The U.S. Supreme Court decided Monday to hear two cases about the penalties companies are facing for infringing on others' patents—a matter that could have potential implications for the medical device industry.
The justices will hear Halo Electronics Inc. v Pulse Electronics Inc. and Stryker Corporation v. Zimmer, which both raise the question of when a company may receive up to triple damages in patent infringement cases. Now, if a company is found to have willfully infringed on a patent, then a district court can order that company to pay the patent-holder triple damages. The question is whether the test for willful infringement, at the U.S. Court of Appeals for the Federal Circuit, is appropriate.
The justices decided to consolidate the cases for hearing and decision.
The cases could “have a very significant effect” on whether and when such triple damages are awarded, said Harold Edgar, a professor at Columbia Law School.
“The ease with which willful damages can be awarded affects people's judgment about whether to settle or carry on with behavior that's alleged to be infringing,” Edgar said.
It's an issue that would likely come into play in cases involving medical devices, he said. It wouldn't likely, however, affect patent cases involving pharmaceuticals because pharmaceutical patent cases don't typically involve damages, he said.
In the Stryker case, the Michigan-based medical-device maker sued competitor Zimmer saying it infringed on Stryker's patent for a handheld device used to clean wounds and remove tissue from wound sites. A jury ruled that Zimmer willfully infringed on the patent and should pay Stryker triple damages worth $210 million. A federal appeals court, however, ruled that though Zimmer infringed on that patent, it did not do so willfully, and it undid the triple damages, saying Stryker was entitled to $70 million not $210 million.
In the Halo case, the small company, which makes electrical components, sued Pulse for patent infringement. A jury awarded Halo $1.5 million, but the judge wouldn't increase the damages, and the federal circuit agreed with that decision.
Stryker argues in court documents that the current test for determining willfulness is flawed.
Under that test, a company or individual must show that the party infringed on the patent despite a high likelihood that its actions infringed on a valid patent and that the risk of patent infringement was either known or should have been obvious.
Stryker says that standard wrongly protects those who infringe on patents from triple damages “so long as they present at least one plausible defense at the post-trial appellate stage.”
Zimmer, however, argues in court documents that changing that willfulness test at the federal circuit would lead to disparities in how circuit courts handle such questions across the country.
Getting rid of the willfulness test would also “force small companies to settle when they are unable to bear the risk of large judgments,” according to court documents.