Supreme Court to Review the Federal Circuit’s Test for Willful Patent Infringement


At the end of October, the Supreme Court announced that it will review the issue of when enhanced damages may be awarded to a patentee with a finding of infringement.  Stryker Corp. v. Zimmer, U.S., No. 14-1520, Halo Electronics, Inc. v. Pulse Electronics, Inc., U.S., No. 14-1513.

In 2007, the Federal Circuit adopted a two-part test for determining willful infringement.  Patentees must show that (1) “the infringer acted despite an objectively high likelihood that its actions constituted infringement of a valid patent,” and (2) the infringer knew, or should have known, the risk of infringement.  In re Seagate Technology LLC, 497 F.3d 1360, 1371 (Fed. Cir. 2007).  The test is rigid and has made it extremely difficult for a patentee to prove willfulness.  Generally, patentees, including those in the Stryker and Halo cases, have a difficult time proving the objective prong.  This has led to very few findings of willful infringement over the past few years.  Thus, the Stryker and Halo petitioners are requesting that the Court abandon this test, and allow district courts to have broad discretion to grant a damages award, as allowed under the Patent Act.  35 U.S.C. § 284. 

The current petitions are based on two Supreme Court decisions from last year, in which the Supreme Court struck down a similar two-part test set forth by the Federal Circuit for determining attorneys’ fees.  Highmark Inc. v. Allcare Health Mgmt. Sys., Inc., 134 S. Ct. 1749 (2014), Octane Fitness, LLC v. ICON Health & Fitness, Inc., 134 S. Ct. 1749 (2014).  Specifically, the Supreme Court determined the second prong of the two-prong test, which included an objective and subjective determination, was unduly rigid.  The Supreme Court also indicated that the Federal Circuit was applying the wrong test because it improperly imported the subjective and objective requirements from a sham litigation case, which was unrelated to patent law.  See Professional Real Estate Investors, Inc. v. Columbia Pictures Industries, Inc., 508 U.S. 49 (1993).   Because the Federal Circuit relied on the same underlying case when it set forth the two-prong willfulness standard, the current petitioners argue that the willful infringement test set forth in In re Seagate Technology is similarly unduly rigid, should have never been applied by the Federal Circuit, and should be stricken.

The Supreme Court will also consider whether the evidentiary standard relating to deciding willful infringement should be upheld.   In Octane, the Court determined the proper standard for attorneys’ fees is preponderance of evidence.  Octane Fitness, 134 S. Ct. at 1758.  Thus, the petitioners also requested the Court review whether the evidentiary standard applied to willful infringement should likewise be lowered from clear and convincing evidence to the preponderance of evidence standard.

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