Askeladden Urges Supreme Court to Uphold Willfulness Requirement for Punitive Damages in Patent Infringement Cases to Protect Against Abuse

Advocates that Willfulness Requirement Protects Good-Faith Actors from Exposure to Dubious Litigation and Punitive Damages

For Immediate Release:

Date:  December 17, 2015
Contact: Sean Oblack, 202.649.4629

Download full amicus brief

New York, NY -Askeladden LLC, as part of its Patent Quality Initiative, urged the U.S. Supreme Court today to preserve the existing legal requirement that only willful patent infringers can be subject to increased patent infringement damages arguing that this traditional rule provides an important check against patent abuse.

The Court will consider two cases, Halo Electronics, Inc. v. Pulse Electronics, Inc. and Stryker Corporation v. Zimmer, Inc. – to determine when increased damages may be awarded in patent infringement cases. In an amicus curiae brief filed yesterday, Askeladden asked the court to:

1) Reject Petitioners’ requests to fundamentally change the basis upon which punitive damages are awarded for patent infringement; and

2) Ensure that defendants acting in good faith are insulated from increased damages.

Askeladden is dedicated to improving the understanding, use, reliability, and quality of patents pertinent to financial services and other industries. Financial services companies are among the most common targets for abusive patent holders which manipulate the patent system by acquiring patents for the sole purpose of extracting settlement payments by threatening litigation. Askeladden argues that the elimination of the established willfulness threshold requirement would penalize good-faith actors and provide abusive patent holders with enhanced leverage to coerce defendants into costly settlements.

“A strong patent system is vital for innovation and continued economic growth,” said Sean Reilly, General Counsel of Askeladden, LLC. “Discarding willfulness as a threshold requirement encourages abusive patent holder practices and discourages socially beneficial and procompetitive behaviors such as good-faith validity challenges of poor quality patents.”

The Court will specifically review whether awarding enhanced damages under 35 U.S.C. § 284 requires a finding of willfulness, and if so, whether the two-part test for determining willful infringement established by the Federal Circuit in In re Seagate Technology is the appropriate test. This test is used by the courts to determine if additional damages beyond compensation for unlicensed use of a patent is warranted. Petitioners in these cases are asking the Court to eliminate willfulness as a threshold requirement for enhanced damages and at minimum to reject the Seagate test for willfulness.

Askeladden strongly defends maintaining willfulness as a threshold requirement for awarding enhanced patent damages. In the brief, Askeladden urges the Court to protect defendants who act in good faith and do not “willfully” infringe:

“Making punitive damages routinely available in infringement cases will make a serious problem worse by increasing the leverage [abusive] patentees have to coerce settlement payments from defendants that have little choice other than to pay the price of peace.”

Should the Court modify the Seagate test, Askeladden urges the Court to avoid putting good faith actors at risk of punitive damages by recognizing that objectively reasonable defenses should generally foreclose awarding enhanced damages except where a patent holder proves that the defendant did not hold the reasonable belief at the time of the alleged infringement and in fact acted in bad faith.  Applicable considerations to determine bad faith may include whether a defendant deliberately copied the patent in question, whether the defendant attempted to conceal its conduct, and whether the defendant had a motivation to injure the patent holder.

About Patent Quality Initiative

Askeladden L.L.C. is a wholly-owned subsidiary of The Clearing House. Established in 1853, The Clearing House is the oldest banking association and payments company in the United States and is owned by the world’s largest commercial banks, which hold half of all U.S. deposits. Askeladden is an education, information and advocacy organization with the goal of improving the understanding, use and reliability of patents in financial services and other industries. As part of its Patent Quality Initiative, Askeladden strives to promote better patents and patent holder behaviors by regularly filing amicus briefs, Inter Partes Reviews (IPRs) and engaging in educational activities.