Supreme Court’s First 2016 Cases Carry Potential for Patent Holders

Next week, the US Supreme Court will hear oral arguments on the first of two patent issues that it has agreed so far to resolve this year: one involving damages awards and the other inter partes review. In both matters, a win for the petitioner would be a win for those who hold and assert patents—a shift in landscape from two years ago when cases such as Alice and Octane held more promise for defendants.

Enhanced Damages

The question at the heart of Halo Electronics v. Pulse Electronics (2013-1472, 2013-1656) and Stryker Corp. v. Zimmer (2013-1668)—set for consolidated argument on February 23—is how easily a patent owner who prevails on infringement can secure enhanced damages under 35 U.S.C. § 284.

Right now, the Federal Circuit will not permit enhanced damages unless patent owners prove that the defendant “willfully” infringed the patent under a two-part test. But the statute itself simply states that “[w]hen the damages are not found by a jury, the court shall assess them. In either event the court may increase the damages up to three times the amount found or assessed.”

Despite this simplicity, courts have been requiring parties to follow the Federal Circuit’s two-part “willful infringement” test for years now. In Halo and Stryker, the twin petitioners ask that the Supreme Court revisit this “overly rigid” approach to enhancement, arguing that judges should be free to follow a more flexible “totality of the circumstances” test for when to increase damages. Respondents and some amici argue that the Federal Circuit’s test has deep roots in punitive damages law and should be preserved.

The petitioners see the Supreme Court’s 2014 decisions in Octane and Highmark as providing a roadmap for success in their current appeal. In Octane, the Court announced a more flexible standard for determining when to declare a case “exceptional” and award attorney fees to the prevailing party under 35 U.S.C. § 285, rejecting the Federal Circuit’s more rigid approach. The current petitioners seek the same result under Section 284—noting that historically, Sections 284 and 285 have been interpreted in parallel fashion, and arguing that the Octane changes in the Section 285 context require parallel changes in Section 284 case law.

Inter Partes Review

On January 15, the Supreme Court accepted Cuozzo Speed Technologies, LLC v. Michelle K. Lee (2014-1301) for review. This case presents two issues central to the inter partes review (IPR) process: first, whether the Court should eliminate the current, broad standard for interpreting a patent’s claims while in IPR; and second, whether the Court should increase appellate scrutiny of the process.

In short, a change on either issue might make invalidating a patent through IPR more difficult. Then again, it may not. RPX is preparing an analysis of data relevant to whether and how a petitioner’s proposals might affect case outcomes before the Patent Trial and Appeal Board or in district court.

RPX will also continue to monitor whether the Supreme Court agrees to hear argument during the second half of this year’s term on various pending petitions that have raised other patent-related issues.