Supreme Court to Address IPR Proceedings & Willful Infringement

The Supreme Court will continue to shape patent law in 2016, addressing critical components of the widely-popular Inter Partes Review (IPR) proceedings before the Patent Trial and Appeal Board, and examining the standard for willful patent infringement in district court actions.

IPR proceedings provide a streamlined avenue for invalidating issued patents.  In the first two years of their existence, over 4,000 IPR proceedings have been filed, with the majority leading to invalidation of one or more patent claims.  The Supreme Court has now granted a writ of certiorari in its first IPR case, Cuozzo Speed Technologies v. Lee.  The Court will review two key issues: (1) whether the Federal Circuit erred in holding that, in IPR proceedings, the Board may construe claims in an issued patent according to their broadest reasonable interpretation rather than their plain and ordinary meaning; and (2) whether the Federal Circuit erred in holding that, even if the Board exceeds its statutory authority in instituting an IPR proceeding, the Board’s decision whether to institute an IPR is judicially unreviewable.  A reversal on the claim construction issue would make it more difficult for patent challengers to invalidate claims in IPR, bringing IPR claim construction in line with the current district court standard.  Such a change could reduce the draw of IPR proceedings, which have tended to favor the party challenging a patent.  A reversal on the second issue could also reduce the popularity of IPRs.  The potential for judicial review would increase the costs of IPRs by adding another ground for patent holders to challenge such proceedings, and it would likely reduce the number of IPRs that proceed to hearing.  But even with these expected changes, IPRs would remain a viable alternative to lengthy district court actions.

On the heels of last year’s decision liberalizing attorney fee shifting in patent cases, the Supreme Court may well eliminate the bright-line test for willful patent infringement in 2016.  In the joint cases of Halo Electronics v. Pulse Electronics and Stryker  v. Zimmer, the Court will address the following issues:  (1) Whether the Federal Circuit erred by applying a rigid, two-part test for enhancing patent infringement damages under 35 U.S.C. § 284, that is the same as the rigid, two-part test this Court rejected last term in Octane Fitness for imposing attorney fees under the similarly-worded 35 U.S.C. § 285; and (2) whether a district court has the discretion under 35 U.S.C. § 284 to award enhanced damages for the deliberate copying of a patented invention.  The Supreme Court may well answer both questions in the affirmative.  It remains to be seen whether the Court will address many other important related issues including (1) whether willfulness is a prerequisite to enhanced damages; (2) whether subjective bad faith is sufficient for enhanced damages; (3) whether district courts should apply a totality of the circumstances test when determining enhanced damages; (4) whether preponderance of evidence or clear and convincing evidence is required; and (5) what level of review should be applied when an enhanced damage award is appealed.

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