by Dennis Crouch
The Supreme Court today issued an important unanimous decision in Halo v. Pulse – vacating the Federal Circuit’s rigid limits to enhanced damages in patent cases. The decision rejects the dual objective/subjective test of Seagate as “inconsistent” with the statutory language of 35 U.S.C. §284. Rather, the court indicated that district courts have discretion to award enhanced damages where appropriate “as a sanction for egregious infringement behavior” and that those awards will be reviewed with deference on appeal. Although the district courts are given discretion, the opinion here makes clear that enhanced damages should not be awarded in “garden-variety cases.”
Section 284 gives district courts the discretion to award enhanced damages against those guilty of patent infringement. In applying this discretion, district courts are “to be guided by [the] sound legal principles” developed over nearly two centuries of application and interpretation of the Patent Act.[1] Those principles channel the exercise of discretion, limiting the award of enhanced damages to egregious cases of misconduct beyond typical infringement.
The Roberts opinion linked this case to that of Octane Fitness in which the court had earlier rejected a rigid Federal Circuit test for attorney-fee awards in favor of flexible discretion at the district court level.[2] In its decision, the Supreme Court also repeatedly cited its 19th century decisions as guidance.[3] However, rather than wholehearted acceptance of those old cases, the nuanced opinion walks through their reasoning and explains which continue to hold force today.
In thinking about enhanced damages, I find it useful to keep in mind that this issue only arises after a patent has been found enforceable and the accused found liable for infringement. Thus, any ‘excuse’ offered for the infringement at that point is insufficient to avoid liability but may still be sufficient to avoid an enhanced damage award. An important element of the decision is that of timing for the excuse. The opinion notes that an ex post defense generated for litigation is does not remove culpability. Rather, culpability will be measured according to the infringer’s knowledge at the time of the accused unlawful conduct.
Although the burden for proving egregious infringement behavior rests entirely upon the patentee, the court here held that clear-and-convincing evidence is not required to support an enhanced damages award. Rather, a preponderance of the evidence (more likely than not) is sufficient to support that award.
Missing from the opinion is an express holding as to whether willful infringement is a prerequisite to an enhanced damages award. The statute, of course, is silent on this point – indicating only that “the court may increase the damages up to three times the amount found or assessed.” Going forward, it may make sense to refer to the topic as ‘egregious’ infringement rather than ‘willful’ infringement.
The opinion vacates the decisions in both Halo and Stryker. Read the Decision: HaloPulseStrykerZimmerDecision
= = = = = =
Although the court’s opinion was unanimous, Justice Breyer also provided a concurring opinion joined by Justices Alito and Kennedy. The concurrence suggests a more limited discretion for the district court – namely: (1) that mere knowledge of the patent is insufficient to prove willfulness; (2) failure to obtain advice of counsel cannot be used to prove recklessness (see Section 298); and (3) enhanced damages are not to be used to compensate the patentee for either the infringement or the hassle/cost of litigation.
Regarding the standard for review, Justice Breyer also offers an interesting statement supporting the Federal Circuit’s role as an ‘expert court’:
[I]n applying that standard [of deference], the Federal Circuit may take advantage of its own experience and expertise in patent law. Whether, for example, an infringer truly had ‘no doubts about [the] validity’ of a patent may require an assessment of the reasonableness of a defense that may be apparent from the face of that patent. And any error on such a question would be an abuse of discretion.
Despite this ‘experience and expertise’, I won’t look for the Supreme Court to begin giving deference to the Federal Circuit anytime soon.
= = = = = =
[1] Martin v. Franklin Capital Corp., 546 U. S. 132, 136 (2005) (quoting Fogerty v. Fantasy, Inc., 510 U. S. 517, 533 (1994)).
[2] Octane Fitness, LLC v. ICON Health & Fitness, Inc., 572 U. S. ___ (2014).
[3] See, for example, Seymour v. McCormick, 16 How. 480, 488 (1854); Dean v. Mason, 20 How. 198, 203 (1858); Hogg v. Emerson, 11 How. 587, 607 (1850); Livingston v. Woodworth, 15 How. 546, 560 (1854); Tilghman v. Proctor, 125 U. S. 136, 143–144 (1888); Topliff v. Topliff, 145 U. S. 156, 174 (1892); Cincinnati SiemensLungren Gas Illuminating Co. v. Western SiemensLungren Co., 152 U. S. 200, 204 (1894); Clark v. Wooster, 119 U. S. 322, 326 (1886); Day v. Woodworth, 13 How. 363, 372 (1852); and Teese v. Huntingdon, 23 How. 2, 8–9 (1860).
This ruling is interesting but was largely expected. Now for the real potential earth-shaker, when will the Supreme Court decide what to do about Cooper/MCM? Would it be after June 30, since it appears that’s how long they gave the other side respond (at least for MCM v. HP)? Do they make cert/no-cert decisions over their summer recess?
In practically all likelihood, these cases will be carried over to next term.
Even just making the decision on cert?
There is nothing published by the Court during their recess, so unless they move prior to the break, then yes, even the decision on cert.
Ken, we have 14 days to respond, placing the date the clerks can first look at the case in mid July. I will assume they will make a positive recommendation given that the Supreme Court takes important cases. That probably means a decision to take the case will occur sometime in September.
Ned, you think there’s any chance they might just do a vacate/remand of sorts (e.g., simply ordering the Federal Circuit to reconsider, in light of the Supreme Court precedent that they’ve thus far summarily ignored)?
Ken,
Zero chance at that (and that’s being generous).
What’s your angle with such “insistence” that you are pursuing?
Not really an “angle” – let’s just say it would help me, along with many others I’m sure, to know ASAP whether the Supremes are likely to cut back on IPR in some meaningful way.
Ken, I think IPRs in their current form will not last another year.
I am curious Ned (hence the asking) what do you think that the mode of change will be, given that you foresee a (substantial) change within the year?
I am curious too when that question is avoided (hence, the repeated question).
Are there any legally cogent mechanisms that you want to provide that you think this change will happen by? Ones that would account for this law and this law’s particular explicit actions by Congress?
Ken, if there is something said in Cuozzo that might be truly relevant to the issue, perhaps. Ned
Good point – and Cuozzo might give us some “clues” in any event.
The Court could theoretically reach the constitutional question in Cuozzo.
Also – the Court will continue to review / grant / deny cert petitions through the summer, even though technically between terms.
Also – the Court will continue to review / grant / deny cert petitions through the summer, even though technically between terms.
I don’t believe this is quite accurate. Although the clerks may continue to review petitions, the Justices traditionally do not. The petitions that become ripe for consideration over the summer are not reviewed by the Justices on a rolling basis. They are all considered at the “long conference” at the end of the summer. See here.
Thanks Jane.
The SCOTUS website indicates that the process is on-going; however, perhaps there is a difference between what it says it does and what it actually does.
link to supremecourt.gov
The process of “prep” is different than the process of the Justices taking action on that prep.
Jane, from my understanding, the summer involves clerks having nothing other to do but to review petitions and make recommendations. Petitions that become reviewable during this time will receive careful review.
The clerks are also operating with to fill out the docket of the upcoming term with worthy cases, cases worthy of Supreme Court review. That is the primary criteria.
That means, the cases must be important. The minor dispute over claim construction would not meet this criteria regardless of how wrong the Federal Circuit was. Anything that involves an unresolved disputes of fact will never receive certiorari. It is unlikely that any case that did not receive a written opinion from the court of appeals would be taken.
All petitions try to make the case that their petitions are important. But few rise to the constitutional level, as opposed to statutory construction or rule of law issues. Serious constitution questions are the kind of cases worthy of Supreme Court review.
I have not reviewed the entire gamut of petitions, so my view here is only speculation, but is the MCM case presents the kind of issue that the Supreme Court would deem worthy — a case involving the constitutionality of a statute, separation of powers, jury trial rights and the nature of a patent, whether it is property or just a government-granted privilege.
There is little doubt that patents were central to the power struggle between the crown, on the one hand, and parliament and the courts on the other — a struggle that lead to the English civil war and a fundamental constitution change in England. Similarly, it was the patent of the British East Indies Company (Boston Tea Party) that lead to the American Civil War. Famously, the English Privy Council finally transferred the validity of patents to the exclusive jurisdiction of the common law courts in 1753 in one more constitutional crisis.
The MCM case is historically important, one of the most important cases before the Supreme Court in 200 years. Separation of powers, the scope of the jury trial right, and whether patents truly are property or not. I think the Supreme Court will not pass on MCM.
It doesn’t add up that the Court would sleep on Cooper in order to hear MCM sans Roberts – which leaves Cuozzo.
Why do you think that it is one or the other?
Courts have combined cases many times previously.
anony, I do not think that Roberts will be recused if the court takes MCM.
Moreover, Cooper is appealing the Fed’s ruling in MCM, but only one aspect of that case. How odd would it be that the court would not take MCM if it took Cooper?
I agree that most of us would like to see the Court hear the cases in parallel.
However, Roberts is recused from one, but not the other. Where provided with option, the Court will decide an important constitutional question such as this one with 8, not 7.
Additionally, if Cooper was procedurally infirm per the DOJ’s argument, the Court would have denied cert by now.
Also, 7A argument is not the separation of powers argument, which is at issue. The Court may determine that a stand alone question of patent validity was historically resolved at equity – which necessarily resolves the jury trial question. Similarly, the Court may determine that a stand alone question of patent validity was historically resolves at law – which also necessarily resolves the question. Finally, the Court may affirm the CAFC’s view that patent validity is a public right, which also necessarily resolves the jury trial question.
The inclusion of the jury trial issue is superfluous / redundant, and would not elevate one petition over the other.
All signs point to Cuozzo + GVR for Cooper / MCM.
Back to the recusal:
If Roberts were to sell his HP stock now, he would remain recused.
If you are aware of any prior examples, etc. demonstrating were a Justice has reversed a prior recusal and re-entered the case, we’d like to see it.
anony, but, in point of fact, all issues of fact were tried to common law juries prior to 1800. But validity was tried to the jury and judgment entered by a common law judge. Those are the facts. The court cannot ignore facts.
You guys want to hear something ironic? Lee sent a mail to everyone to discuss the Orlando shooting, and invited everyone to “stand in solidarity” with them by giving blood. Irony: Gay mans can’t give blood because Fed gubmit (and the AMA).
Actually this isn’t true anymore.
They just said in the news like yesterday that it was a hoax that it was repealed.
Alright so I went ahead and looked into it, multiple reputable sources now confirm apparently it is no longer a lifetime ban. Now it is only a year ban since your last ahem, gay contact. Well I guess its a step in the right direction. Though I do remember the AMA making a lot of noise over at least one other infection that was not HIV but which was nearly entirely prevalent in gay men specifically. I wonder if the AMA switched their position or if they just were overridden.
link to cnn.com
ahem, gay contact
You know what else is “ironic”? Like you, the k00k00b@nanas shooter was also kind of fixated on “gay contact.”
Generally speaking, the grown-up thing to do is work on your own fulfilling sex/love life and not worry too much about what the other grown-ups are doing. I know, I know … you just wanted to share this fascinating news story with your virtual friends here. We get it.
“You know what else is “ironic”? Like you, the k00k00b@nanas shooter was also kind of fixated on “gay contact.”
Generally speaking, the grown-up thing to do is work on your own fulfilling sex/love life and not worry too much about what the other grown-ups are doing. I know, I know … you just wanted to share this fascinating news story with your virtual friends here. We get it.”
MM presumes that I’m not a black gay trans disabled person of the islamic faith who suffers this very discrimination. There’s nothing like the “soft” discrimination from those on the left, they always feel so good about discriminating thusly. Why, its a virtue don’t you know?
For shame MM. Either way, the point of my bringing it up is that gay people were still being discriminated against, by law/rule/regulation by our very gov until just last year, and that they still are actually, and that it is ironic for members of that same gov to invite people to stand beside those people “in solidarity” while they are a part of the same apparatus literally still discriminating against gays. The point is that the gov, who is supposedly all “anti-discrimination” is indeed still a discriminator itself. Not some fixation with gayness or contact re re, it even goes beyond gayness, as there are still several other categories the gov assures people won’t be discriminated against on, and then promptly does so itself.
MM presumes that I’m not a black gay trans disabled person of the islamic faith
I definitely did not presume any of those things.
who suffers this very discrimination.
Ah, so there’s some some form of anti-gay discrimination that’s bothering you. Kinda odd that you chose to focus on the “irony” without mentioning that the discrimination itself was problematic for you … until now. But I’ve pretty much seen everything on the Internets so …. [shrugs].
6, the Orlando incident tends to confuse. Was the bar attacked because it was gay? But, as we learn more, the shooter himself was gay. Thus, it appears, the more we learn, the more we find that what we thought we knew may not be true.
I just saw a headline that suggested the Orlando shooting was a hate crime. That assumes the shooter targeted Pulse because of gays. How is this possible if the shooter himself was gay and a frequent patron?
Sorry I didn’t get back to you for awhile there Ned. I don’t know bro, lots in there, actual gayness, actual self-hatred, actual jihadism, and actual mental illness amongst others all seem to play a role.
6, the information since does seem to suggest that Pulse was targeted on behalf of ISIS and its ideology because of its patrons were gays. What this says, to me at least, is that gays are special targets of ISIS and its allies.
But there is another consideration: Is it not it also interesting that the radical in Santa Barbara and the radical in Orlando both attacked groups of which they were a member?
…sort of like how Malcolm ALWAYS seems to attack patent attorneys….?
Hmmmm.
Dennis – were threads 9 and 10 lopped off on purpose or has there been a tragic loss of data and backup/restore?
…wrong thread?
Although there was some editing on the previous thread under 10…
A thread was edited? Wow. Sounds like a conspiracy.
Or at least it could give someone the “perception” of a conspiracy. And that’s just as bad, at least if you’re already an embittered entitled paranoiac who perceives all kinds of stuff via the voices in your fillings.
I see that you are (partially) projecting again…
Still hearing those voices, eh?
Same old Malcolm.
Still hearing those voices
Just recalling your typical silliness and “concern” about Dennis’ reputation, “anon.” Golly, it must have been almost three weeks since you last lost your marbles and went off the deep end with one of your recycled rants about “perceptions.” Okay, maybe it was five weeks.
But don’t worry. We’re all trying to be considerate of your precious fee-fees. “Perceptions,” you know.
LOL
LOL right back at you: your “crocodile tears” of concern would be far better addressed if you were not such a blight.
Happy decade of decadence.
Chump.
Hmmm…. I’m no longer sure.. It could be I thought I was in another article.
I think MM was hinting at this at 5.0 but to expound further.
Page 9: “The principal problem with Seagate’s two-part test is that it … excludes from discretionary punishment many of the most culpable offenders, such as the “wanton and malicious pirate” who intentionally infringes another’s patent — with no doubts about its validity or any notion of a defense — for no purpose other than to steal the patentee’s business.”
Really? How does that work?
The Seagate test reflects, in many respects, a sound recognition that enhanced damages are generally appropriate under §284 only in egregious cases. That test, however, “is unduly rigid and it impermissibly encumber sthe statutory grant of discretion to district courts.”
Page 8: “At the same time, “[d]iscretion is not whim.”
This opinion seems to be running true to form, e.g., KSR. A CAFC rule, like TSM, is useful but too rigid. What’s needed is common sense, albeit with a requirement to articulate sound reasoning.
Also note that the standard of proof was lowered from clear and convincing to preponderance. I do not recall why it was placed at clear convincing in the first place. Does anybody?
In the IEEE brief filed in MCM Portfolio LLC v. Hewlett-Packard, the IEEE argues that a heightened standard of proof is required when the risks are asymmetric, where would the one party has little to lose and the other party a great deal to lose, such that the standard must be set such that the a wrong answer is unlikely. Thus when a party is accused of a crime where his life, liberty or property are at stake, the standard is beyond reasonable doubt. Furthermore, when the validity of a patent is at issue, the burden is set a clear convincing to avoid a wrong answer.
In the case of willful infringement, on the one hand we have a willful violation of the patentee’s rights and on the other the risk of treble damages. The risks seem symmetric to me. Thus it is a wonder that the Federal Circuit ever came up with clear convincing evidence as standard of proof.
Troubled: This opinion seems to be running true to form, e.g., KSR. A CAFC rule, like TSM, is useful but too rigid. What’s needed is common sense, albeit with a requirement to articulate sound reasoning.
Right. My comment in 5 is directed to the judicial determination that comes after the determination that the losing defendant’s behavior was “egregious” such that some measure of enhanced damages are warranted.
The question is: what level of articulation of “reasoning” will suffice to insulate a judge’s determination of precisely how much “enhancement” is appropriate? I suspect it will be enough for a judge to say “Because behavior a, b and c was egregious, treble damages are appropriate.” What’s odd about that result, however, is that treble damages are themselves just an option. The statute says “up to 3x the amount”. So it would seem that judges need to articulate some reason that they chose “3x” rather than “1.5x”. My hunch is that a decision to award 1.5x damages will be scrutinized more closely than a decision to award 3x (i.e., the judge will need “better reasons” to award less than the maximum than he/she needs to award the maximum).
I think judges/ district courts/ CAFC will either (1) start from 3 and work down with mitigating factors considering the aggravating factors, or (2), and the more likely scenario, start at 1 and work up with aggravating factors considering the mitigating factors.
In the environmental law arena, where Congress has sanctioned $X amount per day for a continuing violation (e.g., violation of clean water act, up to $35k (I think) per day for a violation), Courts do one of those two frameworks. Either way is fine as long as it is reasoned.
I guess my point is that District Courts are used to exercising this kind of discretion.
District Courts are used to exercising this kind of discretion.
One would hope so! We’ll find out soon enough, I’m sure.
First, note that this is a pro-patent-owner Sup. Ct. decision overruling a less pro-patent-owner decision of the Fed. Cir.
Secondly, this decision of the Sup. Ct. was so widely predicted after its prior and closely similar issue Octane Fitness decision that one wonders why the Fed. Cir. did not itself take an enhanced damages case en banc rather than continuing to apply inconsistent law and waiting for another unflattering unanimous reversal?
It is almost as if they have become accustomed to the fire-hose treatment….
(The training of simians in a cage, reaching for bananas)
Paul: “[O]ne wonders why the Fed. Cir. did not itself take an enhanced damages case en banc rather than continuing to apply inconsistent law and waiting for another unflattering unanimous reversal?”
Indeed.
Then we have other examples such as not overturning Aukerman in view of Petralla, and Patlex overruling McCormick Harvesting, a Supreme Court case. We even have the Federal Circuit itself overruling Patlex in Lockwood and refusing to follow Lockwood.
Now just why would the Federal Circuit not following controlling Supreme Court cases law? Why did they not follow Benson? Whey did they not follow Bilski ’till Allice. Why?
Well, for one reason, Paul, the courts seems to be highly influenced by the patent bar; and the patent bar, or at least a large segment of the patent bar, has viewed the Supreme Court with alarm since the ’30s and ’40s. There is not a day goes by where the likes of Gene Quinn, anon or Night Writer does not pound that drum. Quinn is on record for the Federal Circuit to openly defy the Supreme Court.
And, Paul, you too are somewhat guilty of this in the case of IPRs, are you not?
Your “selectivity” is appalling Ned.
MY attorney oath does not place the Supreme Court above the Constitution.
I suggest that you check yours – maybe for the first time, eh?
Anon, having a belief that the law should be X, when it is in fact Y, is not a proper legal defense.
Ned,
Your reply here is a non-sequitur.
Let me know what your particular state attorney oath says about placing the Supreme Court above the Constitution.
Your “feality” is rather fickle and reflects the typical affliction of yours of “6-is-a-genius-because-he-agrees-with-me.”
Let me know what your particular state attorney oath says about placing the Supreme Court above the Constitution.
Last time I checked the Supreme Court gets to intepret Federal statutes. And they’ve done that numerous time with respect to the patent statutes.
But the patent maximalists (i.e., “anon” and his quail-inhaling c0horts) just can’t wrap their heads around that. Nope. After all, nobody is as important as they are. They invent everything! And “Big Corp” copies them. Yup. They told us so. And they’re very serious people.
Interpret is just not the same as re-write.
But then again, you probably already knew that, eh?
Interpret is just not the same as re-write.
And remember folks: if it was up to super serious “anon”, he’d take us back to State Street Bank.
Because that worked out so wonderfully.
LOL
But he’s super serious! We all have to pay attention to him and his quail-inhaling hero.
The “poker-tell” of “so serious” compounded by the fact that I have NEVER banked on State Street – you funny (but not in the way that you think)
No, I am not.
What aspect of the IPR statute [or any other part of the AIA] has yet even been contested by the Fed. Cir.? Or even reached the Sup. Ct. after being supported by the Fed. Cir. other that Cuozzo? And Cuozzo is only a challenge to two PTO statutory interpretations of the IPR statute.
That is completely different from expressing a realistic view of the indisputably very low odds of the Sup. Ct. accepting and supporting a constitutional challenge to a federal statute that no lower court has sustained, rather than missleading lay readers as to those low odds.
The CAFC, in fact, just affirmed various aspects of IPR proceedings this morning (e.g., no due process issues raised by the presentation of new references/evidence of non-obviousness which weren’t cited at the initiation stage, as long as the patentee has an opportunity to respond).
It was also interesting that the Fed. Cir. recently held that late changing of the claim interpretation in an IPR proceeding without providing an opportunity to respond, was a violation of the APA statute, rather than raising it to a Constitutional due process issue, as they could have.
[A full opportunity to respond in an IPR should include being able to cross-examine the authors of any new declarations?]
As they could have…?
I don’t think so – those were Office procedures and not the legislative statutes under review, eh?
“anon” those were Office procedures and not the legislative statutes under review, eh?
Are you suggesting that Office procedures can’t violate the Constitution? If not, then it’s unclear what you’re talking about. Again.
Not at all – but there is a point to be distinguished as to when the APA can serve as a basis and when it cannot.
Think before you v0m1t, please.
there is a point to be distinguished
ROTFLMAO
Keep digging, “anon.” You’re a super serious person!
Yay / “so serious”
Happy Decade of Decadence
Paul, the decision at one point said that the point of the trial was to introduce new evidence.
Yes and No. Petitioner’s entire case must be presented in the petition. The petitioner has no right to add new evidence except on motion.
Rule 42.122(b)
It is the patent owner that has the right to present evidence in rebuttal. While the petitioner has a right to reply, that reply cannot introduce new evidence or argument. Rule 41.122(b).
When the Reply DOES present new evidence and argument, the Feds say the patent owner can move to strike otherwise it appears that that the PTAB can rely on it. That seems contrary to the rules. The patent owner should be able to respond at oral argument that the reply contained argument and evidence beyond the patent owner’s response. That is what apparently happened here. Nevertheless, the PTAB did rely on it, and the patent owner lost.
The result of this case is that the Patent owner will have to move to strike reply briefs that add or rely on new evidence or argument exceeding the scope of the opposition brief and evidence.
Petitioner’s entire case must be presented in the petition.
Give everyone a break, please. The petitioner does not need to pre-answer the patentee’s replies. If the patentee replies with some bizarre dust kicking, turf-twisting bal0ney — which is very typical behavior when the patentee is presented with good evidence that their patent is junk — then the petitioner is certainly entitled to address that bal0ney. The only “showing” that’s possibly needed is a statement that the patentee has presented an argument that doesn’t appear in the specification or the prosecution history of the patent. But most of the time that’s going to be self-evident to everyone involved (the patentee, of course, will have its head buried in the sand).
When the Reply DOES present new evidence and argument, the Feds say the patent owner can move to strike otherwise it appears that that the PTAB can rely on it. That seems contrary to the rules.
It’s not contrary to the rules at all.
MM, the Rules forbid anything in a reply that is beyond addressing the opposition (patent owner’s statement).
Regarding “bizarro” arguments and evidence, the petitioner has the right to cross declarants and to comment on such evidence and arguments based thereon. What they do not have a right to do is introduce new evidence except with leave of the court, and that leave has a very high showing before it can be introduced.
What you argue for here, MM, is that petitioners should be able to get away with violating the rules. That is illegal and immoral, would you not agree?