Posts Tagged: "willful patent infringement"

Practitioners dealing with a magistrate judge’s report and recommendation should be sure to preserve objections for appeal, since failing to object may lead to a more deferential, plain error standard of review, depending on the applicable circuit law. Further, in seeking a preliminary injunction, evidence of harm from pre-issuance of the asserted patent is relevant to show likelihood of irreparable harm from similar injuries in the future.

After Halo, courts appear to be breathing new life into claims for willful patent infringement and enhanced damages claims. In fact, since Halo’s new standard took effect a few months ago, juries found willful infringement in three out of four cases where they returned a verdict of infringement. However, as discussed below, there are steps a defendant can take to protect itself against a finding of willful infringement.

For accused infringers relying on invalidity defenses that were presented in an inter partes review (“IPR”) to fight willful infringement allegations in district court, the shift in IPR success rates can spell trouble. Evidence of an IPR in which all asserted claims were not petitioned or some of the challenged claims were not invalidated in a final written decision can undermine willful infringement defenses. And now that Halo v. Pulse has chipped away at the high-bar of the Seagate objective prong in favor of a fact-intensive evaluation, willfulness is more likely to be a centerpiece of jury trials. See Halo Elecs., Inc. v. Pulse Elecs., Inc., No. 14-1513, 2016 WL 3221515 (U.S. June 13, 2016); In re Seagate Tech. LLC, 479 F.3d 1360 (Fed. Cir. 2007) (en banc). As a result, evidence regarding the strength of and reliance on IPR-presented defenses is more likely to come into the record at trial. Petitioner-defendants need to prepare early for the possibility that evidence of perceived IPR failures will be presented to jury to avoid being left with no admissible evidence disproving willful infringement. A well-prepared defendant can even turn the tables on the patent owner by using the perceived failures to its own advantage in front of the jury.

The Federal Circuit again addressed whether Pulse’s domestic sales activities were either a sale or an offer for sale in the U.S. While the patent statute does not define “sale,” the Court has previously held that it carries its ordinary meaning, including the transfer of title or property. Further, a “sale” must be understood in view of the strong policy against extraterritorial liability for patent infringement. Here, no sale occurred in the U.S., because the final formation of a contract and all elements of performing the contract occurred outside the U.S.

Under the Federal Circuit’s reading of Halo, companies can no longer rely solely on reasonable litigation-inspired defenses to prevent a finding of willfulness… The Federal Circuit also found that the district court abused its discretion in failing to issue a permanent injunction. While there is a public interest in safer generators, there is also a public interest in the security of patent rights. The patent owner presented evidence that it had sufficient production abilities to satisfy market demand for the product. Finally, in similar contexts, Congress has expressly indicated that permanent injunctions may issue to prevent infringement of other life-saving goods like pharmaceuticals.

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.

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.

Earlier today, in a unanimous decision delivered by Chief Justice John Roberts in Halo Electronics, Inc. v. Pulse Electronics, Inc., the United States Supreme Court did what much of the patent world expected it would do, which is overrule the Federal Circuit’s “unduly rigid” test for the awarding of enhanced damages for willful damages put in place by In re Seagate Technology, LLC, 497 F. 3d 1360, 1371 (2007)(en banc).

If the allegations in the Valencell complaint against Apple proves to be true, the dispute between Valencell and Apple yet another example of a small company that was lead astray by a larger company pretending to want to license their technology only to get a better look so they could shamelessly copy without regard to whether they infringed any existing patents. Indeed, the complaint says that would be in keeping with Apple’s long standing policy, quoting Steve Jobs as having said that Apple has “always been shameless about stealing great ideas.” See Complaint paragraph 14.

So it now looks like this: if you are a patent owner and feel that your rights have been encroached upon, you now have to assume there will be a challenge to their validity by a potential licensee through an Inter Partes Review (IPR). If you are one of the lucky few (~25%) who survive such a challenge with at least one valid patent claim, you then have to expect an appeal. Assuming you win that appeal, then the real court battle starts in earnest and you’ll have to face what has now become a $3-5M ordeal in legal fees to get through a full trial on the merits and the routinely filed appeal should you beat all odds and win. Treble damages for willful infringement have been rarer than a dodo bird sighting and even winning does not mean you will collect your money any time soon, as the Apple-Samsung saga has recently shown.

Since the start of the Supreme Court’s term in October, the Court has already agreed to hear two patent cases, Halo Electronics, Inc. v. Pulse Electronics, Inc. and Stryker Corp. v. Zimmer, Inc. Both cases address the issue of willful infringement and when it is appropriate for a court to award enhanced damages under 35 U.S.C. § 284. The only question that remains is whether the Court will continue its recent trend of taking three or more patent cases a term, or whether it will revert to its longer term average of accepting only one to two patent cases. Against the wider backdrop of the Supreme Court’s shrinking merits docket, it is notable that patent law consistently draws the attention of the Court under Chief Justice Roberts. Here we take a look at four cert petitions raising patent law issues, and handicap the odds of being granted.

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.

The STRONG Patents Act appears to be overwhelmingly favorable to innovators and patent owners. This legislation stands in stark contrast with the Innovation Act submitted in the House by Congressman Bob Goodlatte (D-Va) and shows a very different, alternative vision for the patent system.