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for past infringement that would otherwise be available under the Patent Act’s six-year statutory limitations period for past damages under 35 U.S.C §286. Laches encouraged a patent owner to exercise its patent rights promptly upon learning of infringement, rather than waiting to sue until the defendant is prejudiced. In SCA Hygiene v. First Quality, the Supreme Court eliminated the availability of laches as a defense to the award of past damages for patent infringement.
Now that laches is no longer available as a defense, patent owners may hold off bringing suit until there are significant past damages available within the six-year statutory period, without concern that delay will potentially reduce their ability to collect past damages. It also enables patentees to place themselves in a stronger position in deciding when to bring suit, and to gain stronger settlement and litigation positions. Nevertheless, there are still some limitations of which patentees need to be aware. The court emphasized that equitable estoppel is still available to protect against “unscrupulous patentees” who induce potential infringers to produce arguably infringing products and then pursue an infringement claim.
Patentees also must to be careful in not causing unnecessary delay, since doing so can result in lower damages. For example, each day of delay could result in loss of damages that accrued on that day but now fall outside the six-year limitation period due to the delay. Potential infringers, on the other hand, are now more susceptible to unexpected lawsuits even after extensive licensing communications. On the other hand, it also gives them more oppor- tunity to consider declaratory judgment suits.
Limitations on Extraterritorial Reach Of U.S. Patent Laws
35 U.S.C. §271(f)(1) makes it an act of infringement to supply from the United States “all or a substantial portion of the compo- nents” of a patented invention so as to actively induce the combination of the components outside of the United States. Life Technologies supplied an enzyme from the United States to its U.K. subsidiary, which incorporated the enzyme into a diagnostic kit abroad, and was sold worldwide. The jury found infringement and awarded substantial damages. The judge reversed, holding that the “substantial portion” language of §271(f)(1) required that multiple components were shipped abroad. The Federal Circuit reversed, holding that the “substan- tial portion” language referred to importance, rather than quantity, and could be met by a single component—here, the enzyme.
On Feb. 22, 2017, in Life Technologies v. Promega, the Supreme Court reversed the Federal Circuit and held that there is no pat- ent infringement when an entity supplies “a single component” from the United States for combination into “a multicomponent inven- tion” outside the United States. The court left unresolved what percentage of components constitute a “substantial portion,” though it did say that a single component cannot be a “substantial portion.” The exact boundaries of §271(f)(1) are still to be determined. Until the lower courts weigh in on this question, suppliers will face uncertainty when they ship multiple components of a patented invention
from the United States for assembly abroad. As a preemptive measure, limiting the number of components when drafting claims could be advantageous because the higher the number of components, the more uncertainty there is as to what constitutes a “substantial” portion.
Enhanced Damages for Infringement And Use of Opinions of Counsel
In June 2016, in Halo Electronics v. Pulse Electronics, the Supreme Court addressed the Federal Circuit’s test for determining whether enhanced damages should be awarded for pat- ent infringement under 25 U.S.C. §284. The court concluded that the prior Federal Circuit
The Supreme Court’s recent trend has been to discard long- standing judicial constructs interpreting the Patent Act, and following instead common-law principles more applicable to other areas of intellectual prop- erty law and civil litigation.
Seagate test was “unduly rigid, and impermissi- bly encumbers the statutory grant of discretion to the district courts.” The court rejected the requirement for clear and convincing evidence of both objective recklessness on the part of the infringer, as well as subjective knowledge of the risk of infringement.
The court faulted the Seagate test for requiring a showing of “objective recklessness” at the time of litigation, which would absolve the accused infringer regardless of what they thought when they realized the patent was relevant to their products. The court also relaxed the evidentiary burden for proving willful infringement from clear and convincing evidence to a preponderance of the evidence. The court thus focused on the infringer’s state of mind, and did not provide much weight as to the objective reasonability of the infringer’s defenses.
Since the Supreme Court puts more empha- sis on what defenses existed when an alleged infringer was confronted with a patent, com- panies may want to review their policies concerning replying to infringement letters and whether an opinion from outside pat- ent counsel may be necessary. In particular, under Halo, companies will need to consider that where there was a pre-suit assertion of infringement, an opinion of counsel can be used as good evidence to show that a defen- dant’s behavior was not willful or careless.
Conclusion
The Supreme Court’s recent trend has been to discard long-standing judicial constructs interpreting the Patent Act, and following instead common-law principles more appli- cable to other areas of intellectual property law and civil litigation. Whether you are a plaintiff or defendant, you need to be cog- nizant of the impact of these decisions on your intellectual property litigation strategies.
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