clean. Pharma wanted to bifurcate it and then Google wanted the ee/cs part wiped clean.
Step size, or is it that some want to dismissively eliminate the question?
Again Rich:
Of course, not every new contribution, even within the statutory categories, should be patented, and there is the question where we should draw the line. …
So “innovation occurs by tiny steps”, typically it does, not always. Duh…
The patent incentive does not create the innovator. (It is unfortunate that it has created a new type of inventor in the last decade or so.) The incentive aids to keep him in business, it allows him more focus, or freedom and it theoretically allows him to build on previous disclosure. All pragmatic and socially useful. The drive is personal, its not a job choice, and it resonates in everything that he does. One engineer can be a great analyst, another may be an implementor, while another may be a creator, and a non engineer may be innovating too. If you want that innovator to do something for you or society that’s quid pro quo.
Its strange logic when actual innovators are told that they don’t know what they do. This strengthens our emerging thoughts on distinctions of invention and innovation. Mere invention may now be formal.
We’ll end with another Rich quote for deeper thought:
…The only possibility of doing damage is to construe a patent on a dud as to cover a commercially meritorious invention made by a more competent inventor, but it is not noticeable that the courts have a tendency to do that…
All from Principles of Patentability
Night, since Jefferson, the debate is had as to what was the measure of advance that justified awarding a patent.
The original statute merely said “improvement.”
All the Supreme Court cases, all of them, require some functional improvement.
So, even though 103 has no explicit requirement for “improvement,” it is there regardless. Different, worse, and really worse might be non obvious, but, as Rich observed, courts find way not to enforce these patents on people who actually figure out how to make something better.
But how much improvement?
How can we define that?
Apologies for the missing italic tag.
Ned Heller – if you haven’t done so already, you should read the dissent in B&B Hardware. There is a very interesting discussion of the public rights doctrine, albeit in the TM context. The logic would certainly apply equally to the claim of patent validity before the Art I tribunal.
Read the actual opinion, too.
Thanks, a cite would be helpful.
Also, the Supreme Court has already rule that copyright infringement cases for statutory damages bears a right to a jury trial. Feltner v. Columbia Pictures Television, Inc., 523 U.S. 340, 118 S. Ct. 1279, 140 L. Ed. 2d 438 (1998).
That means copyrights are not and cannot be public rights, otherwise congress could wholly withdrawn copyright infringement cases from the courts.
link to supremecourt.gov
Oh! Came out today at the Supreme Court!
link to supremecourt.gov
And, I see it applies to trademarks. Not copyrights.
Ned,
Could you point me to a something that would give me a thorough overview on public v. private rights?
Stern v. Marshall, 131 S. Ct. 2594, 564 U.S. 2, 180 L. Ed. 2d 475 (2011).
link to scholar.google.com
Also check our brief in MCM Portfolio LLC v. Hewlett-Packard, No. 15-1091, available on pacer, Federal Circuit.
The court has two lines of authority. 1. It deals with what IS a public right. 2. It deals with what IS NOT and cannot be a public right.
Regarding the first line of authority, public rights are limited to the government acting in its sovereign capacity within the scope of his constitutional authority as the executive or as Congress. The public rights doctrine does not extend to private rights which are defined as a liability of one party to another. The example given is property. When an agency adjudicates a private right, it cannot enter a final decision. There must be a right of the novo review to a district court.
The second line of authority looks to causes of action that were litigated in courts of England in 1789. These causes of action and analogous causes of action created by statute, are the exclusive province of Article III courts. Therefore causes of action litigated in the courts of England in 1789 cannot be withdrawn from the courts under the rubric of public rights.
From the first statutes, patents have been property. See, e.g., Act of 1793.
Actions to revoke or repeal patents for double patenting, fraud or invalidity were litigated in the courts of England in 1789. Therefore such actions according to the second line of authority cannot be withdrawn from Article III courts and assigned to administrative agencies.
If something is a public right, all adjudications involving that right may be allocated to law courts, to equity courts, or to administrative tribunals at the discretion of congress. Thus, congress could withdraw patent infringement litigation in whole or in part from the courts if a patent were a public right. Since the Supreme Court has already ruled that there is a 7th Amendment right to a jury trial for patent infringement litigation, a patent cannot be a public right under either line of authority.
Summary: the majority says con law issues not before them, but notes that a trademark opposition is subject to de novo review. Holds an agency decision may have a preclusive effect on subsequent infringement litigation where the issues are the same.
Thomas/Scalia’s dissent goes directly at the power of administrative agencies to decide issues affecting core private rights, such as common law trademark rights. He relies heavily on Crowell v. Benson to demonstrate that there is a constitutional violation to give preclusive effect to an agency decision.
Where have I seen that case before?
Major case.
From the dissent.
The majority, however, would have Article III courts decide infringement claims where the central issue—whether there is a likelihood of consumer confusion between two trademarks—has already been decided by an executive agency. This raises two potential constitutional concerns. First, it may deprive a trademark holder of the opportunity to have a core private right adjudicated in an Article III court. See id., at ___ (slip op., at 21). Second, it may effect a transfer of a core attribute of the judicial power to an executive agency.
From the dissent:
Administrative preclusion thus threatens to “sap the judicial power as it exists under the Federal Constitution, and to establish a government of a bureaucratic character alien to our own system, wherever fundamental rights depend . . . upon the facts, and finality as to facts becomes in effect finality in law.” Crowell, 285 U. S., at 57.
At a minimum, this practice raises serious questions that the majority does not adequately confront. The majority does not address the distinction between private rights and public rights or the nature of the power exercised by an administrative agency when adjudicating facts in private-rights disputes. And it fails to consider whether applying administrative preclusion to a core factual determination in a private-rights dispute comports with the separation of powers.
This sua sponte discussion of the public rights rule of law is stunning, to say the least (and clearly done with an eye towards the 2 disputes pending challenging the constitutionality of IPR)
Public Rights, I don’t know if you are right, but it does appear that people seem to be reading this blog and appear to be debating the issue at the highest levels already.
. . . the SCOTUS got the ball rolling with Stern v. Marshall.
They sure did.
The sockpuppets are excited! Look out! This can only be good news for our patent system.
After all, the need for more junky patents that can’t be reviewed de novo by the granting agency is something that our society has been begging for oh so long. Is there any more pressing need? The people who love themselves some junky patents can’t think of one — and they are the most important people ever (assuming you arent some anti-progress Amish commie)! How do we know that? They told us so!
It is truly shocking to see Scalia and Thomas flying the flag for the 1%. Shocking, I tell you!
I am surprised the majority did not cite Executive Benefits Ins. Agency v. Arkison, 134 S. Ct. 2165, 573 U.S., 189 L. Ed. 2d 83 (2014) as a partial rejoinder to Thomas.
The case held that de novo review of a Stern claim solved the constitutional problem. It seems logical to conclude that if one has the opportunity for de novo review, and does not take it, that is their fault. Constitutional rights can be waived.
IPRs do not have de novo review.
Thank you for is post.
Enhanced damages should aim to fully compensate the patent owner. The requirement that there must be willfulness should be thrown-out.
Huh? What do you mean “fully” compensate? Damages are meant to compensate the patent owner, i.e. to compensate the patentee for its losses (lost profits or at a minimum reasonable royalty). In that sense they are like any other tort damages, viz. to make the injured party whole again. “Enhanced” damages for willfulness are punitive in nature, and have nothing to do with compensating the patentee for its injuries. Rather, they serve as a windfall to the patentee and, perhaps, an additional incentive for potential infringers of all patents to investigate patents that they may be infringing and to avoid infringement if they can’t get an opinion of counsel that they don’t infringe and can’t design around the patents.
Huh?,
You forgot that J fundamentally comes at patent law differently – apparently untethered and unmoored to any actual legal basis.
The “great thing” about this approach is that whatever you want to say is fair game, no matter what it is. Anything (quite literally) goes. There are no limits to the “philosophical jurisprudence” that can be injected into the statutory law by the judicial royalty.
While some may relish this unrestrained ability, others view this as a form of judicial tyranny that is to be avoided.
The post is 100% ad hominem. What exactly are you trying to accomplish with this post?
Not to mention you are deliberately taking me out of context (someone was suggesting I was trying to take away patent rights because I feel inadequate, which is another example of an ad hominem attack).
Ironically, I thought you would be with me on this point. After all, there is nothing in the statute that says anything about willfulness, and never has been since treble damages were first placed in the statute in 1793. It’s a judicially created rule. When I argue in support of a judicially created rule for 101 analysis, you call it judicial tyranny.
Move the goalposts back, as I could not possibly take your comment out of context, given that you have not established the context that your additional post now supplies.
Had you actually made the secondary posts in the first instance, you would not have seen my comment.
You did not do so, thus you see my post.
Evidently, I have engendered you to post better, as you have now supplied a post with at least some logic to your position. That I sparked you to make a better statement is mission accomplished.
You are welcome.
If you wanted more detail, you could have asked, “Hey J, why do you think that?” But you didn’t.
And it was Huh’s comment I replied to, not yours, so you didn’t do anything constructive.
Alas, only far too often the direct questions do not yield responses (leastwise, responses that are on point).
The “culture” here – for better or worse, is that it is the jibe that gets the response.
And no, your mere mention of you “responding to Huh?” change the evident perception that you are actually responding to me.
I’d rather talk about law than quibble about form, so I propose that we both do better.
Rather than me just making an unsupported opinion, I’ll say, “In my opinion, I believe X. I would like to get people’s thoughts on this before I post why. Any takers?”
I’d greatly appreciate if you asked “can you explain your reasoning” rather than assuming me (or any poster) has no legal basis.
That sounds great – and for you I will try to match your approach.
Cheers then!
Cheers!
Truly, I would like to get a response below about what you mean that traditional powers to award damages…
Further – and directly on point to both instances, the ability of the court in the damage setting to apply its traditional powers was explicitly sanctioned with direct words of Congress. This is simply not the case with 35 USC 101.
I have explicitly made this point several times. It is important to note where – and where not – judicial activism is “permitted” and where such violates the doctrine of separation of powers.
Can you provide me exactly where Congress explicitly sanctioned the traditional power to access damage?
What is directly sanctioned by the words in Congress for damages under 284 allow up to 3 times the amount accessed. There is no “exceptional circumstances” language in 284, unlike in the very next section 285. That seems to indicate more discretion than the Federal Circuit allows.
In fact, there were cases in the late 19th century (and I can find them later today) that awarded enhanced damages without a showing of willfulness.
To mirror your “simple layer” (not snark – just not at the level of case citations), I would posit that the courts have been provided authority – by Congress to deal with the equitable situations of post-grant party to party complaints.
This is indeed a quantum level difference with such dealings and the actual writing and “control” of the front gate of patent law itself.
Previously, I have provided the details you seem to be seeking, the actual words of granted authority from one branch of the government to another. In kind then, how do you countenance the lack of that type of authority grant, especially given the historical record of the Act of 1952 coming about in response to a too-activist court (and in view of not giving credit to the post-1952 attempts by that same court to “spin” what Congress did).
I’ll admit it is a simple analysis with no case citations, because the Federal Circuit has gotten this wrong from the beginning and the Supreme Court has gotten this wrong at least since Aro II in 1960. Though Judge O’Malley has caught the issue here.
The power of Federal Courts should be closely examined here, nothing should be assumed, because while the language of the damages statute has stayed the same since 1836 (with the exception of reasonable royalties), the power of the court to award relief has not stayed the same since then. It is vastly different.
The Act of 1952 changes to the damage section was entirely focused on allowing the option equitable for a reasonable royalty instead of equitable accounting. 1952 is not really relevant to enhanced damages.
Before 1952, most patent owners opted for equitable accounting because legal damages were hard to come by. When it was a question of damages at law, district courts often opted to look at the behavior of the parties, but it wasn’t required. In fact, the Supreme Court in the late 1890s signaled that it was entirely up to the district court. (Again, I’ll find the cases later by request.)
If I am reading the notes to 35 USC 283 correctly, the section of the Act that indicates Congress bestowing power to the courts predates the 1952 Act.
See the notes tab at link to law.cornell.edu
Yes. True. It was in 1819 that federal courts were allowed equity jurisdiction in patent cases.
Is that inconsistent with what I’m saying? I don’t see what you are trying to say.
J: When I argue in support of a judicially created rule for 101 analysis, you call it judicial tyranny
This is an old habit of “anon” and his cohorts.
And it’s never going to die. Get used to it.
Mindless drivel from Malcolm that clearly ig nores the point as to why 101 does not have any language from Congress on any grant of authority to a different branch of the government.
“Get used to it” indeed – nine years and running.
MM,
I’ll repeat the same question I asked anon: what do you hope to get out of this post?
J: what do you hope to get out of this post?
Educating you, for starters. Educating others as well.
You wrote to “anon” : I thought you would be with me on this point.
You assumed that “anon” has a consistent position on “judicial activism”. That’s a ridiculous assumption. The only consistent position “anon” takes is that he wants more patents, all the time, that are easier to enforce. Once you understand that, then everything else that comes out of his mealy mouth is very easily understood.
MM,
I knew exactly what I was doing when I pointed out what I did.
MM, believe me when I say, I welcome your thoughts on the substance. I actually am curious if you think my idea is good or bad.
But I don’t need you to “educate” me. If I don’t enjoy the conversations with anon, I’ll stop.
When the treble damages was first put in the statute in 1793, it was mandatory. Willfulness had nothing to do with it.
The district court was granted discretion to award enhanced damages in 1836. At this time, damages were calculated according to contract principles, not tort principles. It wasn’t considered a tort until the 20th century. It was so difficult to get legal damages until the change of statute in 1952 (reasonable royalties) that patent owners almost always sought monetary awards through equitable accounting. Treble damages were there for patent owners who were not able to get to equitable accounting. So, treble damages were not meant to punish the infringer, but to fully compensate the patentee if the judge felt that the jury (which generally has a distrust of monopolies) did not award enough damages.
I think many make the understandable mistake of assuming the treble damages were put in place for the same reason that there are treble damages in the 1890 Sherman Act. But I don’t think it is so, because these treble damages were put in place almost 100 years before the Sherman Act.
See the dissent in In re Seagate.
Not replying to the sniping below, but your comment is consistent with Judge Gajarsa’s concurring opinion in Seagate
link to scholar.google.com
This paragraph gets into possible remedial uses of enhanced damages:
Apart from the difficulties created by the old law and equity division, a district court might decide to enhance a patentee’s damages to overcome other obstacles. For example, assume that a substantial portion of a defendant’s sales data is inadvertently but irretrievably lost prior to discovery. In such a case, a successful plaintiff, through no fault of its own, might be unable to prove the real extent of damage caused by the infringement. It would be entirely reasonable, in my judgment, for the district court to exercise its statutory discretion and enhance the damage award by some measure. Another foreseeable situation is one in which a plaintiff, having successfully secured a damage award for past infringement, moves for a permanent injunction. However, in order to avoid manifest injustice, a multiplicity of suits, etc., the district court might reasonably determine that monetary relief in the form of enhanced damages is more appropriate than an injunction. See, e.g., City of Harrisonville v. W.S. Dickey Clay Mfg. Co., 289 U.S. 334, 53 S.Ct. 602, 77 L.Ed. 1208 (1933); New York City v. Pine, 185 U.S. 93, 22 S.Ct. 592, 46 L.Ed. 820 (1902); Restatement (Second) of Torts § 951 (1979); see also eBay Inc. v. MercExchange L.L.C., ___ U.S. ___, 126 S.Ct. 1837, 1839, 164 L.Ed.2d 641 (2006) (“The decision to grant or deny permanent injunctive relief is an act of equitable discretion by the district court, reviewable on appeal for abuse of discretion.”). Yet, by reading a willfulness requirement into the statute, we are unnecessarily confining enhanced damages to a subset of cases where punitive awards are appropriate, and thereby restricting district courts from exercising legitimate, remedial options of the type discussed above.
It was argued by many here that subjective believe in lack of liability for patent infringement bore on the issue of inducement. That case is at the Supreme Court for decision, and it would be prudent for the Federal Circuit to await the developments in that case before deciding the parameters of willful infringement or of enhanced damages.
Ned, dear Ned, the credited comment would have been “FIRST!”.
Mellow, indeed. But I was referring to the prior discussion on Patently-O about the inducement case before the Supreme Court.
Comments are closed.