Canada: Enhanced Damages May Have A Pulse

Last Updated: July 6 2016
Article by Ken Bousfield

On June 13, 2016 in Halo Electronics, Inc. v Pulse Electronics, Inc., the US Supreme Court decided unanimously that the Seagate test for enhanced damages in patent infringement cases, was not correct.

The Seagate test originated as a response by the US Court of Appeal for the Federal Circuit to the law of enhanced damages for wilful patent infringement. Prior to Seagate, a potential infringer had "an affirmative duty to exercise due care to determine whether or not he is infringing."1 Such a duty included "seeking competent legal advice before the initiation of any possible infringing activity."2 As such, not obtaining legal advice would warrant willful infringement, which could then lead to an award of treble damages. The Court in Seagate found that the willfulness standard was too low, and led to too many enhanced damages awards, and restricted the willfulness standard significantly.

Under Seagate the test for enhanced or trebled damages had two parts. Under the first part, "a patentee must show by clear and convincing evidence that the infringer acted despite an objectively high likelihood that its actions constituted infringement of a valid patent"3 ("objective recklessness"). Under the second part, the patentee had to demonstrate, also by clear and convincing evidence, that the risk of infringement "was either known or so obvious that it should have been known to the accused infringer"4 ("subjective knowledge").

In Halo Electronics, Inc. v Pulse Electronics, Inc. the Supreme Court found the Seagate test to be unduly restrictive of the discretion found in 35 USC 284, which indicates that in patent infringement cases, courts "may increase the damages up to three times the amount found or assessed."5 In looking at the historical intention of 35 USC 284, the Court found that the word "may" was intentionally retained in s. 284 to give the courts ultimate discretion, given the punitive nature of an award of enhanced damages.

Seagate provided an overly mechanical approach to enhanced damages. By requiring a finding of objective recklessness, Seagate was therefore "unduly rigid, and it impermissibly encumbers the statutory grant of discretion to the district courts."6 The objective recklessness standard allowed an infringer to muster a defense of reasonableness, that, successful or not, protected against enhanced damages. An infringer otherwise meriting an enhanced damages penalty might avoid punishment merely through successful attorney creativity. To the extent that it might prevent the Court from awarding enhanced damages when they otherwise would have, Seagate was inconsistent with s. 284.

At first, Halo v. Pulse may appear to be inventor-friendly by facilitating enhanced damages awards against deserving infringers. In his concurring opinion Breyer J., discussed the fear of inhibiting innovation:

"How is a growing business to react to the arrival of such a [demand for settlement or licencing] letter, particularly if that letter carries with it a serious risk of treble damages? Does the letter put the company "on notice" of the patent? Will a jury find that the company behaved "recklessly," simply for failing to spend considerable time, effort, and money obtaining expert views about whether some or all of the patents described in the letter apply to its activities (and whether those patents are even valid)? These investigative activities can be costly. Hence, the risk of treble damages can encourage the company to settle, or even abandon any challenged activity."7

This concern paralleled the respondent's argument that the decision may be inconsistent with the purpose of patent law – to balance "the need to promote innovation through patent protection" and the importance of facilitating the "imitation and refinement through imitation that are necessary to invention itself and the very lifeboat of a competitive economy."8 A decision that lowers the bar to enhanced damages would appear to tip the scale towards favouring patent protection and deter innovation.

Breyer J., addressed this issue: "failure of an infringer to obtain the advice of counsel... may not be used to prove that the accused infringer willfully infringed", the provision of such opinions having been a cottage industry for lawyers prior to Seagate. He also stressed that "enhanced damages are generally appropriate...only in egregious cases."9

Both Breyer, J., and Roberts, C.J., (writing for the majority) pointed out that enhanced damages have the potential to disrupt the balance within patent law as previously discussed – and as had been the case pre-Seagate. However, the Court cautions that a return to the intentional "may" is intended to promote reasoned, balanced analyses. The Court's emphasised that "intentional or knowing" infringement "may" warrant a punitive sanction – the word being may not must.10 Enhanced damages should only be awarded when, on careful review of all of the circumstances, the infringer's conduct merits approbation.

Future case law will show if the return to greater discretion risks re-starting the pre-Seagate abuses. While it is helpful for the court to remind litigants that only "egregious" conduct merits punitive sanctions, it is, of course, not uncommon for plaintiffs consider every infringement to be "egregious". Plaintiffs will no doubt expect their counsel to advance such views no less energetically, and indignantly, than before Seagate.


1Underwater Devices Inc. v Morrison-Knudsen Co., 717 F (2d) 1380 at 1389-1390 (1983).

2 Ibid at 1389-1390.

3 Re Seagate Technology, LLC, 497 F (3d) 1360 at 1371.

4 Ibid at 1371.

5 Patent Act, 35 USC §284 (2015).

6Octane Fitness, LLC v ICON Health & Fitness, Inc., 572 US ___ (2013) (slip op., at 7).

7 Halo Electronics, Inc., v Pulse Electronics, Inc., 579 US ___ (2016) (slip op., at 4).

8 Bonito Boats, Inc. v Thunder Craft Boats, Inc., 489 US 141 at 146 (1989).

9 Supra note 7 (slip op., at 2).

10 Supra note 7 (slip op., at 2).

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

Ken Bousfield
In association with
Related Video
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Check to state you have read and
agree to our Terms and Conditions

Terms & Conditions and Privacy Statement (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

Use of

You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.


Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.


Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.

Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

If you do not want us to provide your name and email address you may opt out by clicking here .

If you do not wish to receive any future announcements of products and services offered by Mondaq by clicking here .

Information Collection and Use

We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to with “no disclosure” in the subject heading

Mondaq News Alerts

In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.


A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

Log Files

We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.


This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

Surveys & Contests

From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.


If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.


This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to

Correcting/Updating Personal Information

If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to

Notification of Changes

If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

How to contact Mondaq

You can contact us with comments or queries at

If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at and we will use commercially reasonable efforts to determine and correct the problem promptly.