Supreme Court Changes Lower Court Ruling on Patent Law

A recent ruling by the U.S. Supreme Court changes lower court case law that made it difficult for patent holders to get punitive damages against infringers. Now that the lower court’s opinion has been overturned, it should be easier for patent holders to enforce their patents and put infringers on notice.

In a typical patent infringement case, a patent holder will ask a court to do several things. First, the patent holder will ask for the infringer to stop using its intellectual property. Then the patent holder will ask for payment of damages suffered by another using that patent. Lastly, if the infringement was willful, the patent holder will ask the court to order the infringer to pay three times what would actually be due. This last provision is provided by the U.S. Code on patent laws.

This typical way of going about patent infringement cases was changed by a court delegated with developing most patent case law. Under this court’s more recent rulings on tripling the amount of damages, it developed a special formula to determine whether such damages are justifiable. As per that formula, in order to award triple damages a court needs to find that the infringer’s defenses are unreasonable or entirely baseless.

One of the problems with this court-developed formula is the difficulty it had presented to patent holders in getting their due under the plain terms federal law. With such a high bar set by the federal circuit court, patent holders could not reasonably expect to deter patent infringement when a large company could take an invention and simply absorb patent lawsuit damages as a reasonable business expense.

Supreme Court Reasoning

Much of the reasoning in the court’s opinion is based on the protection of patent holders. In fact, the entire patent system has been heralded over the years as a unique way of fostering inventions and products that help society. By granting a patent for a limited amount of years, the system allows the owner to profit for a time and then the technology becomes available to everyone for even more widespread use.

While this is a generally efficient system that has fostered innumerable inventions, it is not entirely free of issues. One of these issues encompasses the so-called patent trolls. These are individuals or companies that purchase large numbers of patents and then look for inventions or products that could conceivably infringe upon those patents.  The patent trolls then sue those companies whether the sued companies knew about the patent or not.

Under U.S. patent law, patent infringement is a strict liability offense. This means that it does not matter whether a company or person knowingly infringes on an existing patent— any infringement, knowingly or not, results in a successful infringement case. This has cost large technology firms and companies huge sums in legal fees and fines. When the appeals court created its formula restricting access to triple damages, it sought to curb the abuses of the patent trolls. But the Supreme Court has stopped those efforts and made it easier for patent holders to enforce their patents.

At Royse Law Firm, we understand that almost all modern companies have intellectual property that they need to protect and defend. From initial contact to complex litigation, our Intellectual Property legal team can service all your company’s IP legal needs. Contact us today.

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Roger Royse
rroyse@rroyselaw.com

Roger Royse, the founder of the Royse Law Firm, works with companies ranging from newly formed tech startups to publicly traded multinationals in a variety of industries. Roger regularly advises on complex tax structuring, high stakes business negotiations and large international financial transactions. Practicing business and tax law since 1984, Roger’s background includes work with prominent San Francisco Bay area law firms, as well as Milbank, Tweed, Hadley and McCloy in New York City.
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