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Halo Elecs., Inc. v. Pulse Elecs., Inc.

Supreme Court of the United States

February 23, 2016, Argued; June 13, 2016, Decided 1

Nos. 14-1513, 14-1520

Opinion

 [*1928]  [****1763]   Chief Justice Roberts delivered the opinion of the Court.

Section 284 of the Patent Act provides that, in a case of infringement, courts “may increase the damages up to three times the amount found or assessed.” 35 U.S.C. §284. In In re Seagate Technology, LLC, 497 F. 3d 1360 (2007) (en banc), the United States Court of Appeals for the Federal Circuit adopted a two-part test for determining when a district court  [**286]  may increase damages pursuant to §284. Under Seagate, a patent owner must first “show by clear and convincing evidence that the infringer acted despite an objectively high likelihood that its actions constituted infringement of a valid patent.” Id., at 1371. Second, the patentee must demonstrate, again by clear and convincing evidence, that the risk of infringement “was either known or so obvious that it should have been known to the accused infringer.” Ibid. The question before us is whether this test is [***7]  consistent with §284. We hold that it is not.

Enhanced damages are as old as U. S. patent law. The Patent Act of 1793 mandated treble damages in any successful infringement suit. See Patent Act of 1793, §5, 1 Stat. 322. In the Patent Act of 1836, however, Congress changed course and made enhanced damages discretionary, specifying that “it shall be in the power of the court to render judgment for any sum above the amount found by [the] verdict . . . not exceeding three times the amount thereof, according to the circumstances of the case.” Patent Act of 1836, §14, 5 Stat. 123. In construing that new provision, this Court explained that the change was prompted by the “injustice” of subjecting a “defendant who acted in ignorance or good faith” to the same treatment as the “wanton and malicious pirate.” Seymour v. McCormick, 57 U.S. 480, 16 How. 480, 488, 14 L. Ed. 1024 (1854). There “is no good reason,” we observed, “why taking a man’s property in an invention should be trebly punished, while the measure of damages as to other property is single and actual damages.” Id., at 488-489, 16 How. 480, 488, 14 L. Ed. 1024. But “where the injury is wanton or malicious, a jury may inflict vindictive or exemplary damages, not to recompense the plaintiff, but to punish the defendant.” Id., at 489, 16 How. 480, 488, 14 L. Ed. 1024.

The Court followed the same approach in other decisions applying [***8]  the 1836 Act, finding enhanced damages appropriate, for instance, “where the wrong [had] been done, under aggravated circumstances,”  [*1929]  Dean v. Mason, 61 U.S. 198, 20 How. 198, 203, 15 L. Ed. 876 (1858), but not where the defendant “appeared in truth to be ignorant of the existence of the patent right, and did not intend any infringement,” Hogg v. Emerson, 52 U.S. 587, 11 How. 587, 607, 13 L. Ed. 824 (1850). See also Livingston v. Woodworth, 56 U.S. 546, 15 How. 546, 560, 14 L. Ed. 809 (1854) (“no ground” to inflict “penalty” where infringers were not “wanton”).

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136 S. Ct. 1923 *; 195 L. Ed. 2d 278 **; 2016 U.S. LEXIS 3776 ***; 118 U.S.P.Q.2D (BNA) 1761 ****; 84 U.S.L.W. 4386; 26 Fla. L. Weekly Fed. S 246

HALO ELECTRONICS, INC., Petitioner (No. 14-1513) v. ZIMMER, INC., et al. STRYKER CORP., et al., Petitioners (No. 14-1520)v. ZIMMER, INC., et al.

Notice: The LEXIS pagination of this document is subject to change pending release of the final published version.

Prior History:  [***1] ON WRITS OF CERTIORARI TO THE UNITED STATES COURT OF APPEALS FOR THE FEDERAL CIRCUIT

Stryker Corp. v. Zimmer, Inc., 782 F.3d 649, 2015 U.S. App. LEXIS 7950 (Fed. Cir., 2015)Halo Elecs., Inc. v. Pulse Elecs., Inc., 769 F.3d 1371, 2014 U.S. App. LEXIS 20241 (Fed. Cir., 2014)

Disposition: No. 14-1513, 769 F. 3d 1371; No. 14-1520, 782 F. 3d 649, vacated and remanded.

CORE TERMS

infringement, patent, enhanced damage, district court, damages, cases, recklessness, willful, wanton, Pulse, egregious, awards, deliberate, punitive, treble damages, patent law, patentee, Amici, misconduct, malicious, limits, pirate, clear and convincing evidence, abuse of discretion, Electronics, innovation, invention, licensing, quotation, advice

Patent Law, Remedies, Damages, Increased Damages, Jurisdiction & Review, Standards of Review, Evidence, Burdens of Proof, Preponderance of Evidence, Standards of Review, Abuse of Discretion, Infringement Actions, Burdens of Proof, Defenses, Inequitable Conduct, Elements