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Supreme Court to Review Willful Infringement Standard in Light of Octane Fitness

October 21, 2015
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In the 2014 case of Octane Fitness v. ICON Health & Fitness, the Supreme Court overruled Federal Circuit jurisprudence and provided a flexible framework for district courts to grant attorney's fees in "exceptional cases"under 35 U.S.C. § 285. The Court reasoned that requiring a prevailing party to show "material inappropriate conduct"or that a case was both "objectively baseless"and "brought in subjective bad faith,"as required by the Federal Circuit, "impermissibly encumber[ed] the statutory grant of discretion to district courts.‚¬ 

Section 285 states simply, "The court in exceptional cases may award reasonable attorney fees to the prevailing party,"the brevity of which the Supreme Court viewed as conferring discretion to the district court. In comparison, Section 284 is related to damages, and equally brief, stating in relevant part, "[T]he court may increase the damages up to three times the amount found or assessed.‚¬ 

While the Supreme Court has clarified the contours of § 285, the Federal Circuit continues to apply a more rigid analysis to the "willful infringement‚¬ standard under the similarly brief and similarly worded § 284. Currently, under the standard set out by the Federal Circuit in In re Seagate Technology LLC, an enhanced damages award under § 284 requires clear and convincing evidence that: (1) the infringer acted despite an objectively high likelihood that its actions constituted infringement of a valid patent, and (2) that this objectively-defined risk was either known or so obvious that it should have been known to the accused infringer.

On October 19, 2015, the Supreme Court granted certiorari in two cases (Stryker Corp. v. Zimmer, U.S., No. 14-1520, and Halo Electronics, Inc. v. Pulse Electronics, Inc., U.S., No. 14-1513) to review whether the standard for enhanced damages for willful infringement under § 284 should be overturned based on the Court's holding in Octane Fitness

In deciding the cases, the Court may view the limited statutory language in § 284 as a broad grant of discretion to the district courts for reasons articulated in Octane Fitness. Further, the Court may reject the specific evidentiary burden (i.e., clear and convincing evidence) promulgated by the Federal Circuit for reasons articulated in Octane Fitness. On the other hand, the Court in Octane Fitness expressed concern that § 285 was rendered superfluous by the exacting analysis required by the Federal Circuit when exceptions against attorney fee-shifting have long been recognized. The cases to be heard, however, are not concerned with attorney's fees, but rather with enhanced damages, rendering such concerns less applicable. Taken together, based on of a unanimous Supreme Court in Octane Fitness, it is likely that the Court will at least partially harmonize the analysis of the willful infringement standard § 284 to that of the attorney's fees standard under § 285.



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