The U.S. Supreme Court’s decision Monday casting aside a strict test for securing enhanced damages in patent cases clears the way for patentees to recover big damages more frequently and exert greater leverage over accused infringers in settlement talks, attorneys say.
“The decisions over the last few years appeared to have cut back on patent rights in some respects,” said Erik Paul Belt of McCarter & English LLP. “This a case that I think is very pro-patent and gives patent owners more tools with which to enforce patents and make sure companies that are competitors are not pirating their technology.”
In a 2007 decision known as Seagate, the Federal Circuit had ruled that enhanced damages could be awarded only when a court found infringement to be willful, and set a two-part test that patent owners must meet to prove that. They needed to show first there was a high likelihood that the infringer’s actions constituted infringement, then that the infringer knew of that risk.
By relaxing the rigid Seagate test and making sizable damages awards a more realistic possibility, the Supreme Court’s decision could have a deterrent effect on patent infringement, since the risk of triple damages could make companies think twice before infringing, according to Belt.
Companies that may have previously infringed a patent thinking there was less of a risk might now instead decide to create something new and get their own patent, and “that’s a very good thing for the country,” Belt said.
“If a goal of the patent system is to reduce litigation, one way to do it is to make patent rights stronger so would-be infringers are more careful in the future,” he said.