SCOTUS Strikes Down Strict Appellate Patent Damage Standards

The U.S. Supreme Court has paved the way for the possibility of drugmakers collecting enhanced damages in patent cases, striking down an appellate standard in a unanimous 8-0 decision.

After considering a consolidated case with two claims of patent infringement — one involving medical device makers Stryker and Zimmer and the other involving electronics companies Pulse Electronics and Halo Electronics — the high court nixed a two-part test established by the U.S. Court of Appeals for the Federal Circuit in determining when a district court may increase damages.

Chief Justice John Roberts wrote that the main problem with the appellate court’s two-part test for awarding enhanced damages is the insistence on a finding of “objective recklessness” on the part of the patent infringer.

Roberts said the test is “unduly rigid,” adding that “it can have the effect of insulating some of the worst patent infringers from any liability for enhanced damages.” He further stated that nearly two centuries-worth of enhanced damage awards have substantiated that district courts’ discretion is limited.

Justice Stephen Breyer wrote a concurring opinion that acknowledged the appellate court’s test is “too mechanical,” but argued in favor of limiting the use of enhanced damage awards.

The court’s decision sends both cases back to the appellate court for further review.

The decision presents a contrast with the justices’ positions during oral arguments in February, when they gave a chilly reception to arguments in favor of replacing the appellate standard with judicial discretion. The justices repeatedly questioned the impact this would have on patent litigation (Generic Line, March 2016).

Stryker previously accused Zimmer of violating its patents for a pulsed lavage product and took its case to the U.S. Court of Appeals for the Federal Circuit before it was merged with the other case, in which Halo took Pulse to court for allegedly selling a patent-violating product overseas. That case came before a federal appellate circuit panel before being merged at the high court-level.

Read the opinion here: www.fdanews.com/06-14-16-EnhancedPatentDamagesOpinion.pdf. — Michael Cipriano

 

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