Posts Tagged: "patent damages"

The court decided to award enhanced damages in this case because of egregious behavior on behalf of Samsung, including attempts to copy the technology and demonstrably false testimony given by Samsung. For example, Samsung’s representatives testified under oath that they only became aware of Imperium IP’s patents in June 2014, when the infringement action was first brought to court. Depositions and other discovery proved this to be incorrect. One witness who worked at ESS Technologies, the company to which the ‘884 patent was first assigned, testified that Samsung sought specific information on anti-flicker and flash technology. It was also proven that Samsung had previously attempted to purchase the patents-in-suit from Imperium, concealing its identity through a patent broker. Instead of June 2014, the court found that Samsung knew about Imperium’s patents since at least April 2011.

In rejecting the objective prong of Seagate, the Court rejected the notion that a defendant may escape the specter of enhanced damages by asserting a defense that the defendant was unaware of at the time the infringement occurred. For example, the Court pointed out that under the Seagate test, “[t]he existence of . . . a defense insulates the infringer from enhanced damages, even if he did not act on the basis of the defense or was even aware of it.” Halo at 10. But, as the Court stated, “culpability is generally measured against the knowledge of the actor at the time of the challenged conduct.” Id. Moreover, in response to an argument by Pulse based on the Court’s earlier Safeco decision, the Court held that “[n]othing in Safeco suggests that we should look to facts that the defendant neither knew nor had reason to know at the time he acted.” Id. at 11.

In last week’s Halo Elecs. v. Pulse Elecs. decision, the Supreme Court unanimously rejected the Federal Circuit’s Seagate standard for awarding enhanced damages in patent cases under Section 284, finding the Federal Circuit’s two-part test “impermissibly encumbers the statutory grant of discretion to district courts.” Slip Op. at 9. The Supreme Court’s decision, which vacated and remanded, means that the award of treble damage may very well be reinstated in that case, and reversals of enhanced patent damages rulings – both awards and denial – may become less common.

Essentially, the Supreme Court told the Federal Circuit that they needed remedial reading lessons. The statute is clear: “may” means district courts have discretion. The Supreme Court also seemed instruct the Federal Circuit to stop making stuff up that clearly isn’t found within the statute. It is truly ironic, even downright funny, how the Supreme Court can so clearly see that the Federal Circuit is not being true to the simple, easy to understand, straight-forward terms of a statute but at the same time lack the capacity to similarly see that they are themselves doing the very same thing. If intellectual honesty means anything the Supreme Court would hold themselves to the same standard and stop applying judicial exceptions to patent eligibility that enjoy no textual support in the statute.

The chance of a court tripling damages for patent infringement has significantly increased. The Supreme Court, Halo Electronics, Inc. v. Pulse Electronics, Inc., et al. and Stryker Corporation, et al. v. Zimmer, Inc., et al., granted district courts more discretion to award enhanced damages for willful patent infringement. However, the Court’s recent decision could have unintended consequences. The Supreme Court’s relaxation of the requirements for willful infringement could be a game changer for patent trolls.

Today, the U.S. Supreme Court issued an opinion with large ramifications for patent holders and potential infringers alike. Deciding the consolidated cases of Halo Electronics, Inc. v. Pulse Electronics, Inc. and Stryker Corp. v. Zimmer, Inc., the Court ruled that enhanced patent damages are appropriate to punish an infringer’s egregious, deliberate, or flagrant patent infringement. The Court rejected the Federal Circuit’s Seagate test, which had provided an accused infringer with a complete defense to a charge of willfulness (and thus enhanced damages) if the infringer was able to construct, even years after the infringement began, a reasonable argument that the patent was invalid or not infringed, even where the infringer in fact had acted in bad faith. The Court also lowered the required burden of proof from clear and convincing evidence to a preponderance of the evidence. At the same time, it seems clear that mere negligence is not enough to establish entitlement to enhanced damages. While the Supreme Court referred to the 180 years of enhanced damages jurisprudence since the Patent Act of 1836 as setting forth the appropriate approach, it may take several years of additional litigation for predictability to emerge from today’s decision.

Recent decisions from the U.S. Court of Appeals for the Federal Circuit regarding damages available in design patent cases highlight the court’s divergence from its damages jurisprudence in the utility patent context – specifically, the lack of an apportionment requirement between patented and unpatented portions of an infringing product. While this may make design patents increasingly desirable, the Supreme Court’s decision to review the issue now raises the possibility that the discrepancy will be resolved.

Many defendants to patent troll suits have never heard of the patent owner or its patent(s), and will have never received notice of infringement until service of the lawsuit. Typically patent trolls have no product to mark, since they are non-manufacturing entities. In that situation, the patent troll must take reasonable steps to ensure that its licensees mark their licensed products – if it has licensees. If a patent troll plaintiff has not required its licensees to mark, the defendant may be able to defeat past damage claims without spending thousands in legal fees mounting a defense on the merits to an infringement claim. This, at the very least, minimizes potential exposure to a patent infringement defendant.

2015 is the second straight year in which the list of top plaintiffs has been led by eDekka LLC, a patent holding company, which at times has been accused of exhibiting trolling behaviors… Atop this list was the U.S. District Court for the Northern District of California (N.D. Cal.), which between 2005 and 2015 has awarded more than $2.1 billion in compensatory damages over the course of 2,169 cases filed. Following behind them was the U.S. District for the Southern District of California (S.D. Cal.), U.S. District Court for the Southern District of New York (S.D.N.Y.), and followed in fourth place by E.D. Tex. Median damages for cases terminating between 2000 and 2015 showed a different story, however, as that list was topped by the District of Delaware, which had a median award of $10.46 million in 40 cases with damages. The Eastern District of Texas follows in second with a $7.68 million median damages award and in third is the U.S. District Court for the Eastern District of Virginia (E.D. Va.), with a median award of $2.98 million. After that, there’s a steep drop and every other district is showing a median damages award of less than $1 million.

On Monday, March 21, 2016, the United States Supreme Court accepted certiorari in Samsung Electronics v. Apple, Inc., which relates to how much Samsung owes for infringing Apple design patents. The question accepted by the Supreme Court is: “Where a design patent is applied to only a component of a product, should an award of infringer’s profits be limited to those profits attributable to the component?”

The victory, if it stands, will encourage more design patent infringement claims, and Apple will likely find itself defending against similar suits in the not so distant future. On December 14, Samsung filed a petition asking the Supreme Court to hear an appeal in the case. Given the economics of future litigation, Apple might quietly hope that the Court takes the opportunity to articulate the appropriate standard for awarding total profit damages for infringement.

It is that time once again when we look back on the previous year in preparation to close the final chapter in order move fresh into the year ahead. 2015 was a busy year in the patent world, although change was not as cataclysmic as it was in 2013 when the United States became a first to file country or in 2014 when the Supreme Court issued the Alice v. CLS Bank decision. It was still an interesting year nevertheless. As I close out 2015, I’ve reviewed my patent articles and have come up with my own top 10 patent moments for 2015. They appear in chronological order as they happened throughout the year.

The Supreme Court recently decided to review a pair of cases that challenge the Federal Circuit’s willful infringement test. The two cases, Halo Electronics, Inc. v. Pulse Electronics, Inc, (14-1513) and Stryker Corporation v. Zimmer, Inc. (14-1520), are drawing comparisons from commentators to the Court’s Octane Fitness, LLC v. ICON Health and Fitness, Inc. ruling last term based on the similar structure of the tests and statutory language reviewed in both cases. However, another recent SCOTUS case dealing with induced infringement, Commil USA, LLC v. Cisco Systems, Inc., may also shed some light on how the Court will think about willful infringement, since both doctrines center around the defendant’s intent.

Patent damages generally, and enhanced damages specifically, are a patent political powder keg because there are so many corporations that are users of technology. These technology using, or technology usurping, corporations would rather not have to worry about the consequences of infringing patents. This has caused the so-called infringer lobby to put a premium on the issue of damages, specifically advocating positions that would minimize patent damages. Indeed, the infringer lobby has done an excellent job weakening patent rights and impairing the enforceability of patents over the last decade, both in the federal courts and on Capitol Hill. The Supreme Court has even several times mentioned the patent troll problem without the issue being before the Court and neither party being accused of being a troll.

The United States Supreme Court accepted certiorari in two patent cases, which will require the court to determine whether district court judges should have discretion to award victorious patentees with enhanced damages under 35 U.S.C. § 284. While predicting the outcome of a Supreme Court decision is always speculative, this case should be one of the easiest outcomes to predict ever. Unless the Supreme Court fundamentally alters its statutory interpretation from the Octane Fitness case, arbitrarily creating a distinction without a difference, the Supreme Court will grant district courts the same broad discretion on enhanced damages that they have been given with respect to awarding attorneys fees.