US Supreme Court Rejects “Unduly Rigid” Test for Awarding Enhanced Patent Damages

On June 13, 2016, in Halo Electronics, Inc. v. Pulse Electronics, Inc., the US Supreme Court (the Court) rejected the Federal Circuit’s two-part Seagate test for awarding enhanced patent damages under 35 USC § 284 as being “unduly rigid”.  The Court held that both the substantive requirement for “objective recklessness” and the “clear and convincing” standard of proof required by Seagate were inconsistent with the intent of the statute.

In particular, the Court noted the language of § 284 contains no explicit limit for conditions on when enhanced damages are appropriate.  It criticized that the Federal Circuit’s “objective reckless” test would allow a “wanton and malicious pirate” to escape the sanctions of enhanced damages intended “for egregious infringement behavior.”  The Court stated that  § 284 “allows district courts to punish the full range of culpable behavior” and that the courts should exercise their discretion taking into account the particular circumstances of each case in deciding whether to award enhanced damages and in what amount. 

The Court also held that “the clear and convincing” standard of proof is inconsistent with § 284 and that the evidence standard should always be “a preponderance of evidence”.

The Court vacated the judgments of the Federal Circuit and remanded the cases for proceedings consistent with its opinion.