On June 13, 2016, the Supreme Court issued an important unanimous decision in Halo v. Pulse that vacates the Federal Circuit’s rigid limits to the grant of enhanced damages in patent cases - an issue that only arises after a patent has been found enforceable and the accused has been found liable for infringement.
In In re Seagate, 497 F. 3d 1360 (Fed. Cir. 2007), the Federal Circuit held that enhanced damages could be awarded only when a court found the infringement willful and held that willful infringement requires a showing of “objective recklessness.” It set up a two-part test that patent owners must meet to prove that. First, they had to show, by clear and convincing evidence, there was a high likelihood that the infringer’s actions constituted infringement, and, second, that the infringer knew of that risk.
In Halo, the Supreme Court held that the Seagate test goes beyond what is called for by the Patent Act. The Patent Act, 35 U.S.C. §284, simply states that “the court may increase the damages up to three times the amount found or assessed.” Chief Justice John Roberts wrote that the statute "permits district courts to exercise their discretion in a manner free from the inelastic constraints" of the Federal Circuit's test. "Consistent with nearly two centuries of enhanced damages under patent law, however, such punishment should generally be reserved for egregious cases typified by willful misconduct." In addition to discarding the Seagate test, the Supreme Court also held that enhanced damages awards need not be proven by clear and convincing evidence, but only by a preponderance of the evidence.
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