The patent statute provides that a patent owner can collect money damages from an infringer. Section 284 of the statute provides that “…the court may increase the damages up to three times the amount found or assessed.” In other words, the trial judge may award the patent owner money damages and may increase those damages by up to three times the patent owner’s actual money damages.
If section 284 were widely and uniformly applied, ‘enhanced damages’ would provide substantially increased money awards to patent owners and act as a substantial deterrent to patent infringement.
The statute appears to give the trial judge broad discretion to enhance a money damage award for patent infringement. The Federal Circuit Court of Appeals, which hears appeals of patent cases, has severely limited the discretion of judges to award enhanced damages. The Federal Circuit created a two-part test: (1) the infringer acted despite “an objectively high likelihood that its actions constituted infringement of a valid patent”, and (2) “that this objectively-defined risk was either known or so obvious that it should have been known to the accused infringer.” The Federal Circuit also concluded that whether the infringer’s conduct meets this ‘objective recklessness’ standard is a question for the judge, not the jury. As a result, an award of enhanced damages is difficult to obtain and, if obtained, is easy to reverse on appeal.
The problem with the Federal Circuit’s approach is that it is not supported by the statute and appears contrary to the recent Supreme Court decision of Octane Fitness v ICON in a closely related area; namely, whether a trial judge in a patent case may award attorney’s fees to the prevailing party.
As has happened several times in recent years, the U.S. Supreme Court has stepped into the fray and has accepted an appeal from two Federal Circuit cases on the question of enhanced damages. The two cases are Halo Electronics, Inc. v. Pulse Electronics, Inc. (14-1513) and Stryker Corporation v. Zimmer, Inc. (14-1520). As a general rule, when the Supreme Court accepts an appeal from a Federal Circuit patent case, it will reverse the Federal Circuit and write new law. We’ll be watching these consolidated cases closely.
— Robert Yarbrough, Esq.