Supreme Court to Review Willful Infringement under 35 U.S.C. § 284

Last week, the U.S. Supreme Court granted certiorari to review the standard for willful infringement under 35 U.S.C. § 284. The Court was specifically asked to reject the rigid two-part test set forth by the Federal Circuit in In re Seagate, 497 F.3d 1360 (Fed. Cir. 2007), which requires the court to determine whether an alleged infringer: (1) acted despite an objectively high likelihood that its actions constituted infringement of a valid patent; and (2) this objectively-defined risk was either known or so obvious that it should have been known to the accused infringer.

In the present matter, Halo Electronics Inc. (“Halo”) sued Pulse Electronics Inc. (“Pulse”) alleging that Pulse infringed its patent by shipping infringing product into the U.S. and inducing others to import end products containing the infringing product into the U.S. Halo further alleged that Pulse’s infringement was willful and, thereby, sought enhanced damages under 35 U.S.C. § 284.

At trial, a jury determined that Halo’s patent was valid and that Pulse infringed. The jury also found by clear and convincing evidence that the infringement was willful. Nevertheless, the district court set aside the jury award for willful infringement, finding that infringement was not willful because the first prong of the Seagate test was not met.

On appeal, the Federal Circuit affirmed the district court. The Federal Circuit reasoned that the objective prong of the Seagate inquiry for willfulness was not satisfied by Halo because Pulse had raised a substantial question of the patent’s obviousness and that the obviousness defense was not objectively unreasonable. In concurring, although Judges O’Malley and Hughes felt compelled to affirm based on Federal Circuit precedent, they noted an anomaly: that precedent also conflicted with the Supreme Court’s intervening decision in Octane Fitness, LLC v. ICON Health & Fitness, Inc., 134 S. Ct. 1749 (2014). The concurring judges reasoned that the Seagate test for enhanced damages under 35 U.S.C. § 284 was ‘analogous’ to the Federal Circuit’s now rejected test for attorney fees under § 285 and, thus, the rigid test should no longer apply for willful infringement.

In its petition for certiorari, Halo asks the Court to address this anomaly, namely to relax the “rigid” test on willfulness in view of the Court’s decision in Octane Fitness. By doing so, Halo urges the Court to construe a defendant who infringes in bad faith as a willful infringer. Halo argues “despite th[e] broad language [of the statute], the Federal Circuit has grafted a willfulness requirement onto the statute . . . . It has then stacked on additional requirement in the statute, i.e., that willfulness can be proven only under the same rigid two part objective/subject test that this Court rejected in Octane for the similarly flexible § 285.”

Gibbons will continue to monitor further developments in this case and publish any major developments.

Samuel H. Megerditchian is Counsel in the Gibbons Intellectual Property Department.
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