Supreme Court could change way patent damages are awarded

The Supreme Court on Monday agreed to hear two patent infringement cases that could change the way judges and juries determine whether to award damages. 

The court consolidated a pair of cases from parties who argue the court’s current damages test is too rigid and conflicts with the plain language of the Patent Act. 

{mosads}They argue the Supreme Court struck down an equally rigid test last year, which determined when courts should force the loser of patent litigation to pay a winner’s attorney fees. 

The first case the court agreed to hear is Halo Electronics v. Pulse Electronics, which deals with small transformers in circuitboards that are included in computers and other products. Halo prevailed in a patent infringement suit and was awarded $1.5 million from a jury.

The second case is Stryker Corp. v. Zimmer, which deals with a type of medical device that helps clean out wounds during surgery. Stryker prevailed in alleging infringement and was initially awarded $70 million in damages. 

Halo and Stryker are urging the Supreme Court to relax the “rigid” test used to determine whether increased damages are necessary, hoping to score a bigger payout.  

The Patent Act says courts “may increase the damages up to three times the amount found or assessed.” 

Courts have traditionally only awarded those extra damages if an infringing party acted in bad faith and had no reasonable basis for its position. But some argue that is too rigid and does not mesh with the legislative text. 

They argue that the Supreme Court should follow a precedent it set in the Octane Fitness case decided last year, which struck down a similarly rigid court test that determined when to award legal fees because it “superimposes an inflexible framework onto statutory text that is inherently flexible.”

Courts are allowed to force the loser of patent litigation to pay the winner’s legal fees in “exceptional cases.” And the Octane Fitness case relaxed the interpretation of “exceptional,” giving the green light for more judges to award fees. 

That past case plays a prominent role in the battle over patent litigation reform in Congress, which includes a provision to strengthen fee shifting. However, opponents of broad reform from Congress argue legislation could be rendered unnecessary because the courts appear to be making some changes on their own.