TREBLE DAMAGES

Halo Electronics Inc. v. Pulse Electronics Inc.; Stryker Corporation, et al. v. Zimmer, Inc.

Issues

Should patentees have to show that defendants willfully infringed their patents to receive enhanced damages?

 

In this consolidated case, the Supreme Court must determine the correct interpretation of 35 U.S.C. § 284, which provides enhanced damages in patent infringement cases. Currently, plaintiffs must show that defendants “willfully infringed” to obtain enhanced damages. Courts employ a two-prong test, with subjective and objective elements. The objective element requires plaintiffs to show “by clear and convincing evidence that the infringer acted despite an objectively high likelihood that its actions constituted” patent infringement. In separate actions, petitioners Halo Electronics Inc. and Stryker Corp. sued respondents Pulse Electronics Inc. and Zimmer Inc. respectively for patent infringement. In each case, the U.S. Court of Appeals for the Federal Circuit found that Halo and Stryker failed to satisfy the objective prong of the willfulness test. But Halo and Stryker argue that the Federal Circuit’s interpretation of objective willfulness is unfairly burdensome and should be replaced by a totality-of-the-circumstances standard. Pulse and Zimmer contend that the objective willfulness standard properly allows only culpable infringers to pay punitive damages, in accord with the historical purpose of punitive damages. The Court’s decision may affect how plaintiffs prove infringement, and whether culpable infringers escape liability.

 

Questions as Framed for the Court by the Parties

Did the Federal Circuit err 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, LLC v. ICON Health & Fitness, Inc., 134 S. Ct. 1749 (2014) for imposing attorney fees under the similarly-worded 35 U.S.C. § 285? 

Halo Electronics Inc. (“Halo”) and Pulse Electronics Inc. (“Pulse”) make surface mount transformers, a component in electronic devices such as internet routers.  See Halo Electronics Inc. v. Pulse Electronics Inc., 769 F.3d 1371, 1374–75 (Fed. Cir. 2014).  Prior to the 1990s, surface mount transformers would often overheat and crack, causing the device to fail.

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Medical Marijuana, Inc. v. Horn

Issues

Do economic harms, such as losing employment, qualify as injury to “business or property” under the Racketeer Influenced and Corrupt Organizations Act, if those harms stem from personal injuries, such as ingesting an unwanted drug?

This case asks the Supreme Court to decide whether economic harms resulting from personal injuries are injuries to “business or property” for the purposes of the Racketeer Influenced and Corrupt Organizations Act (“RICO”). Commercial truck driver Horn ingested Dixie X to alleviate his back pain, after learning from the sellers that it contained no THC, even though it did. After testing positive for THC in a random drug test from his employer, Horn was fired. He then sued the sellers for injury to his business under RICO. Medical Marijuana, Inc. argues that ingestion of an unwanted substance like THC is a personal injury, and that economic damages from such an injury do not turn it into an injury to “business or property.” Horn claims that losing his job because of Medical Marijuana’s alleged fraud is an injury to “business or property.” This case has significant implications for the rights of human trafficking victims, the cost of doing business in consumer products, and the vitality of the hemp industry.

Questions as Framed for the Court by the Parties

Whether economic harms resulting from personal injuries are injuries to “business or property by reason of” the defendant’s acts for purposes of a civil treble-damages action under the Racketeer Influenced and Corrupt Organizations Act.

Respondent, Douglas Horn, was a commercial truck driver for fourteen years before the event leading to this case occurred. Brief for Respondent, Horn at 3–4. In February 2012, he was involved in a trucking accident in which he sustained injuries to his shoulder and back.

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