The U.S. Supreme Court just issued an authoritative rebuke to the Federal Circuit today. The issue? Patent damages. In particular, enhanced damages for willful infringement.
In the Patent Act of 1793, Congress mandated treble damages for any patent infringement. Eventually, people figured out that this was a bit rough on innocent infringers and forty-three years later, in 1836, the law was changed to let the district courts decide when triple damages was an appropriate remedy.
Fast-forward to 2007. The Federal Circuit got together in an en banc decision (which means all eighteen judges participated) and they created a new two-part test that made it almost impossible for the lower courts to award enhanced damages. Why? Patent trolls. To protect innocent infringers, and even the not-so-innocent infringers, from treble damages, the Federal Circuit’s 2007 Seagate test quite literally slammed the door on enhanced damages.
Now, in a unanimous decision, the U.S. Supreme Court eliminated the Seagate test and set the patent ship aright again. The test for enhanced damages will now return to something that a patent holder can actually prove. With this decision, the district courts get back the wide discretion they held for 171 years to triple-punish the bad guys and go softer on the innocent ones, and the Federal Circuit gets a lesson in supremacy.
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