Supreme Court says patent opinion won’t open the gate for trolls

The Supreme Court said its decision to change the way judges award extra patent damages will not open the floodgates for patent trolls. 

In a unanimous opinion, the court on Monday threw out what it called an “overly rigid” test that judges had to go through when determining if a patent infringer should pay extra cash damages. 

{mosads}The decision went against a number of major technology companies who had filed friend-of-the-court briefs to argue that removing the test could give more ammunition to trolls, or companies that primarily use their patents to extract high licensing fees or settlements with the threat of litigation. 

Tech companies are the frequent target of patent lawsuits and have unsuccessfully lobbied Congress to change the laws surrounding infringement litigation.  

“They … worry that the ready availability of such damages will embolden ‘trolls,’ ” Chief Justice John Roberts wrote in his opinion, one of the few times the description has been used in a Supreme Court opinion. 

But Roberts sought to allay those concerns. 

“That balance can indeed be disrupted if enhanced damages are awarded in garden-variety cases,” he said. “As we have explained, however, they should not be. The seriousness of respondents’ policy concerns cannot justify imposing an artificial construct.”

Roberts wrote that there is no precise formula for judges to decide when an infringer should pay extra damages. But he said extra damages should be reserved for “egregious cases” where an infringer deserves the blame, like “willful misconduct.” 

The old test that the court threw out was originally adopted by the U.S. Circuit Court of Appeals in a 2007 case involving Seagate Technology. It formalized a test because the Patent Act is vague on when extra damages, triple the original award, should be handed out. 

Roberts said the old test was so rigid that it allowed some of the worst infringers to avoid extra damages. That is because all patent infringers had to do was come up with an argument after the fact on why a person could have though the patent was invalid.

“Such a threshold requirement excludes from discretionary punishment many of the most culpable offenders, such as the ‘wanton and malicious pirate’ who intentionally infringes another’s patent—with no doubts about its validity or any notion of a defense—for no purpose other than to steal the patentee’s business,” Roberts wrote. 

The underlying facts of the case mean that the two companies that brought the case, Halo Electronics and Stryker Corporation, can get another try at asking the lower courts for extra damages. In both cases, a competitor was found to infringe on their patents, but enhanced damages were turned down.