High Court’s ruling on damages may re-invigorate patent licensing

The Supreme Court of the United States is in the position to make patent licensing meaningful again. 

At least that is what some experts believe. SCOTUS has agreed to hear a case relating to willful patent infringement that could be a game changer for some businesses attempting to license. Over the past several years the environment for patent licensing has become increasingly contentious as the system adjusts to lack of judicial consistency and new laws intended to root out dubious patents.

Opinion is less divided on the likely outcome of the decision than its ultimate impact.

“While predicting the outcome of a Supreme Court decision is always speculative, this case should be one of the easiest outcomes to predict ever,” says Gene Quinn on IP Watchdog.

“Unless the Supreme Court fundamentally alters its statutory interpretation from the Octane Fitness case, supreme_court_buildingarbitrarily creating a distinction without a difference, the Supreme Court will grant district courts the same broad discretion on enhanced damages that they have been given with respect to awarding attorneys fees.”

Those familiar with enhanced-damages awards are aware that the Federal Circuit has created complex, somewhat arbitrary tests for determining when they can be granted.

A damages expert for a leading consulting firm told IP CloseUp that a decision to lower the bar for willfulness, or, at least, clarify it, could be a game changer not only for operating companies whose sales can be materially harmed by patent infringement, but NPEs, who will likely benefit from the more risk-adverse posture that many businesses will assume.

“Willfulness has been too hard to prove for a long time,” the expert said. “For it to have any real meaning, the criteria and application need to be less arbitrary, and the Supreme Court appears to be willing to provide more definition. That will give some licensors more negotiating leverage and many patents and portfolios greater value.”

An non-practicing entity told IP CloseUp, that he did not think that a Supreme Court ruling making willfulness easier to establish will have any effect much less a significant impact. “It’s so damn hard to prove willfulness, and even if you can get jury award, judges don’t usually along with them.”

Halo’s lawyers argue (PDF) that just as the Supreme Court created a more flexible test for awarding attorneys’ fees when it decided the Octane Fitness case last year, reports Ars Technica, the test for when willfulness awards should be granted should be loosened up as well.

The high court will hear cases from Halo Electronics Inc and Stryker Corp, consolidating them to consider the companies’ arguments that the willfulness standard as set out by the U.S. Court of Appeals for the Federal Circuit is too rigid and should be relaxed. The case is scheduled for oral arguments in early 2016.

Image source: biospectrumasia.com; adweek.com

 

About Bruce Berman

IP trend spotter, consultant and author.

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