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Supreme Court Revives Treble Damages: Halo

Posted Tuesday, June 14, 2016 by Jim Ruttler

In a significant victory for innovators, the U.S. Supreme Court this week made it easier for patent owners to obtain treble damages for infringement. Since 2007, the Federal Circuit Appeals Court and the lower District Courts have been applying a strict standard for treble damages. Essentially, they required clear and convincing evidence of willful infringement without any reasonable defense. Of course, it was easy for most patent litigators to concoct some reasonable defense after the fact during trial, so even the most egregious willful infringement avoided treble damages.

However, the Supreme Court has laid this test to rest and changed the rule to permit the lower District Courts considerable discretion in determining whether to avoid penalizing treble damages. The new test requires only that the case be out of the ordinary considering the behavior and actions of the infringer at the time of infringement. The standard has been lowered to preponderance of evidence (more likely than not) and infringers can't escape by producing some reasonable defense later during trial. Furthermore, the District Court's decision to institute treble damages is entitled to significant deference during any appeal of the damage award.

In short, this is a significant pro-patent change in the law. Now, any infringer who knows about a patent and the existence of infringement will have the potential for a very heavy toll of 3 times the total damages and the possibility of attorneys fees.

We are currently waiting for the decision by the Supreme Court in Cuozzo, which will likely result in significant limitations on the inter partes review proceedings at the Patent Office, further increasing the strength of patents. Also, the Supreme Court should be deciding whether to take up Cooper and MCM to possibly declare the entire inter partes review proceedings as unconstitutional.

My expectation is that the Supreme Court will limit inter partes review proceedings to be mini-court proceedings which apply the same post-grant court standards. I think also that the inter partes review proceedings will be held constitutional, so long as all the parties consent to the Patent Office's jurisdiction. This will effectively permit parties to choose whether to litigate via the Patent Office or the Courts, but will prevent patent owners from being drug into the Patent Office against their will.

Supreme Court Revives Treble Damages: Halo ›› Ruttler Mills PLLC