The Supreme Court issued a significant, unanimous, decision in the case of Halo v. Pulse – vacated and remanded the Federal Circuit’s limits to enhanced damages in patent cases. This decision replaces the strict Seagate test for enhanced damages with a test that is easier for patent owners to satisfy. Although the district courts now have discretion to award enhanced damages “as a sanction for egregious infringement behavior” the opinion makes it clear the damages are not to be given in “garden-variety cases”
“Section 284 gives district courts the discretion to award enhanced damages against those guilty of patent infringement. In applying this discretion, district courts are “to be guided by [the] sound legal principles” developed over nearly two centuries of application and interpretation of the Patent Act. Those principles channel the exercise of discretion, limiting the award of enhanced damages to egregious cases of misconduct beyond typical infringement.”
This case has been linked to that of Octane Fitness in which the court earlier rejected a Federal Circuit test for awarding attorney fees in favor of flexible discretion at the district court level.
It is worth noting the issue of enhanced damages tends to arise after the patent has been found enforceable and the accused found liable for infringement. If the plaintiff/patentee wants to recover enhanced damages the plaintiff/patentee needs to show by a preponderance of the evidence, the infringer was involved in “egregious activity beyond typical infringement”. The opinion mentions an ex post defense which is directed towards litigation and does not remove culpability. Rather, culpability will be measured based on the infringer’s knowledge at the time of the unlawful conduct.
You can read the entire decision here.