In the last five years or so, there’s been a dramatic change in many of the areas of law concerning patent infringement. We plan to discuss recent, notable decisions and changes in the law over the next couple of weeks. Today, we’ll discuss the raising of the bar for proving willful infringement.
35 U.S.C. § 284 states that “the court may increase the damages [found for patent infringement] up to three times the amount found or assessed.” The statute itself does not specify the instances in which increased damages may be awarded, but the Federal Circuit has long held that an award of increased damages requires a showing of willful infringement. See, e.g., Beatrice Foods Co. v. New England Printing & Lithographing Co., 923 F.2d 1576, 1578 (Fed. Cir. 1991); Jurgens v. CBK, Ltd., 80 F.3d 1566, 1570 (Fed. Cir. 1996).
Shortly after the creation of the Federal Circuit, it announced a standard for evaluating willful infringement: “Where * * * a potential infringer has actual notice of another’s patent rights, he has an affirmative duty to exercise due care to determine whether or not he is infringing. Such an affirmative duty includes, inter alia, the duty to seek and obtain competent legal advice from counsel before the initiation of any possible infringing activity.” Underwater Devices Inc. v. Morrison-Knudsen Co., 717 F.2d 1380, 1389-90 (Fed. Cir. 1983) (emphases in original).
(The Federal Circuit had also held that an accused infringer’s failure to produce advice from counsel “would warrant the conclusion that it either obtained no advice of counsel or did so and was advised that its [activities] would be an infringement of valid U.S. Patents.” Kloster Speedsteel AB v. Crucible Inc., 793 F.2d 1565, 1580 (Fed. Cir. 1986). The “adverse inference” of Kloster was later overruled by Knorr-Bremse Systeme Fuer Nutzfahrzeuge GmbH v. Dana Corp., 383 F.3d 1337 (Fed. Cir. 2004), and the recently enacted America Invents Act provides that “[t]he failure of an infringer to obtain the advice of counsel with respect to any allegedly infringed patent, or the failure of the infringer to present such advice to the court or jury, may not be used to prove that the accused infringer willfully infringed the patent or that the infringer intended to induce infringement of the patent.” See 35 U.S.C. § 298.)
In In re Seagate Tech., LLC, 497 F.3d 1360 (Fed. Cir. 2007), the Federal Circuit sharply curtailed the willfulness doctrine, overruling Underwater Devices in the process. Specifically, the Court held that:
[P]roof of willful infringement permitting enhanced damages requires at least a showing of objective recklessness. Because we abandon the affirmative duty of due care, we also reemphasize that there is no affirmative obligation to obtain opinion of counsel.
Id. at 1371.
Seagate further held:
[T]to establish willful infringement, a patentee must show by clear and convincing evidence that the infringer acted despite an objectively high likelihood that its actions constituted infringement of a valid patent. The state of mind of the accused infringer is not relevant to this objective inquiry. If this threshold objective standard is satisfied, the patentee must also demonstrate that this objectively-defined risk (determined by the record developed in the infringement proceeding) was either known or so obvious that it should have been known to the accused infringer.
Id.
So, in addition to overruling Underwater Devices’ requirement that a potential infringer had an affirmative obligation to obtain an opinion of counsel when it had become aware of another’s patent, the Federal Circuit also imposed a test made up of two prongs that the patent holder must satisfy (by clear and convincing evidence) to prove that a defendant willfully infringed: (i) an objective prong (i.e., that “the infringer acted despite an objectively high likelihood that its actions constituted infringement of a valid patent”) and (ii) a subjective prong (i.e., “this objectively-defined risk (determined by the record developed in the infringement proceeding) was either known or so obvious that it should have been known to the accused infringer”).
Following Seagate, the Federal Circuit has held that the “‘objective’ prong of Seagate tends not to be met where an accused infringer relies on a reasonable defense to a charge of infringement.” Spine Solutions, Inc. v. Medtronic Sofamor Danek USA, Inc., 620 F.3d 1305, 1319 (Fed. Cir. 2010). And, although the question of willfulness had long been treated as a question of fact, the Federal Circuit, in Bard Peripheral Vascular, Inc. v. W.L. Gore & Associates, Inc., 2010-1510, 2012 WL 2149495 (Fed. Cir. June 14, 2012), ruled that “the objective determination of recklessness, even though predicated on underlying mixed questions of law and fact, [must be] decided by the judge as a question of law subject to de novo review.” Id. at *2.
The effect of these rulings is to make it very difficult for a patent holder to establish that the defendant-infringer willfully infringed. In fact, in many of the cases filed today, a willfulness allegation isn’t included in the complaint.