Patent indemnification agreements, common in asset purchases, mergers and acquisitions, manufacturing, and patent licensing agreements, reduce the possibility of liability should a third party later assert its patent against the asset purchaser or licensee. However, entering into such agreements to mitigate risk can actually increase exposure. During the damages stage of patent infringement lawsuits plaintiffs often seek, with varying success, to bring in evidence of the existence of a defendant’s indemnification agreement to show that defendant knew of the patent and committed willful infringement. Thus, the very vehicle used to shift the risk of monetary liability can sometimes itself be used as a mechanism to enhance damage awards.
Accused patent infringers continue to breath easier as an ever more challenging path to treble damages persists. Recent decisions from the Court of Appeals for the Federal Circuit placed the objective prong of the In re Seagate test toward establishing willful infringement squarely with a judge. The impact on appeal has taken effect. Under 35 U.S.C. § 271(a), direct patent infringement is a “strict liability” offense. In certain cases, 35 U.S.C. § 284 may provide “up to three times” actual damages. A determination that the accused infringer willfully infringed is used to determine whether enhanced damages are warranted. Finisar Corp. v. DirecTV Group, Inc. 523 F.3d 1323, 1339 (Fed. Cir. 2008).
Bard Peripheral Vascular, Inc. v. W.L. Gore & Associates, Inc.: Federal Circuit Explains Willful Infringement
Last week, in Bard Peripheral Vascular, Inc. v. W.L. Gore & Associates, Inc., the Federal Circuit issued a precedential opinion concerning the willful infringement standard articulated in In re Seagate Technology, LLC (“Seagate”). After affirming the United States District Court for the District of Arizona, appellant Gore filed a petition for rehearing and rehearing en banc, challenging the District Court’s willfulness analysis. The Federal Circuit granted Gore’s petition for rehearing en banc for the sole purpose of determining the standard of review applicable to willful infringement.