Creating a More Certain Standard for Enhanced Patent Damages by Requiring Egregiousness as an Element in the Section 284 Analysis

by Brian Barnes

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Abstract

According to 35 U.S.C. § 284, district courts have the power to “increase the damages up to three times the amount found or assessed” by the jury in patent infringement cases where willful infringement occurred. Following the recent Supreme Court decision in Halo Electronics, Inc. v. Pulse Electronics, Inc., it is now less clear how courts are to go about deciding whether to exercise this power. Halo established that the decision lies within the discretion of the district court judge, but declined to give a more concrete standard than urging the judge to “take into account the particular circumstances of each case” and only increase damages in “egregious cases typified by willful misconduct.” This Note proposes a new standard that is consistent with the Halo framework that will bring more certainty to enhanced damages decisions.

Under this Note’s proposed standard, before an award of enhanced damages can be made, the jury must find that infringement was willful, and the judge must find that the infringement was egregious under the standards established by the Federal Circuit. The egregiousness of the infringement is an explicit element that must be established before enhanced damages can be awarded. After these two elements are satisfied, the judge would have the discretion to award enhanced damages depending on the circumstances of the case. The egregiousness element is a mixed question of fact and law, so factual determinations made by the lower court are subject to clear error review and the overall legal determination of egregiousness is subject to de novo review by the Federal Circuit. This proposed standard would allow the Federal Circuit to reduce the uncertainty left by Halo , making it clear that egregiousness is required for every award of enhanced damages and providing a framework of specific factors district courts should weigh in making that determination.

Creating a More Certain Standard for Enhanced Patent Damages by Requiring Egregiousness as an Element in the Section 284 Analysis

by Brian Barnes

Click here for a PDF file of this article

Abstract

According to 35 U.S.C. § 284, district courts have the power to “increase the damages up to three times the amount found or assessed” by the jury in patent infringement cases where willful infringement occurred. Following the recent Supreme Court decision in Halo Electronics, Inc. v. Pulse Electronics, Inc., it is now less clear how courts are to go about deciding whether to exercise this power. Halo established that the decision lies within the discretion of the district court judge, but declined to give a more concrete standard than urging the judge to “take into account the particular circumstances of each case” and only increase damages in “egregious cases typified by willful misconduct.” This Note proposes a new standard that is consistent with the Halo framework that will bring more certainty to enhanced damages decisions.

Under this Note’s proposed standard, before an award of enhanced damages can be made, the jury must find that infringement was willful, and the judge must find that the infringement was egregious under the standards established by the Federal Circuit. The egregiousness of the infringement is an explicit element that must be established before enhanced damages can be awarded. After these two elements are satisfied, the judge would have the discretion to award enhanced damages depending on the circumstances of the case. The egregiousness element is a mixed question of fact and law, so factual determinations made by the lower court are subject to clear error review and the overall legal determination of egregiousness is subject to de novo review by the Federal Circuit. This proposed standard would allow the Federal Circuit to reduce the uncertainty left by Halo , making it clear that egregiousness is required for every award of enhanced damages and providing a framework of specific factors district courts should weigh in making that determination.