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SCOTUS Takes on Enhanced Patent Damages

WASHINGTON (CN) - The U.S. Supreme Court took up and consolidated two patent cases Monday that challenge its recent precedent on enhanced damages.

Back in April 2014, the court had been mostly unanimous in its resolution of Octane Fitness v. Icon Health & Fitness, a case that involved the alleged infringement of elliptical machine components.

After successfully fighting off Icon's infringement allegations, Octane sought $1.3 million in fees, but both the trial court and Federal Circuit shot it down.

Citing Section 285 of the U.S. Patent Act, the court said fees could be awarded only in exceptional cases, where a lawsuit is deemed "objectively baseless" and filed in bad faith.

The Supreme Court reversed after finding that the Federal Circuit precedent used to determine what makes a case "exceptional" was inconsistent with the statute.

Enhanced damages are the subject of the two patent cases the Supreme Court picked up and consolidated Monday.

In the first case, Halo Electronics v. Pulse Electronics, the Federal Circuit affirmed a ruling out of Nevada that said Pulse neither directly nor willfully infringe patents owned by Halo involving electronic components.

The second case, Stryker v. Zimmer, ended with the Federal Circuit vacated treble damages that a Michigan court had awarded Stryker for infringing patents that concern "pulsed lavage devices."

Finding that the infringement at issue was not willful, the Federal Circuit also remanded the lower court's finding of exceptional case.

The Supreme Court did not issue any comment in taking up and consolidating the two cases Monday.

As to Halo's petition, it did note that it was considering only the question of "whether the Federal Circuit erred by applying a rigid, two-part test for enhancing patent infringement damages under 35 U.S.C. § 284, that is the same as the rigid, two part test this Court rejected last term in Octane Fitness, LLC v. ICON Health & Fitness, Inc., for imposing attorney fees under the similarly worded 35 U.S.C. § 285."

Stryker's petition contained two questions, both of which the court has agreed to answer.

One asks, "Has the Federal Circuit improperly abrogated the plain meaning of 35 U.S.C. § 284 by forbidding any award of enhanced damages unless there is a finding of willfulness under a rigid, two-part test, when this Court recently rejected an analogous framework imposed on 35 U.S.C. § 285, the statute providing for attorneys' fee awards in exceptional cases?"

The second asks whether a U.S. District Court has "discretion under 35 U.S.C. § 284 to award enhanced damages where an infringer intentionally copied a direct competitor's patented invention, knew the invention was covered by multiple patents, and made no attempt to avoid infringing the patents on that invention?"

Granting the cases one hour for oral argument, the justices also agreed to let groups led by Independent Inventor Groups and Nokia Technologies OY file briefs as amici curiae.

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