The Federal Circuit’s Give-and-Take in Cisco’s Willful Infringement

The first time at the Court of Appeals for Federal Circuit, Cisco was able to slice its damages penalty in half by eliminating the extra $23.6 million awarded by the trial court for enhanced damages due to willful infringement. On its second visit to the court of appeals, it was not so lucky.

In SRI International v. Cisco Systems (Fed. Cir. Sept. 28, 2021), once again the main and critical question that dominated the willfulness inquiry was whether Cisco had a reasonable belief that it did not infringe the patents in suit or that the patents were invalid. In its defense, Cisco presented an invalidity argument based on a prior art reference that was twice considered and twice rejected by the Patent Office. It also presented a non-infringement argument that was inconsistent with the court’s claim construction as well as one that was directly contradicted by its own evidence. The appeals court found these arguments unreasonable, held that Cisco’s infringement was willful as a result, and reinstated the original willfulness finding as well as the original damages enhancement.

What changed since the first appeal?

The relevant facts were essentially the same, but the Federal Circuit acknowledged that the standard it applied in the first appeal was erroneous and, importantly (though relegated to a footnote), the original jury did in fact consider behavior during the correct time period as opposed to what the court understood to be the case at the time.

Indeed, trial courts have been confused since the issuance of the first SRI v. Cisco decision as to the proper standard to apply to the threshold question of willfulness before looking at enhanced damages. Was it the higher “wanton, malicious, and bad-faith” behavior that was stated in the first SRI case, or was it the “deliberate or intentional,” “knew or should have known of the risk” standard that was set forth in Eko Brands v. Adrian Rivera Maynez Enters. and Arctic Cat v. Bombardier and others? See, for example, the trial court decisions Bos. Scientific Corp. v. Nevro Corp., 415 F.Supp.3d 482 (D. Del. 2019) and VLSI Tech. v. Intel Corp. (D. Del. 2020), both of which include the explanation: “All three of these [Federal Circuit] cases [following the Arctic Cat standard] were decided before SRI, and, in my view, cannot be reconciled with Halo. I will therefore follow SRI.” See also Schwendimann v. Stahls’, Inc., 510 F.Supp.3d 503, 512-513 (E.D. Mich. 2021) (“a debate has emerged at the district court level concerning whether a patentee, in order for its complaint to survive a motion to dismiss willful infringement claims, must allege ‘egregious infringement behavior.'”).

So the Federal Circuit in this second SRI case made clear that, as far as the initial question of willfulness, the standard is as set forth in Eko Brands and Arctic Cat, which is “no more than deliberate or intentional infringement,” (Eko Brands, at 1378) and which can be established by showing that the risk of infringement “was either known or so obvious that it should have been known” (Arctic Cat, at 1371).


  • This case clarifies that there is no heightened standard for willfulness. Only a showing of deliberate or intentional infringement is required. Eko Brands v. ARM.
  • Deliberateness or intentionality can be met when the defendant knew or should have known of the risk. Arctic Cat v. Bombardier.
  • When considering the defendant’s state of mind, the factor that typically carries the most weight is the second Read factor: whether the infringer, when it knew of the other’s patent protection, investigated the scope of the patent and formed a good-faith belief that the patent was invalid or not infringed.
  • For manufacturers and product companies, this case reinforces the need to establish noninfringement and invalidity positions as early as possible.

How An Early Patent Investigation Helped CalAmp Avoid $6 Million in Enhanced Damages

A recent Federal Circuit case, Omega Patents v. CalAmp, underscores the importance of conducting early patent investigations and how they can help avoid enhanced damages due to willful patent infringement.

CalAmp entered the appeal owing $9 million in compensatory and enhanced damages for willful patent infringement after a jury trial ($15 million total after attorney’s and additional fees). The Federal Circuit vacated the entire willfulness judgment and its associated enhanced damages and remanded for a new trial in part because of technical issues relating to the jury verdict.

But before sending the case back to trial, the Federal Circuit made a point to note the importance of CalAmp’s early pre-suit patent investigation efforts and the associated evidentiary errors committed by the district court. When the district court properly considers the evidence, CalAmp will stand a much better chance of escaping the $6 million in enhanced damages.

The Federal Circuit found that the district court erred in two ways when it considered the willfulness issue:

  1. The court improperly excluded testimony by a CalAmp senior director, Gallin Chen, relating to CalAmp’s state of mind prior to the alleged infringing acts. Despite being allowed to testify that he “was the ‘main person’ tasked with investigating the patent landscape,” “discussed his findings with his superior . . . who was part of CalAmp’s executive team,” conducted searches to “see the lay of the land,” Chen was not permitted to state his conclusions as to whether the asserted patent claims were infringed or invalid. The appeals court rejected the trial court’s application of expert witness (FRCP 26) and hearsay rules and held that “Chen’s testimony on this issue was clearly relevant.”
  2. The district court also erred in excluding testimony by CalAmp’s outside counsel, David Bailey, as to the analysis he provided and conveyed to CalAmp executives regarding noninfringement and invalidity of the asserted patents. The Federal Circuit said that Bailey should have been allowed to present a reasonable explanation as to how he arrived at his conclusions in order to demonstrate CalAmp’s mental state as to these issues. The appeals court drew a noteworthy line, however, with respect to Bailey’s post-suit written opinions – opinions performed after the suit was filed were properly excluded since they were not contemporaneous with the infringing activity.


  • Patent analysis by non-attorneys, including conclusions of non-infringement and invalidity, is probative and relevant to an accused infringer’s state of mind at the time of the alleged activity. Chen was not an attorney but had responsibility for freedom to operate analysis. The Federal Circuit held that his conclusions, which indicated a subjective state of mind on the part of CalAmp, were relevant to willfulness under Halo.
  • Testimony regarding prior verbal opinions of non-infringement or invalidity can be relevant and admissible, but it is usually better to document these positions. Although the Federal Circuit rejected a hearsay objection that the district court sustained to exclude testimony about conversations, documentary evidence of such opinions would have avoided the issue altogether and is almost always more credible.
  • The exclusion of Bailey’s post-suit written opinions as to non-infringement and invalidity reinforces the criticality of performing and documenting patent investigations as early as possible in a product’s development and launch cycle. Opinions and patent analysis conducted at the beginning of alleged activity are admissible to show good faith non-infringement and invalidity positions, while after-the-fact opinions usually are not relevant.

Federal Circuit Vacates Enhanced Damages Award Against Cisco Because No Willfulness Before Knowledge of Patent

The Federal Circuit issued an interesting decision involving willful infringement last week, in particular relating to evidence needed to support a period of time during which the alleged willful activity took place. In SRI International, Inc. v. Cisco Systems, Inc., the appeals court found that SRI had not presented sufficient evidence to support a willfulness finding for activity that took place before Cisco had become aware of the patent-in-suit. The court vacated the district court’s award of enhanced damages (which doubled the $23 million damages verdict). The Federal Circuit remanded for further consideration as to whether substantial evidence supported willfulness after knowledge had been acquired.

The district court relied on two primary pieces of evidence asserted by SRI in finding Cisco’s infringement to be willful: (1) “key” Cisco employees did not read the patents-in-suit until their depositions; and (2) Cisco designed the products and services in an infringing manner and that Cisco instructed its customers to use the products and services in an infringing manner.

The fact that “key” Cisco employees did not read the patents-in-suit did not persuade the Federal Circuit that the conduct was willful because the identified individuals were engineers without legal training. The court suggested that its conclusion would have been different if Cisco’s lawyers had behaved in the same way: “[g]iven Cisco’s size and resources, it was unremarkable that the engineers—as opposed to Cisco’s in-house or outside counsel—did not analyze the patents-in-suit themselves.”

As to the second of SRI’s willfulness arguments, that Cisco designed products in an infringing manner, the appeals court noted that this point simply amounts to proof that the products infringed. That is, there is nothing further to show that Cisco had knowledge of the patents prior to 2012 and otherwise acted egregiously.

However, it was undisputed that Cisco was aware of the patents-in-suit as of May 2012 (when SRI sent a notice letter to Cisco) and that Cisco could still face enhanced damages based on its behavior after that date upon remand. But two impediments may make this determination on remand rather difficult: (1) as the Federal Circuit noted, JMOL proceedings are not the ideal mechanism to evaluate when, if ever, willful infringement began; and (2) the jury trial took place prior to the Supreme Court’s Halo decision, which critically changed the willfulness standard. As a result, it appears unlikely that the factual record in the case will sufficiently support a finding of willful infringement under current law, without further proceedings.

Supreme Court Denies Cert in Arctic Cat: Willful Infringement Remains a “Knew or Should Have Known” Standard

Earlier this week, the Supreme Court issued an order denying certiorari in Bombardier Recreational Products Inc. v. Arctic Cat Inc. As a result, the holding of the underlying Federal Circuit case remains intact. We discussed this case and its implications in a blog post several weeks ago.

Specifically, the Federal Circuit held:

Halo did not disturb the substantive standard for the second prong of Seagate, subjective willfulness. Rather, Halo emphasized that subjective willfulness alone—i.e., proof that the defendant acted despite a risk of infringement that was “‘either known or so obvious that it should have been known to the accused infringer,'” Halo, 136 S. Ct. at 1930 (quoting Seagate, 497 F.3d at 1371)—can support an award of enhanced damages.

Bombardier challenged this holding as amounting to a negligence standard. Arctic Cat disagreed, arguing that the language comes from longstanding Supreme Court precedent defining “recklessness.” Irrespective of the label, the fact remains that willful infringement continues to be assessed according to a “knew or should have known” standard.

What does this mean to innovators and manufacturers? While there are still very few cases that have actually tested the “should have known” portion of the standard after Halo, producers should consider the following items.

  1. First, a notion of slight comfort: mere knowledge of a patent has generally been insufficient to find subjective willfulness. A patentee must typically show that the accused infringer was in some way aware of a risk of infringement or that it was otherwise obvious. However, where the parties are close competitors who frequently assess each other’s patent portfolios, it may be possible for the patentee to demonstrate that the accused infringer should have known about the risk and therefore acted willfully even if it cannot prove direct knowledge of the patent-in-suit.
  2. A “should have known” test necessitates a comparison between an accused infringer’s behavior and what should be expected from reasonable participants in a similar position. Companies should therefore familiarize themselves with relevant industry customs and standards with respect to freedom-to-operate, clearance, and diligence investigations to ensure that they are acting reasonably. If standards are unclear, companies should think about generating internal policies that set forth clear processes for handling and investigating third-party patents.
  3. Well-documented records of investigation are key. It is important to establish early non-infringement and/or invalidity positions reflecting the beliefs of a competent decision-maker that is supported by a reasoned approach. The decision-maker need not be an attorney, but should be someone that has some degree of understanding as to how patents are interpreted.
  4. Consider privilege issues. In some cases courts will grant a bifurcated trial to separate liability issues from damages issues, which would allow a defendant to maintain privilege for the liability case while choosing to waive privilege to defend against a charge of willfulness, if it becomes necessary (this is to address the so-called “Quantum dilemma”). To prepare for the possibility that bifurcation may not be granted, companies should consider how they might build non-privileged documentation that supports a subjective belief of non-infringement, or to compartmentalize privileged information that is intended to be waived if necessary.

We will also be keeping an eye on Corning Optical Comms. LLC v.
PPC Broadband, Inc., in which a petition for writ of certiorari was filed last week. Corning presents essentially the same question as did Bombardier, and also asks whether courts must consider “all relevant circumstances” regarding the infringement, including evidence that the defendant’s position was objectively reasonable in assessing enhanced damages. At first glance, certiorari does not seem likely because one question was already denied in Arctic Cat and the other question does not raise much of a controversial issue. Courts will generally consider the nine Read factors when considering enhanced damages and factor 5 relates to “the closeness of the case,” which is effectively a test of objective reasonableness.

Arctic Cat v. Bombardier at the Supreme Court — Is Willful Infringement Determined by a Negligence Standard?

Currently making its way through the Supreme Court appeal process (petition for certiorari filed, not yet granted), Arctic Cat v. Bombardier is an important willful infringement case that implicates the standard of care applicable to potential infringers when investigating patent risk.

The current rule is that, in order to show willfulness and obtain enhanced damages, a patentee must demonstrate that the infringer acted despite a risk of infringement that “was either known or so obvious that it should have been known.” The phrase “should have known” suggests the existence of a duty of care against which an accused infringer’s actions will be compared.

Does that make it a “negligence” standard? Does it matter? That’s what this case is about.

Specifically, the question presented to the Supreme Court is whether the Supreme Court’s Halo decision changed the prior subjective willfulness inquiry under Seagate (in addition to eliminating the objective inquiry) or if it simply kept the subjective part as it was. Under Seagate, the subjective inquiry required the patentee to demonstrate that a risk of infringement “was either known or so obvious that it should have been known to the accused infringer.” Bombardier argues that Halo changed this rule when the Court stated that “the subjective willfulness of a patent infringer, intentional or knowing, may warrant enhanced damages, without regard to whether his infringement was objectively reckless.” Arctic Cat argues that this statement does not necessarily preclude a “should have known” standard and, further, that the statement is not a controlling holding. This “should have known” language made its way into the jury instructions at trial, which was the basis for Bombardier’s appeal to the Federal Circuit and beyond.


The underlying facts as found by the district court include the following:

  • Bombardier knew about the subject patents before they issued and in fact had made a note in a file to reexamine the patent after its issuance.
  • Bombardier did in fact later learn of the patents about a month after they issued.
  • The only pre-suit investigation relied upon by Bombardier “consisted of one conclusory sentence on a page of handwritten notes” and pertained to the published application, not the issued claims.
  • Bombardier recognized a likelihood of infringement of Arctic Cat’s patents and attempted to purchase them through an intermediary (to remain anonymous).
  • After the patent purchase was unsuccessful and after years of infringing activity, Bombardier sought opinion of counsel regarding infringement and invalidity.
  • By the time the opinion was received, Bombardier had already known about the patents for 8 years, and had been selling infringing products for at least 5 years.

The jury found willful infringement, and the district court trebled damages to a total of $46 million after consideration of the Read egregiousness factors. The court found that seven of the nine Read factors weighed in favor of enhancement including factors 1 (copying), 2 (lack of investigation), 4 (size and financial condition of infringer), 5 (closeness of the case), 6 (duration of misconduct), 7 (remedial action), and 9 (attempt to conceal misconduct).

On appeal to the Federal Circuit, the panel found no error in the jury instruction that included the “should have known” language derived from Seagate and affirmed the district court’s award of trebled damages. Quoting its earlier post-Halo decision in WesternGeco L.L.C. v. ION Geophysical Corp., the appeals court reiterated that subjective willfulness can be shown with “proof that the defendant acted despite a risk of infringement that was either known or so obvious that it should have been known to the accused infringer.”


Bombardier’s primary argument is that the Supreme Court set out a new standard for subjective willfulness when it stated that “the subjective willfulness of a patent infringer, intentional or knowing, may warrant enhanced damages,” which does not include the “knew or should have known” phrase. Bombardier further argues that “knew or should have known” amounts to a negligence standard and, as such, should not be a basis upon which to award punitive damages.

Arctic Cat argues that the Supreme Court left the Seagate rule for subjective willfulness intact, and that the rule is not based on negligence at all but instead comes from a well-established definition of recklessness. After all, the lower court decisions as well as Halo itself do not recite the word “negligence” at all. Indeed, Halo specifically notes Supreme Court precedent regarding a “recklessness” standard, not negligence, stating that “a person is reckless if he acts ‘knowing or having reason to know of facts which would lead a reasonable man to realize’ his actions are unreasonably risky.”

This case wouldn’t be sitting in Supreme Court chambers if it were easy. On one hand, the phrase “knew or should have known” essentially requires a standard of care against which to compare an accused infringer’s actions. How would you know whether an actor “should have known” about something without applying some kind of duty of care or objective conditions that determine whether they acted appropriately or within reasonable risk? And if a duty of care exists and is breached, isn’t that the definition of negligence?

On the other hand, the phrase “knew or should have known” must be taken in its context. The context typically describes the thing that should have been known as an “unjustifiably high” or “unreasonable” or simply “high” risk of infringement as part of a definition of recklessness. Ultimately, whether the rule is called “negligence” or “recklessness” is largely beside the point because neither label is explicitly part of the rule.

Experienced patent practitioners’ ears are surely ringing at the suggestion of a duty of care with respect to others’ patents. They know that the Federal Circuit unceremoniously disposed of any notion of an affirmative duty of care in 2007 with the Seagate decision. But if a premise of installing the Seagate two-part willfulness test was eliminating the affirmative duty, and Halo overruled Seagate, doesn’t that leave open the possibility that an affirmative duty could re-emerge? Or maybe it still exists in some form, perhaps just not as stringent as the one that Seagate rejected?

The real crux of the issue is where to place the question of objective risk. With an affirmative duty to investigate like that which existed prior to Seagate, opinion of counsel essentially assured objectively reasonable risk at the front end. After Seagate, litigators in infringement suits were tasked with validating objectively reasonable behavior at the back end. So if Halo removed Seagate’s objective inquiry without implementing a duty of care, how do we now balance the requirement for competent patent investigation at the front end without overburdening innovation? In other words, today’s patent thickets can be extremely dense and companies must occasionally launch products at known risk — what is the proper mechanism, if any, to evaluate the reasonableness of that risk and what should be the consequences?

We’ll have more to say on this topic in coming weeks. The Supreme Court is scheduled to decide whether to grant certiorari in Arctic Cat on September 24, 2018.

ClearstoneIP to Attend Upcoming IP Law Events

ClearstoneIP will be attending two major IP community events this fall.
We’d love to meet you!

2018 IPO Annual Meeting, Chicago

First, it’s the 2018 IPO Annual Meeting in Chicago on September 23-25th. ClearstoneIP will be exhibiting as part of the IP Expo, showcasing our continually evolving cloud platform for managing the complexities of the patent clearance and freedom-to-operate process, Clearstone FTO.

Click here for program and registration information.

2018 AIPLA Annual Meeting, Washington DC

Then, we’ll be at the 2018 AIPLA Annual Meeting in Washington, DC on October 25-27th. ClearstoneIP’s CEO and Co-Founder, Gabe Sukman, will be speaking as part of a panel on the timely subject of:

Defending Against Willful Infringement Post-Halo

Learn what steps you can take, both pre-suit and during litigation, to minimize your risk of exposure to enhanced damages due to willful infringement.

Click here for program and registration information.

We hope to see you at these great events!

Federal Circuit Affirms: No Enhanced Damages Against Willful Infringer Who Intentionally Copied

The Federal Circuit last week affirmed a district court’s denial of enhanced patent infringement damages in Sociedad Espanola de Electromedicina y Calidad v. Blue Ridge X-Ray Co., limiting the total damages to just the $852,000 jury award.

In a previous summary of post-Halo cases, we noted the remarkable facts in the underlying trial: the defendants were found to have intentionally copied the plaintiff’s patented design for an x-ray generator and the jury decided that they willfully infringed, but the court declined to award enhanced damages. Instead, the court decided that a brief patent analysis by a senior engineer in Korea was a sufficiently reasonable investigation per HaloIncidentally, according to the plaintiff this engineer “admitted unfamiliarity with basic patent law concepts such as anticipation and claim construction” and “used a Korean-English dictionary to help him review the English language patent.”

Now, we have long advocated that early competitive patent investigation (e.g., freedom to operate) is not only good for innovation but is also a critical component in helping avoid enhanced damages due to willfulness, but this case was still somewhat surprising. After reading through the appellate briefs, the picture is slightly clearer but it suffices to say that we would not recommend modeling your patent diligence policies after this non-precedential case.

We recommend, at a minimum, that the early patent analysis is performed or reviewed by at least one individual who has a fair degree of competence in both the relevant technical field as well as in basic principles of patent law and claim interpretation. That said, this case is still a testament to the broad notion that early patent investigation is looked upon very favorably by courts when deciding on enhanced damages.

What might have happened here?

Based on pure conjecture and without cynicism, I think this case is simply an example of judicial efficiency trumping process. Sure, the plaintiff had a fairly strong willfulness case, but it was also awarded reasonable royalties well in excess of what it actually argued at trial. The final $852,000 jury verdict is nearly three times as much as the highest amount of reasonable royalty damages argued at trial — $297,500. In fact, these excess damages were the subject of the defendant’s JMOL and subsequent cross-appeal at the Federal Circuit.

The district court (and the Federal Circuit, in turn) could have felt that, yes, the jury should not have awarded damages that were so far beyond the argued amount. But the plaintiff did have a pretty good willfulness case, which could have ended up tripling damages in any event. The resulting competing motions, defendant’s motion to reduce the damages verdict and the plaintiff’s request for enhanced damages, each had merit and would have essentially canceled each other out.

Also of note is that it appears that the above-noted characterizations of the engineer’s analysis (unfamiliarity with patent law and consulting a Korean-English dictionary) were not admitted as evidence at trial, so were not considered by the trial court in deciding the motion for enhanced damages.


I don’t want to overstate any takeaways from this particular case because it was, after all, a non-precedential Rule 36 summary affirmance (decision without opinion), but it is still useful and instructive.

The general takeaway is that the Federal Circuit found no abuse of discretion when a trial court denied awarding enhanced damages even when the jury found that the defendant willfully infringed and intentionally copied the plaintiff’s design. The trial court afforded a great deal of weight to the early pre-suit investigation by a senior engineer even though the only evidence of that investigation was a single undated document that included a very brief analysis and conclusion of non-infringement regarding the patent-in-suit.

In practical terms, Sociedad Espanola remains consistent with and supports these best practice points for patent diligence:

  • Certain patents can carry increased risk and should be investigated as soon as practicable after they become known within an organization. Factors that lead to increased risk include, for example, ownership by a close competitor, ownership by a litigious entity, or close proximity in a technical space.
  • The investigation should be performed, either primarily or secondarily, by a person or people with sufficient technical and legal competence. Cases have supported the notion that analysis by an engineer can be sufficient as a “reasonable investigation.” Out of further caution, we recommend that a patent professional, such as an agent or attorney, also perform or at least review the analysis.
  • Review by an attorney can carry the further benefit of establishing a privileged attorney-client communication (an upcoming article will discuss ways to preserve the attorney-client privilege while retaining the option to use the information to defend against willfulness under the new post-Halo paradigm).
  • Track patent analysis in a systematic way so that issues of authenticity and foundation are not in question (the evidence in Sociedad Espanola was somehow admitted, but certainly raised more than a few questions of authenticity/foundation when considering the deposition testimony). Internal policy directives and software tools should align to ensure that a collective patent review effort is best initiated, captured, and preserved.

Willful Infringement Case Update – Eidos Display v. Chi Mei Innolux

Earlier this month, Judge Gilstrap of the Eastern District of Texas issued a post-trial decision penalizing a patent infringer for failing to form a good-faith non-infringement or invalidity position before the lawsuit. The court doubled the $4.1 million verdict for a total of $8.2 million in damages. Eidos Display, LLC v. Chi Mei Innolux Corp., 6:11-cv-00201 (E.D. Tex. Mar. 5, 2018).

This case arose in 2011 when Eidos Display sued a number of defendants alleging infringement of U.S. Patent No. 5,879,958, which related to a method for forming an electro-optical device. Chi Mei Innolux and Chi Mei Optoelectronics (collectively, “Innolux”) were the only defendants remaining when the case went to trial after all of the others settled out.

After trial in mid-2017, the jury returned a verdict finding that Innolux willfully infringed the ‘958 patent and awarded $4.1 million in damages.

Eidos moved for enhanced damages, alleging that Innolux’s conduct was “willful, wanton, malicious, bad-faith, deliberate, consciously wrongful, flagrant, or—indeed—characteristic of a pirate” per the standard set forth in the Supreme Court case Halo v. Pulse (see our earlier discussion of Halo here). As is typical in such cases, the court did not parse the meanings of those flowery words and instead walked through a measured analysis by considering the nine Read factors.

Judge Gilstrap found that five factors favored Eidos’ argument for enhancement, one factor favored Innolux, and three factors were neutral. With the weight of the factors on the plaintiff’s side, Judge Gilstrap opted to enhance the damages by 100%, to $8.2 million, which was short of the fully tripled amount allowed by statute.

Factors favoring enhanced damages:

  • Lack of Investigation or Good-Faith Belief of Non-Infringement/Invalidity (Read factor #2) – This factor weighed the heaviest against Innolux. Innolux’s predecessor (CMO) first learned about the ‘958 patent through one of its customers, Fujitsu, who received infringement claims from the patentholder and “repeatedly asked CMO to undertake a serious analysis.” The court found that no good faith pre-suit investigation occurred and that Innolux had not “formed, prior to this lawsuit, any reasonable non-infringement or invalidity positions.” As such, this factor favored enhancement.
  • Litigation Conduct (Read factor #3) – The court found that Innolux engaged in some degree of discovery misconduct relating to delays in producing documents, waiting until the last minute to resolve disputes, and other gamesmanship tactics. Though the behavior was not so severe as to warrant adverse jury instructions, the court found that it weighed in favor of enhancement.
  • Size and Financial Condition (Read factor #4) – This factor favored enhancement simply because “Innolux is a large company with billions in revenue.”
  • Duration of Misconduct (Read factor #6) – Innolux continued to infringe the ‘958 patent for at least 8 years prior to the filing of the lawsuit. While it attempted to point to Eidos’s delay in bringing suit to justify its behavior, that argument was not persuasive and the court held that “Innolux is responsible for its own actions, including failing to meaningfully investigate the ’958 patent while continuing to infringe it for several years. This conduct supports an enhancement in this case.”
  • Lack of Remedial Action (Read factor #7) – There was no real dispute that Innolux did not take any remedial action after learning of the ‘958 patent.

Factors against enhanced damages:

  • Closeness of the Case (Read factor #5) – The single factor found in Innolux’s favor was supported by the fact that Innolux had previously won summary judgment of invalidity due to indefiniteness, which decision was later reversed by the Federal Circuit on appeal.

Neutral factors:

  • Deliberate Copying (Read factor #1) – Eidos conceded that there was no evidence of affirmative copying.
  • Motivation for Harm (Read factor #8) – “[T]he record lacks evidence that Innolux gained some specific ‘competitive edge’ over LG or Eidos in the marketplace by infringing the ’958 Patent. The record also lacks any indication that Innolux carried on its infringing conduct to gain such an edge or to harm LG or Eidos.”
  • Attempts to Conceal Misconduct (Read factor #9) – To the extent that Innolux’s discovery abuses could be considered an attempt to conceal misconduct, they had already been considered with respect to factor #3. The court did not address any other arguments.


The takeaways from this case are in line with other post-Halo decisions. They stress the importance of conducting early patent investigations and establishing good faith non-infringement and invalidity positions:

  • Ignorance is not bliss when it comes to others’ patents.
  • A solid approach is to adopt a policy of prompt investigation, and to establish reasonable non-infringement or invalidity positions as soon as a relevant patent becomes known by anyone in the company.
  • Evidence demonstrating pre-suit non-infringement or invalidity positions would likely have saved this defendant $4.1 million, and may have led to design-arounds that could have avoided liability entirely.

Willful Infringement: More Clarity From the Federal Circuit — Exmark v. Briggs & Stratton and More

The Federal Circuit’s recent decision in Exmark v. Briggs & Stratton echoes the central point in our prior analysis of Halo v. Pulse that timing matters in determining whether an accused infringer did so willfully. The case leaves us with two key practical implications:

  • Early investigation of patent threats can help avoid a finding of willful infringement; positions developed at the time of litigation are too late and irrelevant.
  • Prior art-based invalidity positions can form the basis for a subjective intent sufficient to defeat willfulness.

Case Summary

Exmark sued Briggs for infringement of U.S. Patent No. 5,987,863, relating to high-end lawn mowers. After a jury trial, the Nebraska district court awarded $48 million to the plaintiff after doubling the damages as a result of willful infringement. Notably, the trial took place before the Supreme Court’s decision in Halo v. Pulse, which meant that the district court applied the now-overruled Seagate standard for willfulness. After determining that Briggs’ defenses were objectively unreasonable, the trial court precluded Briggs from presenting prior art evidence at trial. Briggs’ hope was to use the prior art evidence to support a subjective state of mind that lacked willfulness.

On appeal, the Federal Circuit held that the trial court’s finding of objective unreasonableness did not comport with the Halo standard, which only requires consideration of subjective intent. The court further found that Briggs should be allowed to present prior art evidence in a new trial, conditioned on the timing at which Briggs considered it:

The district court must reconsider its decision to exclude evidence of the prior art during the jury trial on willfulness to determine whether Briggs had developed any views about the prior art at the time of accused infringement or whether the evidence only relates to Briggs’ litigation-inspired defenses.

The Federal Circuit vacated the damages award and the enhancement due to willfulness, and remanded to the district court for a new trial on those and other issues.


The Exmark case is a straightforward but significant application of the willfulness doctrine after the Supreme Court’s standard-shifting decision in Halo v. Pulse. In Halo, the Court made it easier for a patentee to obtain enhanced damages from a willful infringer by rejecting the “objectively reckless” prong while also lowering the burden of proof from “clear and convincing” to “preponderance of the evidence.” In practice, the former standard allowed even blatant copiers to escape liability for enhanced damages if they could come up with a reasonable non-infringement or invalidity position at the time of litigation. Now, the focus is on the subjective knowledge, intent, and behavior of the infringer at the time of infringement.

Cases following Halo have begun to shape the new willfulness doctrine. While Exmark does not include an extensive discussion regarding willfulness, the takeaways are clear. If Briggs could have shown that it had developed prior art-based invalidity positions when it allegedly committed the infringement, then it would have been able to use that evidence to prove a lack of subjective willfulness and avoid enhanced damages. But if no pre-litigation analysis had taken place, then the trial court would exclude the prior art evidence, and Briggs would likely be liable for up to three times the jury’s damages verdict.

Other Recent Cases

In Presidio Components, Inc. v. Am. Tech. Ceramics Corp., 2016-2607 (Fed. Cir. Nov. 21, 2017), the Federal Circuit affirmed the district court’s denial of enhanced damages even when the jury determined that the defendant willfully infringed. An engineer for ATC knew about the patent-in-suit for years, which knowledge contributed to the jury’s finding that ATC behaved with reckless disregard. However, due to a later re-examination that resulted in amended claims, the period of infringement was set to begin on a later date — a time when the parties were already well into litigation (the court had issued claim constructions and ATC had developed its defenses). So while the jury found that ATC’s conduct was willful, the district court recognized these “unique circumstances” and ultimately declined to enhance damages because, looking at ATC’s conduct after the relevant date, the case was a “garden-variety” patent infringement action. Had the patent not undergone a re-exam that ended up resetting the infringement period, logic suggests that enhanced damages would have been much more likely.

In Tinnus Enterprises, LLC, Zuru Ltd. v. Telebrands Corporation, 6:16-cv-00033 (E.D. Tex. Nov. 21, 2017), several defendants are currently staring down the barrel of potential liability of up to $36 million (if trebled) after a recent jury verdict of willful infringement. The facts of the case relating to willfulness have not yet come to light, as much of the briefing and trial records are under seal, but we will monitor the case as it makes its way through post-trial motions and appeal. This is a high-profile case against a so-called “knock-off company” that has garnered much attention.


This article is made available for educational purposes only as well as to give you general information and a general understanding of the law, not to provide specific legal advice. By using this blog site you understand that there is no attorney client relationship between you and the author or ClearstoneIP. The blog site should not be used as a substitute for competent legal advice from a licensed professional attorney in your state.

Pirates Among Us? How Have Courts Treated Willful Infringers in the Year Following Halo v. Pulse?


As the Supreme Court’s Halo decision[1] recently celebrated its first anniversary, we take a look to see whether the lower courts have effectively rooted out the “wanton and malicious pirates” about whom the unanimous High Court was so gravely concerned. Have we found and singled out our swash-buckling ne’er-do-wells for public shaming, or have we discovered that the label, if defined by the reduced willfulness standard set out in Halo, might suggest that even some of the best-intentioned among us might be keeping parrots in their desk drawers and their closets well-stocked with puffy shirts? And importantly, what can we do to trade those bandannas for halos in the eyes of the court?


In Halo v. Pulse,[2] the Supreme Court made it easier for a patentee to obtain enhanced damages from a willful infringer under 35 U.S.C. § 284. The Court rejected a part of the previous requirement, under Seagate,[3] in which the patentee had to show that the infringer acted “objectively recklessly.” It also lowered the burden of proof from “clear and convincing” to “preponderance of the evidence.” In practice, the old standard allowed even willful infringers to escape liability for enhanced damages if they could come up with a reasonable non-infringement position even as late as during litigation. The Court felt that this standard was too rigorous. It ratcheted back the necessary showing to, essentially, “egregiousness,” which is centered on the subjective knowledge, intent, and behavior of the infringer.

To that end, courts will consider the nine so-called Read factors[4] in considering whether to award enhanced damages. In terms of guiding behavior outside the context of a specific dispute or litigation, three of these factors are most salient here:

  • Read Factor #1: Whether the infringer deliberately copied the patentee’s ideas or design.
  • Read Factor #2: Whether the infringer, upon knowing of the patent, investigated the scope of the patent and formed a good faith belief that it was invalid or that it was not infringed.
  • Read Factor #7: Remedial action taken by the infringer.

Enhanced Damages After Halo

If one pattern clearly emerges, it is that courts disfavor infringers who “know” about a patent but do not conduct an analysis of the scope of its claims (Read factor #2). Mere knowledge of a patent is generally not sufficient in itself to find willfulness, but knowledge in combination with copying and malicious intent, with no investigation, has proven extremely dangerous.

In Dominion v. Alstom, a Pennsylvania district court found that seven of the nine Read factors weighed in favor of enhanced damages against the defendant.[5] The court doubled the reasonable royalty findings to $972,000. The court found evidence of copying over a long period of time and took particular issue with the fact that “Alstom’s belief it did not infringe . . . is based entirely on the opinion of people without expertise in reading patent claims. On balance, it is not a good faith belief in non-infringement.”[6] The court noted that Halo played a role here and may have ultimately led to Alstom’s downfall. During the course of infringement, Alstom was operating in a Seagate world where an infringer can avoid enhanced damages if they can “muster a reasonable (even though unsuccessful) defense at the infringement trial.” But the Halo ruling did away with that post hoc safe harbor and essentially requires a good faith belief of non-infringement during the actual period of infringement.

In Imperium IP Holdings v. Samsung, an Eastern District of Texas court tripled jury verdict damages to nearly $21 million due to willfulness, the maximum enhancement allowed. The crux of the decision was that, “despite knowing of Plaintiff’s patents since at least April 2011, Defendants never undertook any serious investigation to form a good-faith belief as to non-infringement or invalidity.”[7] In deciding Samsung’s JMOL motion, the court reiterated that “evidence offered at trial established that Defendants had pre-suit knowledge of the patents-in-suit and took no steps to avoid infringement after becoming aware of the patents.”[8]

SRI International v. Cisco Systems also involved large damages numbers.[9] There, the Delaware trial court doubled the jury’s damages verdict to award more than $46 million to the plaintiff. Again, the court was swayed by a finding that the defendant did not perform a sufficient analysis of known patents, noting that evidence showed “that key Cisco employees did not read the patents-in-suit until their depositions.” The fact that Cisco knew about the asserted patents but did not investigate the technical aspects relating to infringement led to more than $23 million in additional damages.

How have defendants avoided enhanced damages?

Here is where the contrast becomes sharp. Even in cases where the Read factors might suggest some troublesome behavior, like knowing and intentional copying, defendants were spared enhanced damages because they made a reasonable investigation at the time of infringement.

In Greatbatch Ltd. v. AVX Corp.,[10] a Delaware district court found no willfulness in relation to three patents infringed by AVX. Even though AVX knew about all three patents at the time of the culpable activity, the court held that the conduct was not egregious or wanton because AVX performed a reasonable investigation at the time. The court distinguished a Federal Circuit case in which enhanced damages were awarded by noting that “here, by contrast, AVX sought and obtained invalidity and non-infringement opinions of counsel before litigation and developed designs and processes to avoid infringement” (court’s emphasis).[11] AVX relied upon opinions of counsel with respect to two of the three asserted patents, and “made significant efforts to avoid infringement of the [third] patent” (i.e., design around) according to the court.

In another remarkable case, Sociedad Espanola de Electromedicina y Calidad v. Blue Ridge X-Ray Co.,[12] the jury explicitly found that the defendants “knowingly and intentionally copied Sedecal’s transformer,” and the court upheld a finding of willful infringement.[13] However, the trial court has discretion to award enhanced damages even when infringement conduct is egregious and willful. Using this discretion, the court appreciated that the defendants “conducted a reasonable investigation of Sedecal’s patent claims and made a good faith determination that the patent was not infringed by their activities and that the patent was likely invalid,” and did not enhance damages. In other words, the defendants here blatantly copied the plaintiff’s product but escaped increased willfulness liability because they made the pre-suit effort to formulate reasonable (though ultimately incorrect) non-infringement positions. In this case, the pre-litigation investigation was conducted by a head engineer.

Similarly, in Koninklijke Philips v. Zoll Medical,[14] a plaintiff’s request for enhanced willfulness damages was rejected on summary judgment because the defendant had evaluated the asserted patents before the lawsuit and established a reasonable non-infringement position. After a portion of the case was appealed, the court quoted the Federal Circuit’s binding finding “that [although] Zoll’s claim construction argument against the jury’s direct infringement verdict . . . was incorrect, [its] argument was based on a reasonable interpretation of the claims in light of the specification and the prosecution history. . . . [T]his belief in non-infringement was reasonable . . . .”


An important practical result here is that Halo has effectively shifted the point in time at which an accused infringer should establish reasonable non-infringement or invalidity positions. We can no longer rely upon arguments that were first conjured up after being sued. By and large, future patent defendants stand a good chance of avoiding enhanced damages if they have a process in place to competently evaluate asserted patents at an early stage. They should have systems to collect relevant information such as analysis, documents, technical information, and relevant discussions in order to bolster a good faith belief of non-infringement or invalidity. That, or else they may find themselves walking the plank.

This article is made available for educational purposes only as well as to give you general information and a general understanding of the law, not to provide specific legal advice. By using this blog site you understand that there is no attorney client relationship between you and the author or ClearstoneIP. The blog site should not be used as a substitute for competent legal advice from a licensed professional attorney in your state.

[1]Halo Elecs., Inc. v. Pulse Elecs., Inc., 136 S.Ct. 1923 (2016).

[2] Id.

[3] In re Seagate Technology, LLC, 497 F.3d 1360 (2007).

[4] The Read factors include: (1) whether the infringer deliberately copied the patentee’s ideas or design; (2) whether the infringer, upon knowing of the patent, investigated the scope of the patent and formed a good faith belief that it was invalid or that it was not infringed; (3) the infringer’s litigation behavior; (4) the infringer’s size and financial condition; (5) the closeness of the case; (6) the duration of the infringer’s misconduct; (7) remedial action taken by the infringer; (8) the infringer’s motivation for harm; and (9) whether the infringer attempted to conceal its misconduct. See Read Corp. v. Portec, Inc., 970 F.2d 816, 826-27 (Fed. Cir. 1992).

[5] Dominion Res. Inc. v. Alstom Grid, Inc., Civil Action No. 15-224 (E.D. Pa. Oct. 3, 2016).

[6] Id. at *52-70.

[7] Imperium IP Holdings (Cayman), Ltd. v. Samsung Elecs. Co., Civil Action No. 4:14-CV-00371, at *12 (E.D. Tex. Aug. 24, 2016).

[8] Id. at *33.

[9] Sri Int’l, Inc. v. Cisco Sys., Inc., Civil Action No. 13-1534-SLR (D. Del. May. 25, 2017).

[10] Greatbatch Ltd. v. AVX Corp., Civil Action No. 13-723-LPS (D. Del. Dec. 13, 2016).

[11] Id. at *5 (distinguishing WBIP, LLC v. Kohler Co., 829 F.3d 1317, 1340-41 (Fed. Cir. 2016) (“as the Supreme Court explained in Halo, timing does matter. Kohler cannot insulate itself from liability for enhanced damages by creating an (ultimately unsuccessful) invalidity defense for trial after engaging in the culpable conduct of copying, or ‘plundering,’ WBIP’s patented technology prior to litigation.”)).

[12] Sociedad Espanola de Electromedicina y Calidad, S.A. v. Blue Ridge X-Ray Co, No. 1:10-cv-00159-MR, at *19-23 (W.D.N.C. Dec. 28, 2016).

[13] Id.

[14] Koninklijke Philips N.V. v. Zoll Med. Corp., Civil Action No. 10-11041-NMG (D. Mass. Jun. 26, 2017).