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VOL. 131 | NO. 139 | Wednesday, July 13, 2016

Patent-holders Feel More Secure Thanks To Patent-infringement Lawsuit Ruling

By Matthew M. Lubozynski

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Imagine that you are an innovator in the field of widgets and you have invented the next great widget. To protect your invention, you patent it.

Your archrival, who doesn’t believe in research and development, knows about your invention and knows about your patent. Yet much like a pirate, he blatantly copies your product – which he knows is covered by the patent – and sells it in the marketplace.

You believe that you have a slam-dunk case against this competitor, so you sue him for patent infringement. You seek enhanced damages under federal patent law that will allow you to collect from him “damages up to three times the amount found or assessed.”

Despite plenty of evidence that your competitor failed to look into any defenses at the time he blatantly copied your product, at trial he still asserts a non-infringement and invalidity position arguing that he did not incorporate all of your widget and the elements of the patent into his product and that someone else had created a similar widget well before you did.

The jury didn’t buy his defense, but the judge acknowledged that your competitor raised a substantial question as to infringement or invalidity. In other words, you would not be able to collect enhanced damages against him, despite all of the clear evidence of blatant and willful copying.

That was last month. Fast forward to today. On June 13, the Supreme Court, in a unanimous ruling in Halo Electronics, Inc. v. Pulse Electronics, Inc., eased the rigid standards required to collect enhanced damages against a patent infringer. Those standards had been set by the Federal Circuit Court of Appeals, the appellate court with exclusive jurisdiction for patent cases. Under the Supreme Court’s recent ruling, an award of enhanced damages is left to the discretion of the trial judge.

No longer is there a rigid two-part test with objective and subjective elements, and a high burden of proof that the plaintiff must overcome. No longer does a reasonable trial defense serve as a get-out-of-jail-free card to a wanton and malicious patent pirate. Instead, district court judges now are able to award enhanced damages at their discretion under a preponderance-of-the-evidence standard, as opposed to a higher clear and convincing burden previously used.

It is important to note, however, that the Supreme Court made it clear that enhanced damages should not be awarded in all patent infringement actions. Instead, district court judges should exercise their discretion and award enhanced damages only in “egregious cases typified by willful misconduct” -- cases where the accused infringer’s behavior is shown to be “willful, wanton, malicious, bad-faith, deliberate, consciously wrongful, flagrant, or-indeed- characteristic of a pirate.”

As a result, all patent-holders should feel a bit more secure because they’ll have a better chance to collect a lot more money in damages if they win a patent-infringement lawsuit. And anyone who decides to copy another invention first should carefully consider the repercussions when deciding to manufacture and roll out a product that may infringe on someone else’s patent. It could be a very costly venture.

Matthew M. Lubozynski is a member of Wyatt, Tarrant & Combs LLP’s Intellectual Property Protection & Litigation Service Team. He concentrates his legal practice in the area of intellectual property, patent and general litigation matters.

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