Apply Damage Awards that are Fair and Support Innovation
When a defendant is found to infringe, the patent owner should receive a damage award that compensates it for the use of that invention based on the economic value contributed by the patented invention. But damage awards that overcompensate a patent owner compared to the value of the patented technology encourage speculation and wasteful litigation. Too often this has been the case, with staggering awards that make little sense when levied against complex tech products comprising tens of thousands of inventions having nothing to do with the plaintiff's patents. To support juries and courts in reaching fair compensatory damage awards, courts must craft legal rules that reflect economic reality, the complexity of high-tech products and the patent landscape, and admit only evidence that is grounded in rigorous economic analysis.
Enhanced damages for willful infringement should be awarded in only the most egregious circumstances involving “a wanton and malicious pirate.” And because insufficiently supported allegations of willfulness can be distracting and prejudicial in litigation and at trial, courts should dismiss them at the pleadings stage or prevent the jury from hearing them. The 2016 Supreme Court decision in Halo v. Stryker took a step in the wrong direction when it made defendants having objectively reasonable defenses potentially liable for enhanced damages, and Congress should correct it.
Without correction, enhanced damages law will undermine a critical objective of the patent system--to encourage the dissemination and sharing of information through publication of a patent’s technical disclosure as a means of supporting innovation. Patents cannot fulfill that purpose if the public avoids reading them for fear of being charged with willful infringement and liability for trebled damages. If a company’s best defense to allegations of willful infringement is to obtain an expensive opinion of counsel on every patent it learns of, the disclosure function of the patent system will suffer severely.