Halo and Innovention: Federal Circuit Remands for Consideration of Enhanced Damages

A link to the Federal Circuit's opinion from this past Friday in Halo is here; no big surprises.  On remand from the Supreme Court, which as readers will recall overturned the Federal Circuit's standard for determining when a district court may award enhanced damages for patent infringement (see here), the Federal Circuit--after reaffirming that defendant Pulse was not liable for sales that the district court concluded were made outside the United States--has remanded to the district court to determine if the case is an appropriate one for an award of enhanced damages.   From the opinion:

Here,the jury awarded Halo $1.5 million in reasonable royalty damages with respect to products that were delivered in the United States. The jury also found that it was highly probable that Pulse’s infringement was willful. However, the district court determined that the objective prong of the Seagate test was not met because it concluded that the obviousness defense that Pulse presented at trial was not objectively baseless. On appeal, Pulse does not challenge the propriety of the jury finding of subjective willfulness. In light of the Supreme Court’s decision, we vacate the district court’s determination of no willful infringement. We remand for the district court to exercise its discretion and to decide whether, taking into consideration the jury’s unchallenged subjective willfulness finding as one factor in its analysis, an enhancement of the damages award is warranted.

Halo argues that Pulse did not actually rely on any invalidity defense pre-suit when selling the accused products because Pulse’s obviousness defense was developed after the lawsuit was filed in 2007. As the Supreme Court explained, “culpability is generally measured against the knowledge of the actor at the time of the challenged conduct.” Halo, 136 S. Ct. at 1933. Thus, in assessing the culpability of Pulse’s conduct, the district court should consider, as one factor in its analysis, what  Pulse knew or had reason to know at the time of the infringement of the Halo patents. 

Accordingly, we vacate the district court’s decision not to enhance damages under § 284 and remand for further proceedings.

Also on Friday, in a nonprecedential opinion the court remanded Innovention Toys v. MGM Entertainment (opinion here, previous blog post on the case here), for a determination of whether enhanced damages are appropriate after Halo.  The court holds that the jury has already found the infringement to have been subjectively willful, and that the district court should now determine whether it is sufficiently "egregious" to merit a damages enhancement.