Halo Electronics, Inc. v. Pulse Electronics, Inc.

Enhanced damages under § 284 of the Patent Act are awarded on a discretionary basis against egregious and willful patent infringers, and non-discretionary frameworks or tests for enhanced patent infringement damages are not permissible when inconsistent with § 284.

Two Petitioners challenged the Federal Circuit’s two-pronged Seagate test and its tri-partite appellate review framework, used to determine whether a patent infringement is willful for purposes of determining eligibility for enhanced damages. Under § 284 of the Patent Act, a patent owner can recover punitive or enhanced damages against a willful infringer. In both of Petitioners' cases, the Federal Circuit affirmed the district courts’ application of its willfulness test. On appeal, the Supreme Court determined that the Seagate framework and test are inconsistent with § 284 of the Patent Act and vacated the judgments of the Federal Circuit. The Court reviewed the Seagate test and determined it to be unduly rigid. The Court noted that the historical application and language of § 284 does not place limits on the discretion of the district court to award enhanced damages, and reserves enhanced damages for egregious infringers. The Court held that the Seagate test imposes an objective recklessness standard that must be proven with clear and convincing evidence. The Court determined that the objective recklessness standard is impermissibly narrow because it allows willful (but not reckless) infringers to escape enhanced damages. The Court held the clear and convincing standard and the tri-partite framework invalid as well, because no heightened scrutiny or standard is supplied under § 284. The Court ordered both cases to be reviewed under the discretionary willfulness standard. VACATED and REMANDED.