The Supreme Court has now granted certiorari in two enhanced fee award patent cases: Halo Electronics, Inc. v. Pulse Electronics, Inc., S.Ct. No. 14-1513 and Stryker Corp. v. Zimmer, Inc., No. 14-1520.
The court linked the two together and will hold one big oral arguments (one hour) focusing on whether the Federal Circuit’s rigid test limiting enhanced patent damages is appropriate — especially following the Supreme Court’s decision in Octane Fitness where the Supreme Court rejected a parallel rigid test in the fee-shifting situation.
Those familiar with treble-damages know that the Federal Circuit has created a complex and rigid test for determining whether such awards may be granted. The statute though is simple and only states that “the court may increase the damages up to three times the amount found or assessed.” 35 U.S.C. 284.
In this case, the Supreme Court is very likely to require flexibility – what is unclear is what level of flexibility will be allowed. For instance, will enhanced damages continue to be limited to willful infringement?
= = = = =
Questions presented (both of these appear to be in close parallel):
Halo: Whether the Federal Circuit erred by applying a rigid, two-part test for enhancing patent infringement damages under 35 U.S.C. § 284, that is the same as the rigid, two-part test this Court rejected last term in Octane Fitness, LLC v. ICON Health & Fitness, Inc. for imposing attorney fees under the similarly-worded 35 U.S.C. § 285.
Stryker: Whether the Federal Circuit improperly abrogated the plain meaning of 35 U.S.C. § 284 by forbidding any award of enhanced damages unless there is a finding of willfulness under a rigid, two-part test, when this Court recently rejected an analogous framework imposed on 35 U.S.C. § 285, the statute providing for attorneys’ fee awards in exceptional cases.
Hal Wegner has posted an interesting comment. Saying that “the contributions of amici Louis J. Foreman in Halo and “Independent Inventors Groups” in Stryker played a significant role in the grant of certiorari.” Indicating “that petitioner Halo switched gears at the Supreme Court, focusing for the first time on certain nineteenth century Supreme Court cases (e.g., Tilghman v. Proctor (1888); Teese v. Huntingdon (1860); Day v. Woodworth (1851)) [on enhanced infringement damages] and economic policy arguments (Small Business Administration data) that amici Independent Inventors originally presented in their amicus brief in support of en banc rehearing at the Federal Circuit.”
Post?
Where?
link to laipla.net
Day v. Woodworth 54 U.S. 363, 372 (1851) (“[I]f, in the opinion of the court, the defendant has not acted in good faith, or has been stubbornly litigious, or has caused unnecessary expense and trouble to the plaintiff, the court may increase the amount of the verdict, to the extent of trebling it.”)
This case was about awarding counsel fees. The court held that juries could not include in damages, even to punish the defendant, counsel fees. The court held that the only statute authorizing the award of counsel fees was in the patent statute that allows trebling.
It would seem therefore that because counsel fees can be awarded as a matter of discretion of the district court through § 285, that trebling should also be within the discretion of the district court; but that if counsel fees are awarded per § 285, perhaps damages should not also be trebled because that might be a double award.
Just reading these cases, one is lead to conclude that an accused infringer cannot simply refuse to take a license and force patent the owner to sue. If he has a defense, he must bring it to court through a DJ action. In all other circumstances, he is a willful infringer and treble damages should be awarded including counsel fees.
If that is what Supreme Court holds in this case, there are going to be a lot of very unhappy big corporations who now simply refuse to even consider discussing patent matters with patent owners. Viz, Judge Michel discussions of this issue. “Sue me,” is their position.
That is about to change.
Paul, Halo cited the Supreme Court cases in its June 22 petition. Stryker, who filed on the same day, did not cite these old Supreme Court cases. The Independent Inventor’s brief was filed on July 24. (I do not have a copy.) But the evidence suggests that Halo’s counsel came up with the basic argument then adopted by the Independent Inventors.
All along, Stryker continued to cite the conventional Federal Circuit cases and the 284-related Supreme Court cases.
Halo’s counsel should be given some credit here. They are
CRAIG E. COUNTRYMAN
Counsel of Record
MICHAEL J. KANE
WILLIAM R. WOODFORD
JOHN A. DRAGSETH
Fish & Richardson P.C.
Perhaps loosening of the strictures on treble damages is reasonable in view of the recent tightening of applicants’ ability to obtain patents [or “junk patents” to use the parlance of MM] in view of Alice and Bilski and Williamson. In other words, the larger the inventive contribution, the larger the potential reward.
IIT, no doubt the worse patents the PTO issues the more the courts will try to limit the damage to the public in the form of remedies. The PTO’s job number 1 is to produce valid patents, not to keep their “clients” happy by issuing patents as fast and as cheaply as possible. Moreover, common sense would tell one that the patent system was never intended to protect anything but inventions in the Useful Arts. The PTO really lost its way there in the mid ’90s.
Pumping out a lot of junk devalues the currency.
You are engaging in the fallacy of “Accept Accept Accept” being “OK” – and then conflating that with your predilections for Ned IMHO law on other areas (missing the actual law on the widened use of terms sounding in function and the exceptions to the judicial doctrine of printed matter), as well as not recognizing that the Useful Arts are wider than the Technical Arts.
This, of course, should not catch you unawares, as this type of incorrect proselytizing has been brought to your attention.
“With prospective damages and injunctions available only in
rare circumstances, a patentee would have to continually sue for
actual damages against infringers to stop continued infringement.
Therefore, it was necessary that the legal damages be trebled to
prevent duplicative cases.”
Ryan, James. “A Short History of Patent Remedies.” Cybaris® 6.2 (2015): 5.
link to web.wmitchell.edu
The court should alternatively grant an injunction or treble damages.
“Those familiar with treble-damages know that the Federal Circuit has created a complex and rigid test for determining whether such awards may be granted. The statute though is simple and only states that “the court may increase the damages up to three times the amount found or assessed.” 35 U.S.C. 284.”
Are you talking about 284 or 101. . . . . . ? Simple statute, real messed up “tests”. . . can’t wait to see what the Supremes do here.
You can bet whatever the test is it will be for the benefit of the accused infringer class. Anything to limit the value of patents in the marketplace.
the accused infringer class
ROTFLMAO
You guys never cease to amuse.
Said the guy who is paid by Google to write anti-patent posts on this forum … everyday
Make sure when you :: roll on the floor laughing your ass off :: dont put your face in your t *u* r *d
Too
Late
Congrats, Brian Smith! Your priceless bit of deep thinking made it into my permanent archives. And you didn’t even mention “academia” or “the Fifth Column”!
Lawyers who fancy themselves “innovators”: they just can’t help but obsess about that super sneaky “infringer class”.
MM who do you fancy yourself as ??
your own mother’s P* I* M* P ?
or
Google’s B*I*T*C ** ?
once you answer that then you can again roll your ass off in your own S H * T
and make another paid post ..
It is hard to imagine how he could not be paid for this given the amount of time he puts in.
To form a decision that would benefit the accused infringer class, it would seem the SCt would have to come up with a test even more stringent (and less likely of application) than the one that’s been developed by the CAFC with and following Seagate.
I don’t see that happening.
Agreed. Loosening up 35 U.S.C. § 284 for getting enhanced damages, as requested in this cert petition, can only help patent owners. Whereas the prior Octane loosening up of 35 U.S.C. § 285 cuts both ways – either party is now more likely get attorney fees for the conduct of the other party.
I agree. My point is that whatever the “test” turns into it won’t benefit patent holders, IMO.
Supreme Court dislikes the Federal Circuit, not patent owners.
No, I think they dislike strict, bright-line tests in favor of discretion, whereas the Federal Circuit prefers bright-line rules.
If you mean by “discretion,” the ability of the judiciary, and in particular the Court itself, to keep their fingers in the nose of wax of patent law, then you are indeed close.
I think you will like Hayek’s writing. The Road to Serfdom comes to mind.
I don’t think there is a bright-line rule for what kind of rules the Supreme Court will issue., but I agree that this is one reason why the Court dislikes the Federal Circuit. Also, judicial non-compliance.
The folks Scotus really likes are the litigators.
It keeps erasing bright lines and replacing them with fuzzy lines, so the answer to any patent dispute is never crystal clear. This gives the litigators an excuse to keep on fighting in each case, and keep on billing.
“can only help patent owners.”
…and this “amuses” Malcolm.
Hey guys, did you know that all federal employees have basic obligations defined in 5 CFR 2635.101? Lee just sent us all an email about whistleblower protections and prohibited personnel practices. Apparently, under the prohibited personnel practices it’s illegal to take personnel action against someone (say examiner x) refusing to take an illegal action.
I just found out about most of this! (Unless they told me like my first day and I didn’t know what they were talking about). Number 11 was quite a shock to me!
(b) General principles. The following general principles apply to every employee and may form the basis for the standards contained in this part. Where a situation is not covered by the standards set forth in this part, employees shall apply the principles set forth in this section in determining whether their conduct is proper.
(1) Public service is a public trust, requiring employees to place loyalty to the Constitution, the laws and ethical principles above private gain.
(2) Employees shall not hold financial interests that conflict with the conscientious performance of duty.
(3) Employees shall not engage in financial transactions using nonpublic Government information or allow the improper use of such information to further any private interest.
(4) An employee shall not, except as permitted by subpart B of this part, solicit or accept any gift or other item of monetary value from any person or entity seeking official action from, doing business with, or conducting activities regulated by the employee’s agency, or whose interests may be substantially affected by the performance or nonperformance of the employee’s duties.
(5) Employees shall put forth honest effort in the performance of their duties.
(6) Employees shall not knowingly make unauthorized commitments or promises of any kind purporting to bind the Government.
(7) Employees shall not use public office for private gain.
(8) Employees shall act impartially and not give preferential treatment to any private organization or individual.
(9) Employees shall protect and conserve Federal property and shall not use it for other than authorized activities.
(10) Employees shall not engage in outside employment or activities, including seeking or negotiating for employment, that conflict with official Government duties and responsibilities.
(11) Employees shall disclose waste, fraud, abuse, and corruption to appropriate authorities.
(12) Employees shall satisfy in good faith their obligations as citizens, including all just financial obligations, especially those—such as Federal, State, or local taxes—that are imposed by law.
(13) Employees shall adhere to all laws and regulations that provide equal opportunity for all Americans regardless of race, color, religion, sex, national origin, age, or handicap.
(14) Employees shall endeavor to avoid any actions creating the appearance that they are violating the law or the ethical standards set forth in this part. Whether particular circumstances create an appearance that the law or these standards have been violated shall be determined from the perspective of a reasonable person with knowledge of the relevant facts.
However, and I just found out about this, the OSB or Office of the Special Counsel (which is reportedly supremely ineffectual as a factual matter) is in charge of the Prohibited Personnel Practices “appeals”/”grievances”/”complaints” or whatever you call them. And also the MSPB the Merits System Protection Board are in charge of “whistleblower retaliation” complaints which are then appealable to the Federal Circuit (though to get jurisdiction first you have to complain to the OSB and get them to sit on their thumbs for 120 days).
In any event, I just thought I’d share this with you guys, because this is the route that any examiner (junior or primary) who was ever thinking of standing up to some signatory (primary or spe) examiner on some completely bogus rejection (or slew thereof) would have to take. That whole procedure is gigantic, and fraught with procedural hurdles large enough to drive a truck through. And at the end of it there is no “reward” other than just being put back into the position you were in before the whole thing started. So if you’ve ever got a junior examiner who agrees with you on your case, but you can’t get the primary to take a legally appropriate action, just know that the whistleblower system/prohibited personnel practices system that is supposed to enable federal workers (like examiners) to stand up in the face of such nonsensical waste/abuse of power/illegal actions etc. is nearly totally ineffective. If you ever want that to change, that’s where you start.
What does your Union say about it?
Idk, just found out about most of it today. I haven’t run it by them. Of course they handle grievances so that is one avenue (that runs under the Prevented Personnel Practices vein). I’d say they’re probably mostly a fan of those.
“(1) Public service is a public trust, requiring employees to place loyalty to the Constitution, the laws and ethical principles above private gain.”
Does that “private gain” include promotion through quotas…?
I did think about that, but I’m not sure that the caselaw would support that. Apparently there is quite a bit of caselaw about this stuff, there is a primer on the MSPB website.
Why would you need “case law to support that”…?
Thanks 6 – There are lots of benefits of being a federal employee, but this is one aspect of your job: If you do find “waste, fraud, abuse, and corruption,” you have to disclose it even if there may be some blow-back. I expect that you’ll be able to handle it.
While I appreciate the vote of confidence, and I can handle it, the questions are: “at what cost” and “how often”? As in at what cost to myself and/or the applicant? All my weekends sacrificed to pump out barely bureaucratically (and certainly not legally) passable rejections? Should I stand my ground so much that a reviewer eventually starts being pissed and wants to subject all the proceedings to clear error review, wasting the time of literally everyone involved and thereby pushing back the issuance of office action by a year or so? Note that those at best end up with them reversed and thus more pissed than ever. And “how often” as in, this stuff goes on quite a bit, so just how much do I have to point out? Do I have to spend my whole week pointing this out? That’s not feasible.
Feasible for what?
If EVERY examiner stood their ground, imagine what would happen….
“Feasible for what?”
Feasible for having time to do other cases.
“If EVERY examiner stood their ground, imagine what would happen….”
Yeah and also imagine what would happen if global peace broke out!
While “world peace” is not in your job description, apparently 37 CFR 2635.101 IS
Do you recognize the difference?
“is not in your job description, ”
Technically speaking 37 CFR is the law brosef not my job description. If it was in the job description maybe more people would be aware of it.
Hypertechnically speaking the 37 CFR is not law…
😉
Visualize Whirled Pease!
Actually you’re right, who writes those rules?
Mellow: + 1
I’m reminded of the scene with ol jaime lannister talking about swearing and swearing.
link to youtube.com
Doesn’t the circulation of this letter suggest that Lee and other higher ups might be concerned about possible corruption in the USPTO, to wit, effects of SAWS or the Second Look Program?
Examiners and SPEs should be following the law and not making policy above their pay grade as the SAW FOIA documents suggest they are.
Joachim,
There is a far better and more direct path to dealing with any concern that the remaining (and make no mistake, there are remaining**) SAWS-like program.
**lest we forget that the Office directly admitted such in its flubbing response to the outcry of SAWS.
Funny too – note exactly which commentators here were of the mind of trying to minimize the SAWS fiasco – yes, it was (for a large majority) the sAme ones who post relentlessly anti-patent messages.
Is anyone truly shocked?
I have recommended that applicants, who have good reason to believe that an examination was poisoned by SAWS or similar program, join the class action in the CFC.
I suspect IPRs are being used in the same way.
Or do you mean that the USPTO should fire the people that created SAWS and similar programs or that participated as co-conspirators?
But what about those that might have suffered damages from breach of implicit contract in fact?
JM: I suspect IPRs are being used in the same way
LOL. Do you have any evidence?
I didn’t think so. Keep digging, JM!
^^^
Funny too – note exactly which commentators here were of the mind of trying to minimize the SAWS fiasco – yes, it was (for a large majority) the sAme ones who post relentlessly anti-patent messages.
Is anyone truly shocked?”
Malcolm, your post is evidence for my point.
Thanks.
Story, from Pierson v. Eagle Screw Co., 8 Story’s R. 410 1844:
quoted in Curtis (’67) page 345, section 338, Infringement.
Thus, Story would increase the damages to compensate fully for the cost of enforcement – but capped at treble actual damages.
The current statute reads,
“35 U.S.C. 284 Damages.
Upon finding for the claimant the court shall award the claimant damages adequate to compensate for the infringement…
This is regardless of the trebling requirement.
Now it is true that mandatory trebling was removed to protect the innocent infringer, but what if the infringer deliberately infringes based on a private, but mistaken belief of right. Such is not innocence and should open the award up to fully compensate the patent owner.
Vindictive increase damages should be reserved to punish willful infringement. But full compensation beyond actual, provable damages, should be the watchword in any case where the infringer is not innocent.
When was there “mandatory trebling” to begin with?
Check this:
Ryan, James. “A Short History of Patent Remedies.” Cybaris® 6.2 (2015): 5.
link to web.wmitchell.edu
“The 1793 act mandated that infringers pay at least
three times the amount the patentee usually received for either
selling the patented invention or licensing the invention.”
Id. at 156.
Thanks – I will check it out.
By the way – was that a “Jefferson” thing…?
Discussed in the paper, p. 171-180.
And what is this thing called “innocent infringer”…?
You infringe or you do not infringe – no place for the sense of “innocence” here**
**the willfulness aspect is, of course, different; but let’s be clear – a lack of willfulness by no means imputes any sense of innocence.
In the early 19th century, there were probably lots of innocent people brought into court. There was no examination before 1836, only a registration system.
I think what Ned is saying is that there is no need for willfulness to receive enhanced damages. It is to compensate patent owners, or to punish willfulness.
Thanks J – twice.
Since we do not have the system you speak of (registration), then there is no such thing as innocent infringers, right?
Yep. We agree here, treble damages is about compensation, not punishing infringers. I think the cottage industry of determining the exact damage of infringement should be dashed. Let each party make whatever argument they want to the jury, and let the jury decide damages like every other tort. Then, the judge can adjust up or down.
Back to innocent infringers, not all infringers are created equal. in some circumstances the enhanced damages could also be used to punish wanton pirates.
By the way, what is your opinion of the paper’s theory of Thomas Jefferson’s role in coming up with enhanced damages?
I would be remiss to not note that the presumption of validity arose only when the registration era ended.
So while perhaps not all infringers are created equal, there is (today) NO such thing as an innocent infringer.
I do believe that it is a better policy – one more in line with the reason the Office exists – to use a basic presumption that all published patents are known.
That is after all the very intent of publishing patents. That they be known. I have far too often run across (typically Big Corp) marching orders for their engineers and innovators to NOT be current with patents for fear of incurring treble damages. Flipping this so that the baseline presumption already exists would defeat this anti-patent way of thinking about a critical aspect of the Office’s primary mission.
The answer is in a stronger patent right.
I think you are right anon. I’ll add that refusing to read other patents also is counter to one of the goals of the patent system, which is quicker distribution of knowledge.
Although, I think this willful ignorance was cut out by the Federal Circuit in i4i v. Microsoft.
As Ryan argues, the “increase” began as a way for the courts to increase damages awarded to fully compensate the patentee per Story’s argument because legal damages themselves were so very limited.
But again note, the court award “to compensate” is not in the same clause as the discretionary increase. So long as the court can increase the damages found by the jury “to compensate,” I think there is no requirement for willful infringement.
Ned, I believe that was the original ‘lost profits’ make whole theory. This later gets transformed into apportionment (of profits), which then got hopelessly complicated – and was simplified into – the ‘no less than a reasonable royalty’ formulation. Which of course the serial infringers now want to hopelessly complicate yet again – by injecting apportionment in the calculation. Too bad we can’t make Story mandatory reading for SCOTUS!
So true! Precision in calculation of damages has made a cottage industry. Reasonable royalty means it need not be precise, it’s supposed to be easier than disgorgment of profits, which occurred before 1946.
J, “not precise” seems key.
Let’s not forget, though, that we do NOT want a case where the infringer can infringe and if caught and prosecuted merely pays what would have “been nice” at the onset.
All that that would do would encourage gaming the system and making infringement into a “viable” risk option.
Making patents stronger is the only way to reduce patent infringement.
It’s a cold calculation.
anon, agreed. It willful infringement on notice of infringement, copying a marked product, or copying a product known to be patented, not to “promptly,” consistent with standing requirements,
1) take out a license; or
2) file a DJ action (validity or infringement).