Halo Electronics, Inc. v. Pulse Electronics, Inc.; Stryker Corp. v. Zimmer, Inc.: U.S. Supreme Court Rejects Federal Circuit’s Framework for Enhancing Damages in Patent Infringement Cases

Sullivan & Cromwell LLP - June 14, 2016

The Supreme Court held today in consolidated cases Halo Electronics, Inc. v. Pulse Electronics, Inc. and Stryker Corp. v. Zimmer, Inc. that the Patent Act gives district courts discretion to award enhanced damages in “egregious” cases of patent infringement.  The Court overruled the Federal Circuit’s rigid two-part test that (1) an accused infringer must have acted “despite an objectively high likelihood” that its actions infringed a valid patent and (2) the risk of infringement must have been “either known or so obvious that it should have been known.”  Dispensing with that test, the Court held that district courts may award enhanced damages in any case in which, based on the infringer’s knowledge at the time of the infringement, the misconduct was egregious. Such a determination should be made by a preponderance of the evidence and is subject to review by the Federal Circuit for abuse of discretion.  Sullivan & Cromwell LLP served as counsel for the petitioners in Stryker, and presented oral argument to the Supreme Court on behalf of the petitioners in both cases.