On June 13, 2016, in a much-anticipated joint holding in Halo/Stryker, [1] the Supreme Court unanimously overturned the Federal Circuit’s rigid test for willful infringement under Seagate and conferred discretion on district courts, “narrowed” by nearly 200 years of judicial practice, to award enhanced damages to patent owners under 35 U.S.C. § 284 for “egregious cases of culpable behavior.” The High Court’s opinion was authored by Chief Justice Roberts, with Justices Breyer, Kennedy and Alito concurring.
Although the possibility of enhanced damages on a theory of willful infringement would strike fear into the heart of any accused infringer, the two-pronged test for willful infringement previously promulgated by the Federal Circuit proved challenging in practice for patent owners. The Seagate standard, as it was applied prior to the Supreme Court’s decision in Halo/Stryker, required the patent owner to prove that the accused infringer’s conduct was objectively and subjectively culpable, and it needed to do so by a heightened standard of clear and convincing evidence (compared with the preponderance of the evidence standard needed to prove patent infringement). With respect to the objective component, patent owners needed to show that the accused infringer’s defenses were objectively unreasonable – meaning that an accused infringer with effective legal counsel could avoid willful infringement by demonstrating, regardless of the defendant’s culpable pre-litigation conduct, that its defenses raised during the litigation were objectively reasonable.