Supreme Court Relaxes Standard on Enhanced Damages for Patent Infringement

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On June 13, 2016, the Supreme Court of the United States decided a case (Halo Electronics, Inc. v. Pulse Electronics, Inc.) that surrounds the potential for patent infringement damage awards up to three (3) times the amount found as actual infringement damages. This extraordinary damage multiplier arises under Federal Law (35 U.S.C. 284) and is meant to punish egregious infringement behavior. In order to enforce this law, the Federal Courts previously adopted a two-part test for determining whether such egregious or willful infringement behavior was exhibited, and thus an enhanced damage award would be appropriate.

In this case, the Supreme Court ruled that the two-part test adopted by the Federal Courts is inconsistent with the Federal Law. Specifically, the Supreme Court declared that the test is unduly rigid and impermissibly encumbers the degree of discretion that should be provided to the Courts. The Supreme Court also rejected the two-part test because it inappropriately requires the elevated evidentiary standard of "clear and convincing evidence," as opposed to the lower "preponderance of the evidence" standard.

The result of this case is to lower the burden on patent litigation plaintiffs to obtain triple damages against a defendant who exhibits egregious infringement behavior, even when the infringement is conducted without an "objective" recklessness to the conduct of the infringing party.

An additional article on this topic can be found here.