Leave Patent Damages Alone: Congress to Supreme Court

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By Tony Dutra

Jan. 27 — Authors of the Leahy-Smith America Invents Act of 2011 submitted a brief Jan. 20 assuring the U.S. Supreme Court that, in pushing that legislation, they were “fully aware of”—and chose not to amend—the standard for a judge to award punitive damages for patent infringement.

The high court is set to hear arguments Feb. 23 on when a trial court should “enhance” compensatory damages—up to a triple multiplier—based on the actions of the infringer. The controlling Seagate opinion of the U.S. Court of Appeals for the Federal Circuit—on “enhanced damages” under 35 U.S.C. §284—requires a finding of willful infringement, and willfulness cannot be found if the court sees an “objectively reasonable” argument for the defendant's infringement.

“Although it considered numerous proposed amendments over a six-year period, Congress ultimately did not alter the enhancement provision of Section 284, knowing that it was leaving Seagate in place,” the lawmakers' brief stated.

The brief acknowledged “considerable dissatisfaction” with the standard in debates in both the House and Senate. But, after an exhaustive review of several hearings on the topic leading up to the final votes on the legislation, it contended that Congress knew what it was doing when it didn't change the law.

The brief was signed by Sens. Patrick J. Leahy (D-Vt.), Orrin G. Hatch (R-Utah) and Michael F. Bennet (D-Colo.), and Reps. Lamar S. Smith (R-Texas), Robert W. Goodlatte (R-Va.) and Steven Chabot (R-Ohio). The AIA is named after Leahy and Smith, and the others were involved in the floor debate when it passed.

Daniel M. Lechleiter of Faegre Baker Daniels LLP, Indianapolis, filed the lawmakers' brief.

Nine Other Briefs in Support

Pulse Electronics Inc. and Zimmer Inc. escaped the possibility of up to treble damages for infringing patents owned by Halo Electronics Inc. and Stryker Corp., respectively, by convincing the Federal Circuit they had a good reason to believe they were not infringing valid patents. Their briefs in the case were filed Jan. 13 (See previous story, 01/15/16).

The respondents will have to counter the views of the U.S. government as well, which on Jan. 25 was granted its request to participate in the oral argument.

Nine other briefs were filed in support of the respondents on Jan. 20, including a who's who of the high-tech industry: Google, Cisco, Verizon and Salesforce.com; Yahoo! and Arthrex; Intel, Hewlett-Packard and Medtronics; Dell, Samsung and the Internet Association, among others; EMC; Huawei; Marvell Semiconductor; BSA | The Software Alliance; and seven “Internet Companies”: Check Point Software, LinkedIn, Mozilla, Netflix, Pinterest, Roku and Twitter.

However, not all were 100 percent behind the standard set in In re Seagate Tech. LLC, 497 F.3d 1360, 2007 BL 83845, 83 U.S.P.Q.2d 1865 (Fed. Cir. 2007) (en banc) (162 DER A-11, 8/22/07).

While most of the briefs said that “objective reasonableness” must remain part of the willfulness test, others proposed that “deliberate copying” can be a basis for enhancing damages, regardless.

“The Federal Circuit has set the standard for establishing willfulness so low that it creates an imbalance in the law,” the Internet companies' brief said, calling, for example, on the Supreme Court to “revisit the definition of willfulness.”

Mark L. Hogge of Dentons US LLP, Washington, represents Pulse. Seth P. Waxman of Wilmer Cutler Pickering Hale & Dorr, Washington, represents Zimmer.

Craig Earl Countryman of Fish & Richardson P.C., San Diego, represents Halo. Jeffrey B. Wall of Sullivan & Cromwell LLP, Washington, is counsel of record for Stryker.

To contact the reporter on this story: Tony Dutra in Washington at adutra@bna.com

To contact the editor responsible for this story: Mike Wilczek in Washington at mwilczek@bna.com

For More Information 
The brief can be found at: http://src.bna.com/cfT.