Amicus Curiae Brief — Halo Elecs., Inc. v. Pulse Elecs., Inc., 136 S. Ct. 356 (2015) (No. 14-1513)

Nos. 14-1513, 14-1520

In the Supreme Court of the United States

HALO ELECTRONICS, INC.,

Petitioner,

Vv.

PULSE ELECTRONICS, INC. AND

PULSE ELECTRONICS CORPORATION

Respondents.

STRYKER CORPORATION, STRYKER PUERTO RICO, LTD.

AND STRYKER SALES CORPORATION

Petitioners,

Vv

ZIMMER, INC. AND ZIMMER SURGICAL, INC.

Respondents.

On Writs of Certiorari to the United States

Court of Appeals for the Federal Circuit

BRIEF AMICUS CURIAE OF

INTELLECTUAL PROPERTY PROFESSORS

IN SUPPORT OF NEITHER PARTY

CHRISTOPHER B. SEAMAN JASON RANTANEN

Counsel of Record University of Iowa

Washington and Lee College of Law

University School of Law 280 Boyd Law Building

1 Denny Circle Melrose & Byington

Lexington, VA 24450 Iowa City, [A 52232

seamanc@wlu.edu jason-rantanen@uiowa.edu

(540) 458-8520 (319) 335-9034

TABLE OF CONTENTS

Table of Cited Authorities ...................cccccseceeeeeeeeeees ili

Interest of the Amici Curiae. .................ccccccceeeeeeeeeeeees 1

RT 1

| EERE eee wae ee RE ee ea TT 3

I. Willfulness Is the Appropriate Standard for

Determining Whether Damages Should Be

Increased Under Section 284. .............ccccccceeeceeeees 3

A. The Statutory History of the Trial Court’s

Power to Increase Damages Consists

of a Chain of Consistent Statutory

Language, While Courts’ Broader

Authority to Award Monetary Remedies

Has Changed Substantially....................... 4

B. While Trial Courts Have Possessed

Statutory Discretion to Increase Damages

Since 1836, They Have Consistently

Limited Exercise of That Discretion

to Instances of Willfulness..................0...0.. 8

C. Section 298 Confirms That Willfulness Is

the Standard for Increasing Damages ....15

II. The Federal Circuit’s Current Two-Part Test for

Determining Willfulness Is Incorrect as a

LEE REELS anne Ae ON AC ORE OD 16

A. The Pre-Seagate Approach to Willfulness

Was a Flexible Inquiry....................ccccce++ 18

B. The Federal Circuit’s Current Two-Part

Test for Evaluating Willfulness Is Fatally

ER ARS aE RO eC Eee 19

1. The Federal Circuit’s Rigid Test

for Willfulness Is Similar to the

Two-Part Test for Attorney's Fees

Rejected in Octane Fitness.................. 19

2. The Objective Prong Is an Overly

3. The Federal Circuit’s Erroneous

Two-Part Test Often Excludes Key

Evidence Regarding an Infringer’s

NI i tiitatirinientansinlintaminenspesinnies 24

III.Willfulness Should Be Determined Under the

Totality of the Circumstances ..................cceeeeees 27

A. The Statutory Text and Historical Practice

Favor a Totality-of-the-Circumstances

IIIT, sccidienistuicesitiniteinnnaninniaptiuntenienteensdibinini 27

B. The District Court’s Decision Should

Be Reviewed for Abuse of Discretion

REESE ERE Ea ese ner RciS Ree ae eee 29

C. A Totality-of-the-Circumstances Test

Will Not Adversely Impact

Attorney-Client Privilege.......................... 30

D. A Totality-of-the-Circumstances Test

Will Not Result in a Dramatic Increase

in Treble Damage Awards ....................0++- 32

ETE TE SNE ke LT SION ELON ER 33

Appendix — List of Sigmatories ...................ccccseeeeeeees la

ill

TABLE OF CITED AUTHORITIES

Cases Page

Addington v. Texas, 441 U.S. 418 (1979) .........000. 24

Am. Nicholson Pavement Co. v. City of Elizabeth,

1 F. Cas. 691 (C.C.D.N.J. 1874) ...............0000005. 8, 10

Am. Safety Table Co. v. Schreiber, 415 F.2d 373

RT a eR te AE EES AE on 12

Aro Mfg. Co. v. Convertible Top Replacement Co.,

2. REE es eae ae 12, 13

Bard Peripheral Vascular, Inc. v. W.L. Gore &

Assocs., 682 F.3d 1003 (Fed. Cir. 2012)... 17, 18, 24

Bard Peripheral Vascular, Inc. v. W.L. Gore &

Assocs., Inc., 776 F.3d 837 (Fed. Cir. 2015)......... 22

Bell v. McCullough, 3 F. Cas. 108

ES IRIE SE A 11

Birdsall v. Coolidge, 93 U.S. 64 (1876)............0008 5, 6

Boesch v. Graff. 133 U.S. 697 (1890)... 9, 10

Brodie v. Ophir Silver Mining Co.,

4F Cas. 202 (C.C.D. Cal. 1867) 0.0.0... 10

Brooks Furniture Mfg., Inc. v. Dutailier Int'l, Inc.,

393 F.3d 1378 (Fed. Cir. 2005)................00000. 20, 21

Buerk v. Imhaeuser, 4 F. Cas. 594

I et 8

Carnegie Mellon Univ. v. Marvell Tech Grp., Ltd.,

No. 2014-1492, 2015 WL 4639309

(Fed. Cir. Aug. 4, 2015) ..........cccccccccccsssssesseees 22, 24

iv

Carnegie Mellon Univ. v. Marvell Tech. Grp., Ltd.,

805 F.3d 1382 (Fed. Cir. 2015)..............c.c ee eeeeeeeee 22

Comark Commce'ns, Inc. v. Harris Corp., 156 F.3d

ST a an aD 18

Cooper Indus., Inc. v. Leatherman Tool Grp., Inc.,

Tees Mee eee 30

Day v. Woodworth, 54 U.S. 363 (1851)... 4

DePuy Spine, Inc. v. Medtronic Sofamor Danek, Inc.,

567 F.3d 1314 (Fed. Cir. 2009)...........0.ccceeeee 25, 26

Dow Chem. Co. v. Chem. Cleaning, Inc.,

434 F.2d 1212 (5th Cir. 1970) .0........ccecececeeeseeeees 12

Dowling v. United States, 473 U.S. 207 (1985)....... 13

Fogerty v. Fantasy, Inc., 510 U.S. 517 (1994)... 15, 28

Ford v. Kurtz, 12 F. 789 (C.C.N.D. Ill. 1882)...... 8, 10

Glob. Traffic Techs. LLC v. Morgan, No. 2014-1537,

2015 WL 3513416 (Fed. Cir. June 4, 2015) ... 22, 24

Global-Tech Appliances, Inc. v. SEB S.A.,

ee IE intnhicnedhinniderntainiiitiiesiniicmmoinines 27

Guyon v. Serrell, 11 F. Cas. 132 (S.D.N.Y. 1847)..... 9

Halo Elecs., Inc. v. Pulse Elecs., Inc.,

769 F.3d 1371 (Fed. Cir. 2014) ...........cccccceceeeeeeeee 22

Harris Corp. v. Fed. Exp. Corp.,

502 F. App’x 957 (Fed. Cir. 2013) .0......0.....cccceees 24

Highmark Inc. v. Allcare Health Mgmt. Sys., Inc.,

Se es I I uesictiscntetnisisncenscnicieniitin 2, 29, 30

iLOR, LLC v. Google, Inc.,

631 F.3d 1372 (Fed. Cir. 2011) ...........cccecccccceeeeeees 21

Imonex Servs., Inc. v. W.H. Munzprufer Dietmar

Trenner GmbH, 408 F.3d 1374

eal 20

In re Seagate Tech., LLC,

497 F.3d 1360 (Fed. Cir. 2007)........0....000000-. passim

Innovention Toys, LLC v. MGA Entm't, Inc., 611 F.

App’x 693 (Fed. Cir. 2015) ..........ccccccccccesceeseeeseeeees 24

Knorr-Bremse Systeme Fuer Nutzfahrzeuge

GmbH v. Dana Corp., 383 F.3d 1337

IA eae A a 15, 28, 30

Kori Corp. v. Wilco Marsh Buggies & Draglines, Inc.,

761 F.2d 649 (Fed. Cir. 1985)............ccccccccceesceeees 20

Lam, Inc. v. Johns-Manville Corp.,

668 F.2d 462 (10th Cir. 1982) 00.00.00... ccccceeeeeeeees 12

Lee v. Mike’s Novelties, Inc.,

543 F. App’x 1010 (Fed. Cir. 2013) ........0....0...0005 24

Lyon v. Donaldson, 34 F. 789 (C.C.N.D. Ill. 1888)... 8

Martin v. Franklin Capital Corp.,

Ee eae 28

Mathis v. Spears, 857 F.2d 749 (Fed. Cir. 1988) .... 28

McLaughlin v. Richland Shoe Co.,

EE Ee 32

Microsoft Corp. v. i4i Ltd. P’ship,

I a eee 4,24

Milgo Elec. Corp. v. United Bus. Commc'ns, Inc.,

623 F.2d 645 (10th Cir. 1980) ........ccceeeeeeeeeeeeeee 26

Octane Fitness, LLC v. ICON Health & Fitness, Inc.,

SE i I i scisinsocssslimincnmnnndonsienbanees passim

Pall Corp. v. Micron Separations, Inc.,

66 F.3d 1211 (Fed. Cir. 1995)................:c0000 19, 29

Powell v. Home Depot U.S.A., Inc.,

663 F.3d 1221 (Fed. Cir. 2011).................scsesceseee 25

Presidio Components Inc. v. Am. Tech. Ceramics

Corp., 723 F. Supp. 2d 1284 (S.D. Cal. 2010)...... 16

Presidio Components, Inc. v. Am. Tech. Ceramics

Corp., 702 F.3d 1351 (Fed. Cir. 2012).................. 16

Read Corp. v. Portec, Inc.,

970 F.2d 816 (Fed. Cir. 1992).....0...00..ccccceeeee 32, 33

Rex Wine Corp. v. Dunigan,

224 F.2d 93 (2nd Cir. 1955) oo... eccccccccceeeceeeeeeeeeeee 3

Rite—Hite Corp. v. Kelley Co.,

819 F.2d 1120 (Fed. Cir. 1987) .......cccccccccceeeeeeeeees 18

Rolls—Royce Ltd., v. GTE Valeron Corp.,

800 F.2d 1101 (Fed. Cir. 1986).........0000000ccc eee 19

Rosemount, Inc. v. Beckman Instruments, Inc.,

727 F.2d 1540 (Fed. Cir. 1984). ..........ccccccceseeeeeees 20

Russell v. Place, 21 F Cas. 57

I a cicesinsliiniesioin 8, 11

Safeco Ins. Co. of Am. v. Burr,

BE TT, GF GUD ccecccvcnenccccsecscccccsssccscnnssocsscorcsnses 32

Schwarzel v. Holenshade,

21 F. Cas. 772 (S.D. Ohio 1866) ..............00000++ 10, 11

Seymour v. McCormick, 57 U.S. 480 (1854).............. 9

Spine Sols., Inc. v. Medtronic Sofamor Danek USA,

Inc., 620 F.3d 1305 (Fed. Cir. 2010)............... 22, 24

SRI Int'l, Inc. v. Advanced Tech. Labs., Inc.,

127 F.3d 1462 (Fed. Cir. 1997)............0000cc0000- 19, 29

Stryker Corp. v. Intermedics Orthopedics, Inc.,

96 F.3d 1409 (Fed. Cir. 1996)...........:cccccccceeeeeeeees 26

Stryker Corp. v. Zimmer, Inc.,

782 F.3d 649 (Fed. Cir. 2015) ...........cccccccceceeeeeeeees 24

Sutton v. Gulf Smokeless Coal Co.,

Zhe ft . <<: -REEUENERE ED 13

Teese v. Huntingdon, 64 U.S. 2 (1860).........cccccccee000 9g

Topliff v. Topliff, 145 U.S. 156 (1892) ........ccceceeee. 10

Underwater Devices Inc. v. Morrison-Knudsen Co.,

717 F.2d 1380 (Fed. Cir. 1983)..........0cccccccseeeeeeees 16

Union Carbide Corp. v. Graver Tank & Mfg. Co.,

282 F.2d 653 (7th Cir. 1960) ............cccceeeeeee 12, 14

Unisplay, S.A. v. Am. Elec. Sign Co.,

69 F.3d 512 (Fed. Cir. 1995) 0.0.0... cccceeceeceeeeeeees 14

Univ. of Pittsburgh v. Varian Med. Sys., Inc.,

561 F. App’x 934 (Fed. Cir. 2014) ............00..000000 24

Van Kannel Revolving Door Co. v. Uhrich,

297 F. 363 (8th Cir. 1924) 0.0... eeeeeesseeeee 11

Welling v. La Bau, 35 F. 302 (C.C.S.D.N.Y. 1888) 10

Yarway Corp. v. Eur—Control USA, Inc.,

775 F.2d 268 (Fed. Cir. 1985)............ccccccccceeeeeeeees 12

villi

Statutes

I citumiionngen 15

SE 14

Ee 4

Ee 7

ac passim

Teco passim

Ee er 2, 15, 16, 31

Act of Apr. 17, 1800, 2 Stat. 37 (1800) ...............0.0. 5

Act of July 4, 1836, 5 Stat. 117 (1836) ..........00...0000.. 6

Act of July 8, 1870, 16 Stat. 198 (1870).................... 6

Act of Mar. 3, 1897, 29 Stat. 692 (1897)................... 7

Act of Feb. 21, 1922, 42 Stat. 389 (1922)...........0....... 7

Act of Aug. 1, 1946, 60 Stat. 778 (1946) ......0........ 7

Act of July 19, 1952, 66 Stat. 792 (1952)......0.00..00.... 7

Intellectual Property and Communications Omnibus

Reform Act of 1999, 113 Stat. 1501A-521 (1999) .. 8

Leahy-Smith America Invents Act Technical

Corrections, 126 Stat. 2456 (2013).............0cccc 31

Treatises

Anthony William Deller,

Walker on Patents (1937 ed.) ..........cccccccceccceeeeeeees 13

William C. Robinson, The Law of Patents for

Useful Inventions (1890) ............ccccccccceeeeeeeeees 11, 14

1X

Other Authoriti

John R. Allison, Mark A. Lemley & David L.

Schwartz, Understanding the Realities of Modern

Patent Litigation, 92 Tex. L. Rev. 1769 (2014) ... 23

Christopher A. Cotropia & Mark A. Lemley, Copying

in Patent Law, 87 N.C. L. Rev. 1421 (2009)......... 25

William F. Lee & Lawrence P. Cogswell, III,

Understanding and Addressing the Unfair

Dilemma Created by the Doctrine of Willful Patent

Infringement, 41 Hous. L. Rev. 393 (2004) ......... 30

Mark A. Lemley & Ragesh K. Tangri, Ending Patent

Law’s Willfulness Game, 18 Berkeley Tech. L.J.

nen ae eee 15, 26

Kimberly A. Moore, Judges, Juries, and Patent

Cases—An Empirical Peek Inside the Black Box,

99 Mich. L. Rev. 365 (2000)................cccccceeeeceeeeees 33

Patent Litigation Strategies Handbook

(Barry L. Grossman & Gary M. Hoffman eds.,

a enessaheianietaieiienionstin 23

John J. Pavlak, The Increasing Risk of Willful

Patent Infringement, 65 J. Pat. Off. Soc’y 603

eT oiencassssccinsechiuinieeenieansiniiiaitdlesanbineniiadiealoniietees 12

Jason Rantanen, An Objective View of Fault in

Patent Infringement, 60 Am. U. L. Rev. 1575

RSE Seen OS nanan emere 23

Christopher B. Seaman, Wil/ful Patent Infringement

and Enhanced Damages After In re Seagate:

An Empirical Study, 97 Iowa L. Rev. 417

I wicdcaimaninintinahannetinhieiasieienienaene, 23, 25, 31, 33

INTEREST OF THE AMICI CURIAE'

Amici are law professors who specialize in

intellectual property law and who have previously

published on, or have interest in, the issues of willful

infringement, patent remedies, and, more broadly,

the proper functioning of the patent system. The

undersigned amici have no personal stake in the

outcome of these cases, but have an interest in

seeing that the patent laws operate in a way that

promotes innovation.

SUMMARY OF THE ARGUMENT

Section 284 of the Patent Act, 35 U.S.C. § 284,

like its precursors, does not grant trial judges

authority to increase damages up to three times the

amount of actual damages for any reason. Rather,

the statutory text has been consistently been applied

by courts to increase damages when the infringer

has engaged in especially wrongful infringement,

now commonly called willfulness. Absent clear

evidence to the contrary, the Court should conclude

that in enacting § 284, Congress incorporated the

settled meaning developed in over a century of case

! Pursuant to Supreme Court Rule 37.6, amici curiae affirm

that no counsel for a party authored this brief in whole or in

part, that no counsel or a party made a monetary contribution

intended to fund the preparation or submission of this brief,

and that no person other than amici curiae, their members, or

their counsels made a monetary contribution to its preparation

or submission. Pursuant to Supreme Court Rule 37.2, each

party has consented to the filing of this brief, and copies of the

consents are on file with the Clerk of the Court.

law that increased damages? should be awarded only

for willfulness. This settled meaning is confirmed by

Congress’s recent enactment of 35 U.S.C. § 298,

which prohibits use of an accused infringer’s failure

to obtain or present advice of counsel as evidence

that it “willfully infringed” the patent—language

which only makes sense if willfulness is the standard

for increasing damages under § 284.

Although correctly recognizing that willfulness is

the sole basis for increasing damages under § 284,

the current test adopted by the U.S. Court of

Appeals for the Federal Circuit for determining

willfulness is incorrect as a matter of law. Starting

with its en banc decision in Jn re Seagate

Technology, LLC, 497 F.3d 1360 (Fed. Cir. 2007), the

Federal Circuit abandoned its prior totality-of-the

circumstances approach in favor of a rigid, two-part

test that terminates the willfulness inquiry if the

accused infringer can offer a reasonable litigation

defense to infringement, without considerirg any

evidence regarding the accused infringer’s state of

mind. The Federal Circuit’s adoption and application

of this rigid two-part test for determining willfulness

conflicts with the discretionary language of § 284,

particularly in light of this Court’s recent decisions

in Octane Fitness, LLC v. ICON Health & Fitness,

Inc., 134 S. Ct. 1749 (2014), and Highmark Inc. v.

Allcare Health Management System, Inc., 134 8. Ct.

2 For consistency with the statutory text, this brief uses

“increased damages” in lieu of “enhanced damages.” See 35

U.S.C. § 284 (referring to “[i]ncreased damages”).

1744 (2014), which rejected a similarly inflexible

approach for awarding attorney’s fees under § 285.

In lieu of the Federal Circuit’s inflexible

approach, this Court should hold that district courts

should determine willfulness—and thus eligibility

for increased damages—by requiring the patentee to

demonstrate that the infringer at least recklessly

violated the patentee’s rights under a totality of the

circumstances. In addition, because willfulness is a

fact-intensive determination best suited for

resolution by the trial court, this decision should be

reviewed for abuse of discretion on appeal.

ARGUMENT

I. Willfulness Is the Appropriate Standard for

Determining Whether Damages Should Be

Increased Under Section 284

Section 284, like its precursors, allows trial

judges to increase damages up to three times the

amount determined to be adequate to compensate for

the infringement. Courts have long understood that

this authority to increase damages is used only in

situations where the infringer engaged in egregious

or especially wrongful infringement of a patent, a

concept generally known as willful infringement.

3 There is no reason to depart from the terminology of

“willfulness” or to introduce slight distinctions for a word that,

as Judge Learned Hand once observed, “always gathers an

unhappy cloud of uncertainty that has caused an abundance of

discussion.” Rex Wine Corp. v. Dunigan, 224 F.2d 93, 95 (2nd

Cir. 1955).

While the provenance of the willful infringement

standard is well established, amici are concerned

about suggestions that this Court condone

alternative grounds for increasing damages under

§ 284. Despite courts’ and commentators’ occasional

discussion of alternate possible theories for

increasing damages, actual reliance on _ those

theories is lacking. No decision by this Court has

ever affirmed a discretionary increase in damages,

let alone one based on a theory other than

willfulness.

Thus, absent clear evidence to the contrary, the

Court should infer that in enacting § 284, Congress

incorporated the “settled meaning” that increased

damages should be awarded only for willfulness. Cf

Microsoft Corp. v. 141 Ltd. P’ship, 131 S. Ct. 2238,

2246 (2011) (holding that in enacting 35 U.S.C.

§ 282, which declared a patent is “presumed valid,”

Congress also incorporated the “settled meaning”

from case law that a defendant raising an invalidity

defense bore a “heightened standard of proof’ for

overcoming the presumption). This standard is part

of the firm bedrock of patent law.

A. The Statutory History of the Trial

Court’s Power to Increase Damages

Consists of a Chain of Consistent

Statutory Language, While Courts’

Broader Authority to Award Monetary

Remedies Has Changed Substantially

Since its enactment in 1836, the statutory

language granting trial judges the discretion to

increase damages has remained largely the same,

5

although the courts’ broader authorization to award

monetary remedies has changed substantially. The

statutory history of trial courts’ power to award

monetary remedies actually involves two separate

chains of statutory provisions: a first section

applying to suits brought in actions at law, and a

second section largely applying to suits brought in

equity. As explained below, the statutory language

permitting a court to award up to three times the

amount of actual damages consistently appeared in

the remedial provision for actions at law, which

underwent only minor alterations between 1836 and

1952. The court in equity's statutory authority to

award monetary remedies, in contrast, underwent

several major changes over the same time.

Prior to the 1836 Patent Act, successful patent

holders were automatically entitled to “a sum equal

to three times the actual damage sustained.” Act of

Apr. 17, 1800, ch. 25, § 3, 2 Stat. 37, 38 (1800); see

also Birdsall v. Coolidge, 93 U.S. 64, 68-69 (1876)

(discussing the history of the patent statutes in the

1800s). Among the many changes in the 1836 Patent

Act was the replacement of the mandatory trebling

provision with permissive language. The relevant

portion read:

[I]t shall be in the power of the court to render

judgment for any sum above the amount found

by such verdict as the actual damages

sustained by the plaintiff, not exceeding three

times the amount thereof, according to the

circumstances of the case, with costs

Act of July 4, 1836, ch. 357, § 14, 5 Stat. 117, 123

(1836). The 1870 Patent Act contained similar

language:

[T]he court may enter judgment thereon for

any sum above the amount found by the

verdict as the actual damages sustained,

according to the circumstances of the case, not

exceeding three times the amount of such

verdict, together with the costs.

Act of July 8, 1870, ch. 230, § 59, 16 Stat. 198, 207

(1870). That language remained unchanged until

1952, when Congress enacted now-Section 284.

In contrast, the parallel remedial provision

applying to suits in equity changed dramatically

between 1836 and 1952. Section 17 of the 1836

Patent Act provided that infringement suits could be

brought in equity as well as law. § 17, 5 Stat. at 124.

Although this provision referred simply to the court’s

power to “grant injunctions|] according to the course

and principles of courts of equity,” id., courts also

exercised their equitable powers to award the

infringer’s profits. Birdsal/, 93 U.S. at 68-69. This

power was codified in § 55 of the 1870 Patent Act, in

which Congress specifically granted a court sitting in

equity the authority to award “the profits to be

accounted for by the defendant,” as well as “the

damages the complainant has sustained.” § 55, 16

Stat. at 206. Congress also granted courts sitting in

equity “the same powers to increase the same in its

discretion that are given by this act to increase the

damages found by verdicts in actions upon the case,”

id., a clear reference to the trebling power in § 59 of

that act. See Birdsall, 93 U.S. at 69-70.

This provision underwent additional changes

over the next eighty years that further altered the

trial court’s authority to award monetary remedies

while sitting in equity. Notably, in 1946, Congress

eliminated language authorizing courts sitting in

equity to award the infringer’s profits, while at the

same time granting them discretionary authority to

award attorney's fees to the prevailing party. Act of

Aug. 1, 1946, ch. 726, 60 Stat. 778, 778 (1946); see

also Octane Fitness, 134 S. Ct. at 1753. Despite

these changes, courts continued to have the “same

power to increase the assessed damages, in its

discretion, as. . in actions in the nature of actions

of trespass upon the case”—zi.e., actions at law. 60

Stat. at 778.

The 1952 Patent Act collapsed the two remedial

provisions into § 284, providing separate sections for

injunctive relief (35 U.S.C. § 283) and the award of

attorney's fees in “exceptional cases” (35 U.S.C.

§ 285). Act of July 19, 1952, Pub. L. No. 82-593, §§

283, 285, 66 Stat. 792, 812-13 (1952). The second

paragraph of § 284 states:

When the damages are not found by a jury,

the court shall assess them. In either event

the court may increase the damages up to

three times the amount found or assessed.

4 These changes included a six-year limitation on profits or

damages, Act of Mar. 3, 1897, ch. 391, § 6, 29 Stat. 692, 694

(1897), and authority to award “a reasonable sum as profits or

general damages for the infringement” when “damages or

profits are not susceptible of calculation and determination

with reasonable certainty,” Act of Feb. 21, 1922, ch. 58, § 8, 42

Stat. 389, 392 (1922).

35 U.S.C. § 284 (1952). Since 1952, Congress has

made only a single substantive change to § 284, to

exclude provisional rights under § 154(d) from

increased damages. See Intellectual Property and

Communications Omnibus Reform Act of 1999, Pub.

L. No. 106-113, § 4504, 113 Stat. 1501A-521, 1501A-

564 (1999).

B. While Trial Courts Have Possessed

Statutory Discretion to Increase

Damages Since 1836, They Have

Consistently Limited Exercise of That

Discretion to Instances of Willfulness

Since the nineteenth century, courts have

consistently limited the exercise of their discretion to

increase damages to circumstances involving

especially wrongful infringement. Court opinions

have used an array of labels to express this concept.

See, e.g. Lyon v. Donaldson, 34 F. 789, 793

(C.C.N.D. Ill. 1888) (flagrant violation” of patentee’s

rights); Ford v. Kurtz, 12 F. 789, 789 (C.C.N.D. Ill.

1882) (Harlan, J.) (“malicious” infringement); Buerk

v. Imhaeuser, 4 F. Cas. 594, 595 (C.C.S.D.N.Y. 1876)

(“will{I)ful” infringement); Am. Nicholson Pavement

Co. v. City of Elizabeth, 1 F. Cas. 691, 700

(C.C.D.N.J. 1874) (“wanton” infringement); Russell

v. Place, 21 F. Cas. 57, 58 (C.C.N.D.N.Y. 1871)

(“deliberate and intentional” infringement). But each

of these terms reflects a common meaning: that the

infringement was especially egregious, rather than

simply being a typical patent infringement suit. The

well-understood modern terminology for this concept

is willfulness, a term that encompasses bad faith

infringement. See Seagate, 497 F.3d at 1368.

Early case law recognized willfulness as the

primary or sole grounds for increasing damages. The

earliest reported case applying the increased

damages provision appears to be Guyon v. Serrell, 11

F. Cas. 132 (C.C.S.D.N.Y. 1847), in which the trial

court denied a request to increase damages where

the defendant generally acted in good faith. Jd. at

133. Four years later, in Day v. Woodworth, 54 U.S.

363 (1851), this Court noted that “if, in the opinion of

the court, the defendant has not acted in good faith,

or has been stubbornly litigious, or has caused

unnecessary expense and trouble to the plaintiff, the

court may increase the amount of the verdict, to the

extent of trebling it.” Jd. at 372. In Seymour v.

McCormick, 57 U.S. 480 (1854), the Court, reversing

a jury award of damages, distinguished between

actual damages and “vindictive or exemplary

damages,” which are intended “not to recompense

the plaintiff, but to punish the defendant” in cases

“where the injury is wanton or malicious.” /d. at 489.

Subsequent opinions of this Court used similar

language. See, e.g., Teese v. Huntingdon, 64 U.S. 2, 9

(1860) (“[I]f, in the opinion of the court, the

defendant has not acted in good faith, or has caused

unnecessary expense and injury to the plaintiff, the

court may render judgment for a larger sum, not

exceeding three times the amount of the verdict.”);

Boesch v. Graff 133 U.S. 697, 699, 704 (1890)

(reviewing a decision that found infringement

“willful, wanton, and persistent” but reversing on

other grounds).5

6 In the only decision by this Court actually reviewing a

10

In fact, motions to increase damages at this time

were so unusual that more than one judge remarked

on the rarity of such requests. See Schwarzel v.

Holershade, 21 F. Cas. 772, 773 (S.D. Ohio 1866) (“It

is surewhat remarkable that in the almost countless

reports of trials of patent right cases in the United

States, there are so few in which the statute

authorizing a judgment for treble damages has been

presented for judicial consideration.”); see also

Welling v. La Bau, 35 F. 302, 304 (C.C.S.D.N.Y.

1888) (“The limited number of reported cases upon

this subject is of itself proof of the care with which

the courts have exercised the discretion given by the

statute.”). When patent holders did bring motions to

increase damages, courts denied them if the

defendant was not a willful infringer. See, e.g., Ford,

12 F at 789 (declining to increase damages and

remarking “(tlhe infringement by defendants of

complainant’s patent was neither willl]ful nor

malicious”); Am. Nicholson Pavement Co., 1 F. Cas

at 698 (“[T]here is nothing in the case, which

authorizes the court, if it had the power, and were so

disposed, to visit upon the defendants any

consequences in the nature of a penalty. They were

not wanton infringers.”); see also Brodie v. Ophir

Silver Mining Co., 4 F Cas. 202, 203-04 (C.C.D. Cal.

claim for increased damages, Jopliff v. Topliff, 145 U.S. 156,

174 (1892), the Court affirmed the trial court’s decision not to

increase damages, while also suggesting that the Court itself

would have increased them given the circumstances. Those

circumstances fit the mold of willful infringement. None of the

Court’s other decisions, aside from Boesch, actually involved a

claim to increased damages.

11

1867) (stating the power to increase damages

“should only be exercised to remunerate parties who

have been driven to litigation to sustain their

patents by wanton and persistent infringement”).

Indeed, so well established was this standard

that in the 1890 edition of his classic treatise on

patent law, William Robinson observed that courts

exercised their power to increase damages

“principally in cases of wanton infringement, or

where the defendant has compelled the plaintiff to

resort to needless and expensive litigation.” 3

William C. Robinson, The Law of Patents for Useful

Inventions § 1069, at 365 (1890). Each of the cases

cited by Robinson for this claim either denied an

increase because the conduct was not willful or

wanton, see, e.g., Schwarzel, 21 F. Cas. at 772-74, or

increased damages because, for example, the

infringement appeared “deliberate and intentional,”

Russell, 21 F. Cas. at 58. These decisions were

consistent with the view that the purpose of the

increased damages provision was to address this

specific type of activity. See, e.g., Bell v. McCullough,

3 F. Cas. 108, 109 (S.D. Ohio 1858) (rejecting treble

damages and observing that the “object of this

provision was to remunerate patentees who were

compelled to sustain their patents against wanton

and persevering infringers”).

Courts continued to apply a similar approach

throughout the twentieth century. For example, in

Van Kannel Revolving Door Co. v. Uhrich, 297 F.

363 (8th Cir. 1924), the Eighth Circuit affirmed

increased damages where “the defendants were

willful and persistent infringers.” Jd. at 367.

12

Similarly, in Union Carbide Corp. v. Graver Tank &

Manufacturing Co., 282 F.2d 653 (7th Cir. 1960), the

Seventh Circuit, after extensively examining

potential alternative rationales for increasing

damages, concluded that “it is only on the basis of

conscious and willl]ful infringement that exemplary

or punitive damages are allowed.” Jd. at 675.

Decisions from the last fifty years relying on

willfulness as a standard for increasing damages

under § 284 are legion. See, e.g., Lam, Inc. v. Johns-

Manville Corp., 668 F.2d 462, 474 (10th Cir. 1982);

Dow Chem. Co. v. Chem. Cleaning, Inc., 434 F.2d

1212, 1214 (5th Cir. 1970); Am. Safety Table Co. v.

Schreiber, 415 F.2d 373, 378 (2d Cir. 1969); see also

John J. Pavlak, The Increasing Risk of Willful

Patent Infringement, 65 J. Pat. Off. Soc’y 603, 604

(1983) (“Section 284 of the patent laws permits a

court to increase damages ‘up to three times the

amount found or assessed.’ While this statute does

not specify the grounds for such an increase, the

courts have historically limited increased damages to

willful infringement.”). Since the inception of the

Federal Circuit, willfulmess has been the gold

standard for increasing damages under § 284. See,

e.g., Yarway Corp. v. Eur—Control USA, Inc., 775

F.2d 268, 277 (Fed. Cir. 1985) (“It is well-settled that

enhancement of damages [under § 284] must be

premised on willful infringement or bad faith.”).

Similarly, this Court has repeatedly used the

language of willfulness to define when increased

damages could be awarded under § 284. In Aro

Manufacturing Co. v. Convertible Top Replacement

Co., 377 U.S. 476 (1964), the Court noted that a

13

patentee “could in a case of willful or bad-faith

infringement recover punitive or ‘increased’ damages

under the statute’s trebling provision.” Jd. at 508.

More recently, in Dowling v. United States, 473 U.S.

207 (1985), the Court, citing § 284, observed that

“(almong the available remedies are treble damages

for willful infringement.” Jd. at 227 n.19

Although commentators have occasionally

discussed other rationales for increasing damages,

those theories have found little purchase in actual

decisions. For example, while the 1937 version of

Walker on Patents proclaimed that a court could

increase damages by awarding the infringer’s

profits, it cited no case where that was actually

done. See 3 Anthony William Deller, Walker on

Patents § 835, at 2175 (1937). In any event, while

awarding the infringer’s profits was a viable legal

theory during the nineteenth and early twentieth

century, the 1946 Patent Act eliminated that

possibility. See Aro Mfg. Co., 377 U.S. at 505-06.

The difficulty of proving damages has been

offered as another possible rationale for increasing

damages, see, eg., Seagate, 497 F.3d at 1378

(Gajarsa, J., concurring); Trio Process Corp. v. L.

Goldstein’s Sons, Inc., 638 F.2d 662, 662-63 (3d Cir.

1981), but such claims are complicated by the

existence of separate authority on this point. For

example, between 1922 and 1946, the Patent Act

6 The only case cited by Walker on Patents for this

proposition involved an increase on the ground that “there was

deliberate and willful infringement.” Sutton v. Gulf Smokeless

Coal Co., 77 F.2d 439, 442 (4th Cir. 1935) (per curiam).

—

14

expressly authorized courts to decide compensation

when “damages or profits are not susceptibk of

calculation and determination with reasonuble

certainty.” 35 U.S.C. §70 (1934). The text and

structure of § 284 also suggest that damages cannot

be increased due to proof issues. The first paragraph

of § 284 requires an “award” of “damages adequate

to compensate for the infringement,” which shall be

“in no event less than a reasonable royalty.” 35

U.S.C. § 284. Only after adequate compensatory

damages are awarded can the court “increase” them,

as provided in the second paragraph. /d. The

availability of a reasonable royalty, which

“necessarily involves an element of approximation

and uncertainty,” Unisplay, S.A. v. Am. Elec. Sign

Co, 69 F.3d 512, 517 (Fed. Cir. 1995), for

determining adequate compensation further

undermines this claim. See Union Carbide, 282 F.2d

at 673-75 (declining to increase damages when

compensatory damages were calculated on a

reasonable royalty basis).

Some authorities also have suggested that abuse

of the litigation process might be an alternative

basis for increasing damages, but evidence that

courts routinely did so is lacking. For instance,

Robinson’s 1890 treatise referred to “needless and

expensive litigation,” although none of his cited

cases actually increased damages for that reason.

See Robinson, supra, at 365. And even if abusive

litigation tactics might omce have been a valid

rationale for increasing damages, Congress's

creation of a separate statutory provision to address

such behavior in the 1952 Patent Act eliminated that

rationale. See 35 U.S.C. § 285. Moreover, permitting

15

courts to increase damages under § 284 for this

reason would create a new, one-sided remedy for

litigation misconduct—and there is no evidence that

Congress intended such an outcome. Cf Fogerty v.

Fantasy, Inc., 510 U.S. 517, 523, 534 (1994) (holding

prevailing plaintiffs and defendants in copyright

litigation must be “treated alike” for awarding

attorney's fees under 17 U.S.C. § 505 because a

contrary interpretation of the statute lacked support

in the legislative history).

In sum, both the evolution of the statutory text

and its application by courts demonstrates that

increased damages have been consistently granted

for one reason—willful infringement.

C. Section 298 Confirms That Willfulness

Is the Standard for Increasing Damages

in addition, Congress recently confirmed that

§ 284 rests on a determination of willfulness. In

2011, Congress added § 298 as part of the Leahy-

Smith America Invents Act, which states in relewant

part that failure to obtain or introduce advice of

counsel “may not be used to prove that the accused

infringer willfully infringed the patent.” 35 U.S.C.

§ 298 (2012). This provision was intended to protect

against waiver of attorney-client privilege in order to

defend against a claim of willfulness under § 284 by

offering an opinion of counsel regarding non-

infringement and/or invalidity of the asserted

claims, a situation that commonly occurred prior to

Knorr-Bremse Systeme Fuer Nutzfahrzeuge GmbH

v. Dana Corp., 383 F.3d 1337 (Fed. Cir. 2004) (en

banc). See Mark A. Lemley & Ragesh K. Tangri,

Ending Patent Law’s Willfulness Game, 18 Berkeley

16

Tech. L.J. 1085, 1087-88 (2003). Section 298 also

abrogated case law suggesting the absence of an

opinion of counsel was relevant to determining

willfulness even after Seagate. See, e.g., Presidio

Components Inc. v. Am. Tech. Ceramics Corp., 723

F Supp. 2d 1284, 1324 (S.D. Cal. 2010), affd in

relevant part, 702 F.3d 1351 (Fed. Cir. 2012).

“[Willfully infringed” in § 298 only makes sense if it

refers to the standard for increasing damages under

§ 284.

Il. The Federal Circuit's Current Two-Part Test

for Determining Willfulness Is Incorrect as a

Matter of Law

Until 2007, the issue of willful patent

infringement was “a factual determination to be

made after consideration of the totality of the

circumstances.” Am. Med. Sys., Inc. v. Med. Eng’g

Corp., 6 F.3d 1523, 1530 (Fed. Cir. 1993). On appeal,

the Federal Circuit reviewed the “determination of

willfulness under a clearly erroneous standard.” Jd.

But in Seagate, the Federal Circuit, sitting en

banc, substantially reshaped the legal standard for

establishing willfulness. Responding to arguments

that its prior jurisprudence set too low a bar for

finding willfulness,’? the Federal Circuit announced

’ In particular, the Federal Circuit concluded in Seagate

that the so-called “affirmative duty of due care” articulated in

Underwater Devices, Inc. v. Morrison-Knudsen Co., 717 F.2d

1380 (Fed. Cir. 1983), which required a potential infringer with

notice of another’s patent rights to exercise due care—most

commonly by obtaining the advice of competent legal counsel

prior to engaging in potentially infringing conduct—was “more

17

that a patentee must make “at least a showing of

objective recklessness” by the accused infringer.

Seagate, 497 F.3d at 1371. It then articulated a two-

part test for this showing:

[T]o 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 . . . was either known or so

obvious that it should have been known to the

accused infringer.

Jd. Gnternal citation omitted). In Bard Peripheral

Vascular, Inc. v. W.L. Gore & Associates, 682 F.3d

1003 (Fed. Cir. 2012), the en banc Federal Circuit

held that the first part of the Seagate test—the so-

called objective prong—was “best decided by the

judge as a question of law subject to de novo review,”

akin to negligence” than willfulness and thus overruled it.

Seagate, 497 F.3d at 1370-71. Amici agree that a negligence-

like standard is inappropriate for determining willfulness and

that a showing of at least recklessness is required under § 284.

However, amici contend this showing should be made under a

totality of the circumstances, rather than the rigid test

articulated in Seagate and its progeny. See infra pp. 27-28.

18

even though this inquiry often involves underlying

factual issues.® Jd. at 1007.

For the reasons described below, the Federal

Circuit’s current rigid two-part test for determining

willfulness (and thus eligibility for increased

damages) under § 284 should be rejected in favor of a

flexible, totality-of-the-circumstances inquiry.

A. The Pre-Seagate Approach to

Willfulness Was a Flexible Inquiry

For nearly 25 years prior to its decision in

Seagate, the Federal Circuit employed a flexible,

totality-of-the-circumstances approach in deciding

whether an infringer’s conduct was willful. As one

decision put it:

In determining whether willfulness has been

shown, we look to the totality of the

circumstances, understanding that willfulness,

as in life, is not an all-or-nothing trait, but one

of degree. It recognizes that infringement may

range from unknowing, or accidental, to

deliberate, or reckless, disregard of the

patentee’s legal rights.

Comark Commce'ns, Inc. v. Harris Corp., 156 F.3d

1182, 1190 (Fed. Cir. 1998) (internal quotations and

citation omitted)); see also Rolls-Royce Ltd., v. GTE

8 The majority opinion in Bard noted that the objective

reasonableness inquiry was a question of law, even when the

asserted defenses that allegedly rendered the infringer’s

conduct reasonable involved questions of fact, such as

anticipation. 682 F.3d at 1007.

19

Valeron Corp., 800 F.2d 1101, 1110 (Fed. Cir. 1986)

(“In respect of willfulness, there cannot be hard and

fast per se rules.”). This inquiry “includeld]

subjective as well as objective elements,” Pa// Corp.

v. Micron Separations, Inc., 66 F.3d 1211, 1221 (Fed.

Cir. 1995), such as “the closeness or complexity of

the legal and factual questions presented”; whether

the infringer had engaged in copying of the

patentee’s product, or alternatively whether it had

“attemptled] to design around and avoid the patent”;

whether the infringer “relied on legal advice”; and

“any other factors tending to show good faith” by the

infringer. SRI Int, Inc. v. Advanced Tech. Labs.,

Inc., 127 F.3d 1462, 1465 (Fed. Cir. 1997).

B. The Federal Circuit’s Current Two-Part

Test for Evaluating Willfulness Is

Fatally Flawed

The Federal Circuit abandoned this flexible

approach by adopting the rigid, two-part test first

articulated in Seagate and further elaborated upon

in Bard. As explained below, this test is fatally

flawed because it is “overly rigid” and too “inflexible”

for the discretionary inquiry mandated by § 284.

Octane Fitness, 134 S. Ct. at 1756-57.

1. The Federal Circuit’s Rigid Test for

Willfulness Is Similar to the Two-

Part Test for Attorney's Fees

Rejected in Octane Fitness

In Octane Fitness, this Court rejected a similar

two-part, objective/subjective test for attorney’s fees

pursuant to § 285 of the Patent Act. Jd. at 1749. As

with willfulness, historically the Federal Circuit

20

employed a flexible, totality-of-the-circumstances

standard for determining eligibility for attorney's

fees in patent cases. /d. at 1754. Indeed, the Federal

Circuit often considered attorney’s fees under § 285

hand-in-hand with willful intringement under § 284,

affirming fee awards based at least in part on a

finding of willfulness. See, e.g., Kori Corp. v. Wilco

Marsh Buggies & Draglines, Inc., 761 F.2d 649, 656-

57 (Fed. Cir. 1985) (willful infringement found;

double damages and attorney fees awarded);

Rosemount, Inc. v. Beckman Instruments, Inc., 727

F.2d 1540, 1547-48 (Fed. Cir. 1984) (willful

infringement found; treble damages and attorney

fees awarded); see also Imonex Servs., Inc. v. W.H.

Munzprufer Dietmar Trenner GmbH, 408 F.3d 1374,

1378 (Fed. Cir. 2005) (“The criteria for declaring a

case exceptional [under § 285) include willful

infringement... .”).

In Brooks Furniture Manufacturing, Inc. v.

Dutailier {nternational, Inc., 393 F.3d 1378 (Fed.

Cir. 2005), however, the Federal Circuit “abandoned

that holistic, equitable approach in favor of a more

rigid and mechanical formulation” for determining

exceptionality under § 285. Octane Fitness, 134 S.

Ct. at 1754. Specifically, Brooks Furniture

articulated a two-part test requiring the prevailing

party to prove the litigation was both (1) objectively

baseless and (2) brought in subjective bad faith. 393

F.3d at 1381. This Court unanimously rejected the

Brooks Furniture test as “unduly rigid” and

“impermissibly encumberling] the statutory grant of

discretion” by dramatically circumscribing the

district court’s discretion for awarding attorney’s

fees. Octane Fitness, 134 S. Ct. at 1755.

21

Here, the Federal Circuit similarly erred in

adopting a rigid, two-part, objective/subjective test

for determining willfulness under § 284. Indeed, the

Federal Circuit itself has declared that the two-part

test for “objective baselessness .. . under Brooks

Furniture is identical to the objective recklessness

standard. for § 284 willful infringement actions

under [Seagate].” iLOR, LLC v. Google, Inc., 631

F.3d 1372, 1377 (Fed. Cir. 2011). It has also

emphasized that, like Brooks Furniture, evidence of

the infringer’s state of mind “is irrelevant to the

objective baselessness inquiry” required by the first

part of the test. zLOR, 631 F.3d at 1377-78. And like

Brooks Furniture, this inflexible approach is

contrary to the statutory language of § 284, which

allocates significant discretion to the trial court.

Compare 35 U.S.C. § 284 (“[T]he court may increase

damages up to three times the amount found or

assessed.” (emphasis added)), with id. § 285 (“The

court in exceptional cases may award attorney fees

to the prevailing party.” (emphasis added)).

2. The Objective Prong Is an Overly

Strict Gatekeeper to the Willfulness

Inquiry

In addition to its inflexible nature, the objective

prong of the two-part test operates as an overly strict

gatekeeper to the willfulness inquiry, as many

claims of willfulness never proceed beyond this

threshold determination.

The Federal Circuit has held that the existence of

a “reasonable” or “substantial” but ultimately

unsuccessful defense to an infringement claim

means the objective prong cannot be satisfied and

22

thus the willfulness inquiry must be terminated.

See, e.g., Bard Peripheral Vascular, Inc. v. W.L. Gore

& Assocs., Inc., 776 F.3d 837, 844 (Fed. Cir. 2015)

(“Objective recklessness will not be found where the

accused infringer has raised a substantial question

as to the validity or noninfringement of the patent.”

(internal quotations and citation omitted)); Spine

Sols., Inc. v. Medtronic Sofamor Danek USA, Inc.,

620 F.3d 1305, 1319 (Fed. Cir. 2010) (“Thle]

‘objective’ prong of Seagate tends not to be met

where an accused infringer relies on a reasonable

defense to a charge of infringement.”). This extends

not just to potential defenses known to the infringer

prior to engaging in infringing conduct (such as

those developed in an opinion of counsel), but to

defenses first discovered during the pendency of

litigation as well. See, e.g., Carnegie Mellon Univ. v.

Marvell Tech. Grp., Ltd., No. 2014-1492, 2015 WL

4639309, at *14 (Fed. Cir. Aug. 4, 2015) (“[Wle have

repeatedly assessed [the] objective reasonableness of

a defense without requiring that the litigation had

the defense in mind before the litigation.”), petition

for rehg en banc held in abeyance, 805 F.3d 1382

(Fed. Cir. Nov. 17, 2015) (per curiam); Glob. Traffic

Techs. LLC v. Morgan, No. 2014-1537, 2015 WL

3513416, at *7 (Fed. Cir. June 4, 2015) (explaining

the objective prong “requires analysis of all of the

infringer’s non-infringement and invalidity defenses,

even if those defenses were developed for litigation”);

see also Halo Elecs., Inc. v. Pulse Elecs., Inc., 769

F.3d 1371, 1381-83 (Fed. Cir. 2014).

As a result, willfulness often “turns not on an

evaluation of the risk of infringement at the time the

infringement occurred, but on a post-hoc analysis of

23

whether or not an omniscient accused infringer

would have recognized it had a viable defense.”

Jason Rantanen, An Objective View of Fault in

Patent Infringement, 60 Am. U. L. Rev. 1575, 1628-

29 (2011). Because skilled litigation counsel can

usually articulate at least one reasonable defense to

an infringement claim,’ the Federal Circuit’s

omniscient view of objective reasonableness sets a

high bar. Indeed, one empirical study of district

court decisions on willfulness after Seagate found

that the existence of a “substantial” or “legitimate”

defense was “the single best way to defeat a

willfulness claim.” See Christopher B. Seaman,

Willful Patent Infringement and Enhanced Damages

After In re Seagate’ An Empirical Study, 97 Iowa L.

Rev. 417, 452 tbl.5, 457 (2012).

The Federal Circuit also has held that the

objective prong must be proven by “clear and

convincing evidence,” Seagate, 497 F.3d at 1371,

even though this is an evidentiary standard that

“applies to questions of fact and not to questions of

8 In addition to non-infringement, the most common

defenses raised in patent litigation are lack of patentable

subject matter, anticipation/lack of novelty, obviousness,

indefiniteness, lack of enablement, and inadequate written

description. See John R. Allison, Mark A. Lemley & David L.

Schwartz, Understanding the Realities of Modern Patent

Litigation, 92 Tex. L. Rev. 1769, 1785 tbl.2 (2014). Other

potential defenses include inequitable conduct, laches,

equitable estoppel, contractual estoppel, license, co-ownership,

patent misuse, sovereign immunity, the reverse doctrine of

equivalents, and prior commercial use. See Patent Litigation

Strategies Handbook 1282-87, 1294-1322 (Barry L. Grossman

& Gary M. Hoffman eds., 3d ed. 2010).

24

law,” Microsoft Corp., 131 S. Ct. at 2253 (Breyer, J..,

concurring) (citing Addington v. Texas, 441 U.S. 418,

423 (1979)), thus further raising the bar for

satisfying this requirement. In addition, the Federal

Circuit’s reclassification of the first part of the

willfulness inquiry as a question of law, see Bard,

682 F.3d at 1007, grants it de novo review over this

issue, which it has repeatedly used to overturn

findings of willfulness on appeal. See, e.g., Carnegie

Mellon Univ., 2015 WL 4639309, at *12-15; Glob.

Traffic Techs. LLC, 2015 WL 3513416, at *8;

Innovention Toys, LLC v. MGA Entmtt, Inc., 611 F.

App’x 693, 700-01 (Fed. Cir. 2015); Stryker Corp. v.

Zimmer, Inc., 782 F.3d 649, 660-62 (Fed. Cir. 2015);

Univ. of Pittsburgh v. Varian Med. Sys., Inc., 561 F.

App’x 934, 943-45 (Fed. Cir. 2014); Lee v. Mike's

Novelties, Inc., 543 F. App’x 1010, 1016-17 (Fed. Cir.

2013); Harris Corp. v. Fed. Express Corp., 502 F

App’x 957, 969 (Fed. Cir. 2013); Bard, 682 F.3d at

1005-08; Spine Sols., Inc., 620 F.3d at 1320. In sum,

the Federal Circuit’s application of the objective

prong of Seagate has effectively elevated a single

factor—the existence of a reasonable litigation

defense to infringement—and made it dispositive of

the entire willfulness inquiry in most cases.

3. The Federal Circuit's Erroneous

Two-Part Test Often Excludes Key

Evidence Regarding an Infringer’s

State of Mind

The Federal Circuit’s two-part test for

willfulness is further flawed because it prohibits

consideration of the infringer’s state of mind until

(and unless) the objective prong is deemed satisfied.

25

Under the current standard, “the state of mind of the

accused infringer is not relevant” to determining

objective reasonableness. Seagate, 497 F.3d at 1371;

see also Powell v. Home Depot U.S.A., Inc., 663 F.3d

1221, 1236 (Fed. Cir. 2011) (“Should the court

determine that the infringer’s reliance on a defense

was not objectively reckless, it cannot send the

question of willfulness to the jury, since proving the

objective prong is a predicate to consideration of the

subjective prong.”).

By artificially bifurcating the willfulness inquiry

into separate objective and _ subjective prongs

evaluated by different decisionmakers (judge and

jury, respectively), the Federal Circuit’s rigid two-

part test often precludes consideration of highly

probative evidence regarding the infringer’s intent,

such as copying.’° For example, in DePuy Spine, Inc.

v. Medtronic Sofamor Danek, Inc., 567 F.3d 1314

(Fed. Cir. 2009), the patentee argued that the

infringer had knowingly copied its patented

invention and that this was material evidence of

willfulness. Jd. at 1336. The Federal Circuit rejected

10 Empirical studies have found a strong relationship

between evidence of copying and willful infringement. See

Christopher A. Cotropia & Mark A. Lemley, Copying in Patent

Law, 87 N.C. L. Rev. 1421, 1455 (2009) (finding in study of

district court decisions involving willfulness from January 2006

through February 2008 that “successful proof of copying

overwhelmingly leads to a finding of willfulness”); Seaman,

supra, at 458 (finding in study of district court decisions on

willfulness from Seagate through August 2010 that willfulness

was found 63% of the time when the patentee offered evidence

of copying by the accused infringer, compared to 29% of the

time when no evidence of copying existed).

26

this claim, concluding that evidence of copying was

“not relevant to the objective inquiry under Seagate's

first prong.” Jd.; see also id. at 1337 (holding that

“DePuy’s arguments concerning ‘copying .. . are

relevant only to Medtronic’s mental state regarding

its direct infringement under Seagateés second

prong”). And because it found that the patentee had

articulated a substantial (but losing) defense of non-

infringement under the doctrine of equivalents, it

affirmed the district court’s grant of judgment as a

matter of law that overturned the jury’s finding of

willfulness. Jd. at 1335-37.

In contrast, pre-Seagate case law frequently

relied on a finding of copying to support willfulness.

See, e.g., Stryker Corp. v. Intermedics Orthopedics,

Inc., 96 F.3d 1409, 1414 (Fed. Cir. 1996) (affirming

finding of willful infringement based in part on

evidence that the infringer had “deliberately copied

the ideas or design of the [asserted] patent”); Milgo

Elec. Corp. v. United Bus. Commce’ns, Inc., 623 F.2d

645, 666 (10th Cir. 1980) (“Many courts have held

that faithful copying of a patented product shows an

intentional disregard for the patent owner's rights

and supports an award of increased damages under

[§ 284].”). Indeed, some scholars have argued that

the purpose of willfulness is to deter intentional

copying. See, e.g., Lemley & Tangri, supra, at 1118

(“Willfulness law is designed to deter unscrupulous

copyists from taking advantage of the patent

disclosure in order to copy the patentee’s invention

and rush it to market.”). And evidence of copying is

relevant to other issues of liability, such as

inducement of infringement. See Global-Tech

Appliances, Inc. v. SEB S.A., 131 S. Ct. 2060, 2071

27

(2011). In short, it inconsistent with the flexible

inquiry mandated by § 284 to decide the issue of

willfulness without considering evidence regarding

the infringer’s state of mind.

Ill. Willfulness Should Be Determined Under the

Totality of the Circumstances

In lieu of the rigid, two-part test articulated by

the Federal Circuit in Seagate and its progeny, this

Court should conclude the correct test for willfulness

is a determination that the infringer has at least

recklessly violated the patentee’s rights under a

totality of the circumstances.'! This approach is

faithful to both the text of § 284 and historical

practice. On appeal, the lower court’s decision should

be reviewed for abuse of discretion. Finally, a

totality-of-the-circumstances approach to willfulness

will not result in a parade of horribles, such as

jeopardizing attorney-client privilege or a dramatic

increase in treble damage awards.

A. __ The Statutory Text and Historical

Practice Favor a Totality-of-the-

Circumstances Approach

This Court should hold that willfulness should be

determined under the totality of the circumstances.

As previously explained, since 1836, patent law has

granted discretion to the trial court whether and

how much to increase damages due to willfulness.

| In amic?s view, reckless violations of a patentee’s rights

would include, inter alia, knowing and _ intentional

infringement.

28

See supra pp. 3-16. The current version of the

increased damages provision, § 284, similarly grants

discretion by stating that “the court may increase

the damages up to three times the amount found or

assessed.” 35 U.S.C. § 284 (emphasis added). Use of

“the word ‘may’ clearly connotes discretion.” Martin

v. Franklin Capital Corp., 546 U.S. 132, 136 (2005)

(quoting Fogerty, 510 U.S. at 533). The only textual

limitation on the trial court’s discretion is that

increased damages “shall not apply to provisional

rights under [§] 154(d).” 35 U.S.C. § 284.

In Octane Fitness, this Court interpreted similar

discretionary language in § 285 to require that

district courts apply a “totality of the circumstances”

test in determining whether a case is “exceptional.”

Octane Fitness, 134 S. Ct. at 1756. A similar

construction should apply to § 284, particularly since

both statutory provisions serve a common objective—

the deterrence of willful infringement. See Mathis v.

Spears, 857 F.2d 749, 754 (Fed. Cir. 1988)

(“Provisions for increased damages under 35 U.S.C. §

284 and attorney fees under 35 U.S.C. § 285 are

available as deterrents to blatant, blind, willful

infringement of valid patents.”); see also Knorr-

Bremse, 383 F.3d at 1343 (stating that the “[rlemedy

for willful infringement is founded on 35 U.S.C.

§284 and 35 U.S.C. § 285”).

A totality-of-the-circumstances test for

determining willfulness also is consistent with prior

case law. As previously discussed, courts routinely

considered the totality of the circumstances in

adjudging willfulness pre-Seagate. Supra pp. 16, 18-

19.

29

B. The District Court’s Decision Should Be

Reviewed for Abuse of Discretion on

Appeal

In addition, the Court should conclude that the

district court’s decision regarding increased damages

for willfulness should be evaluated for abuse of

discretion on appeal, rather than de novo review. As

discussed above, the statutory text of § 284 grants

discretion to the district court regarding whether to

increase damages for willfulness. In Highmark Inc.

v. Allcare Health Management System, Inc., 134 S.

Ct. 1744 (2014)—decided the same day as Octane

Fitness—the Court held that similar discretionary

language in § 285 should be “reviewed on appeal for

abuse of discretion.” /d. at 1748. Like in Highmark,

the text of § 284 “emphasizes the fact that the

determination is for the district court,’ which

‘suggests some deference to the district court upon

appeal.” Jd. (quoting Pierce v. Underwood, 487 U.S.

552, 599 (1988)).

A deferential standard of review on appeal also

makes logical sense in light of the highly fact-specific

nature of the willfulness inquiry. As the Federal

Circuit explained pre-Seagate, willfulness is

primarily “a question of fact, for it includes elements

of intent, reasonableness, and belief’ that are

particularly within the province of the trial court.

Pall Corp., 66 F.3d at 1221; see also SRI Int’, Inc.,

127 F.3d at 1465 (“Since the issue of willfulness not

only raises issues of reasonableness and prudence,

but is often accompanied by questions of intent,

belief, and credibility, appellate review requires

appropriate deference to the special role of the trial

30

court in making such determinations.”). In addition,

this Court has held that punitive damages should be

reviewed under an abuse-of-discretion standard on

appeal “[i]f no constitutional issue is raised,” such as

when the relevant statute “placels} limits on the

permissible size” of such awards. Cooper Indus., Inc.

v. Leatherman Tool Grp., Inc., 532 U.S. 424, 433

(2001). As a result, “an appellate court should apply

an abuse-of-discretion standard in reviewing all

aspects of a district court’s” § 284 determination.

Highmark, 134 S. Ct. at 1749.

C. A Totality-of-the-Circumstances Test

Will Not Adversely Impact Attorney-

Client Privilege

One potential concern regarding a totality-of-the-

circumstances test is that it may adversely impact

attorney-client privilege by coercing accused

infringers to obtain and disclose an opinion of

counsel to defend against willfulness, thus waiving

the privilege. See, e.g., William F. Lee & Lawrence

P. Cogswell, III, Understanding and Addressing the

Unfair Dilemma Created by the Doctrine of Willful

Patent Infringement, 41 Hous. L. Rev. 393, 433-34

(2004) (labelling the “infringer’s dilemma” the choice

“to invoke the advice-of-counsel defense, thereby

waiving privilege or immunity or both, or choose not

to produce an opinion letter, thereby maintaining a

full panoply of privileges and immunities”). But this

is not likely to occur for at least three reasons.

First, in Anorr-Bremse, the Federal Circuit

rejected the so-called “adverse inference” rule, which

previously permitted the decisionmaker on

willfulness to make an adverse inference of

31

culpability based on an accused infringer’s failure to

obtain or offer an opinion of counse!] in its defense at

trial. 383 F.3d at 1344-46. This holding was

subsequently codified by Congress. See 35 U.S.C.

§ 298.12 As a result, an accused infringer’s decision to

maintain privilege and not offer an opinion of

counsel cannot be used against it, even under a

totality-of-the-circumstances approach.

Second, in Seagate, the Federal Circuit held that

any waiver of attorney-client privilege (as well as

work product protection) due to disclosure of an

opinion of counsel ordinarily will not extend to trial

counsel. 497 F.3d at 1373-74. This remains good law

even if Seagate's rigid two-part test is overturned by

this Court.

Third, despite the “widespread perception that

opinions of counsel remain a strong defense against

willfulness charges,” empirical evidence rebuts this

claim. Seaman, supra, at 454. One study of district

court decisions in the three years following Seagate

found nearly identical rates of willful infringement

findings in cases where infringers offered an opinion

of counsel and in cases they did not. Jd. As a result,

the incentive of accused infringers to disclose an

opinion of counsel is much weakened.

12 This provision is effective for all patent litigation that

commenced on or after January 14, 2013. Leahy-Smith

America Invents Act Technical Corrections § 1(a), Pub. L. No.

112-274, 126 Stat. 2456, 2456 (2013).

32

D. A Totality-of-the-Circumstances Test

Will Not Result in a Dramatic Increase

in Treble Damage Awards

Finally, a totality-of-the-circumstances approach

for determining willfulness will not lead to a

dramatic increase in treble damage awards. First,

even if the rigid, two-part test announced in Seagate

is replaced with a_ totality-of-the-circumstances

inquiry, the underlying requirement for increasing

damages under § 284—willfulness—remains intact.

As this Court has held in other civil contexts, a

showing of at least reckless misconduct is required

to establish willfulness. See, e.g., Safeco Ins. Co. of

Am. v. Burr, 551 U.S. 47, 57 (2007) (concluding that

the “standard civil usage” c‘ “willful” under the Fair

Credit Reporting Act includes reckless violations);

McLaughlin v. Richland Shoe Co., 486 U.S. 128, 132-

33 (1988) (concluding that willful violations of the

Fair Labor Standards Act include reckless

violations). As a result, lower courts cannot return to

a negligence-like standard for awarding increased

damages. See Seagate, 497 F.3d at 1370-71.

Second, even if willfulness is established, the

district court retains discretion whether to increase

damages and how much damages should be

increased, up to the statutory maximum of treble

damages. See 35 U.S.C. § 284 (stating that “the court

may increase the damages up to three times the

amount found or assessed” (emphasis added)); see

also Read Corp. v. Portec, Inc., 970 F.2d 816, 826

(Fed. Cir. 1992) (“An award of enhanced damages for

infringement, as well as the extent of the

enhancement, is committed to the discretion of the

33

trial court.”). Empirical studies have found that even

when a district court decides to increase damages for

willfulness under § 284, ‘+ awards the maximum of

triple damages substantially less than half of the

time. See Kimberly A. Moore, Judges, Juries, and

Patent Cases—An Empirical Peek Inside the Black

Box, 99 Mich. L. Rev. 365, 367, 394 (2000) (finding in

study of all patent cases that went to trial from

1983-1999 that damages were tripled only 35% of

the time when the district court increased damages

under § 284 and the average enhancement was less

than double damages); Seaman, supra, at 469

(finding in study of district court decisions from

September 2004 through July 2010 that over 70% of

increased damages awards under § 284 were for

double damages or less). This suggests that triple

damages are generally awarded only in egregious

cases of willfulness. See Read Corp., 970 F.2d at 826

(“The paramount determination in deciding to grant

enhancement and the amount thereof is the

egregiousness of the defendant’s conduct based on all

the facts and circumstances.”).

CONCLUSION

For the foregoing reasons, this Court should

reverse the Federal Circuit in both cases on the issue

of willfulness, hold that the appropriate standard

under § 284 is a showing that the infringer willfully

infringed under the totality of the circumstances and

that this determination is to be reviewed for abuse of

discretion on appeal, and remand to the district

court for proceedings consistent with this Court’s

opinion.

34

Respectfully submitted,

CHRISTOPHER B. SEAMAN

Counsel of Record

Washington and Lee

University School of Law

1 Denny Circle

Lexington, VA 24450

seamanc@wlu.edu

(540) 458-8520

JASON RANTANEN

University of lowa

College of Law

280 Boyd Law Building

Melrose & Byington

lowa City, LA 52232

jason-rantanen@uiowa.edu

(319) 335-9034

la

APPENDIX — LIST OF SIGNATORIES*

Timothy R. Holbrook

Professor of Law

Emory University School of Law

Jason Rantanen

Associate Professor of Law

University of lowa College of Law

Christopher B. Seaman

Associate Professor of Law

Washington and Lee University School of Law

* The views expressed in this brief are those of the

individual signatories and not those of the institutions with

which they are affiliated.