Last week, the Supreme Court issued an opinion that significantly altered the legal landscape for proving willful infringement in patent cases. In Halo Electronics, Inc. v. Pulse Electronics, Inc., the Supreme Court rejected the Federal Circuit’s two-part Seagate test for awarding enhanced damages under 35 USC § 284, finding that both the substantive requirement for “objective recklessness” and the “clear and convincing” burden of proof were inconsistent with the intent of the statute.
Notably, the Court in Halo held the Seagate test for willful infringement “is unduly rigid, and it impermissibly encumbers the statutory grant of discretion to district courts.” The Court criticized the Seagate test in part because it requires a finding of objective recklessness in every case before district courts may award enhanced damages. 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.”
The Court further criticized the Seagate test because it made “dispositive the ability of the infringer to muster a reasonable (even though unsuccessful) defense at the infringement trial. The existence of such a defense insulates the infringer from enhanced damages, even if he did not act on the basis of the defense or was even aware of it.” The Supreme Court rejected the ability of an accused infringer to escape enhanced damages “on the strength of his attorney’s ingenuity” and noted that culpability for willful infringement “is generally measured against the knowledge of the actor at the time of the challenged conduct.”
Ethical Issues Raised By Halo
There is no doubt that Court’s opinion in Halo may be a game-changer for parties involved in patent litigation. While most commentators have to date focused on the substantive and procedural issues raised by Halo. it is important to note that the Supreme Court’s decision also imposes several significant ethical duties on attorneys who are presently litigating a patent case in which willfulness is an issue. Whether representing the patent owner or the accused infringer, litigators must be mindful of the ethical issues raised by Halo as they proceed in ongoing and future patent infringement cases.
First, an attorney in litigation has an ethical duty to not Continue reading